Australia is facing a global health crisis that is having a significant economic impact. We have moved quickly to put in place a series of health measures to protect the community from the spread of the coronavirus.
This includes a $2.4 billion package that will see the establishment of up to 100 dedicated respiratory clinics, increased training for aged-care workers in infection control, the purchase of more face masks, antibiotics and antivirals for the national medical stockpile and the provision of $500 million to share increased hospital and related costs with the states.
Yesterday, we announced our economic response that is designed to maintain confidence, support investment and keep people in jobs. It’s a $17.6 billion package, $11 billion of which will flow before June 30. There are six key measures. They are all temporary. They are all targeted. They are all proportionate to the challenge we face. About $3 out of every $4 will be spent backing businesses.
There are two measures to directly support investment. Both measures apply from today and to 99 per cent of Australian businesses, namely those with a turnover of up to $500 million.
The first is an increase in the instant asset write-off from $30,000 to $150,000. Any such purchase from now until June 30 including a truck, a tractor, a shop fit out can be written off immediately.
The second is a 50 per cent accelerated depreciation deduction over and above what businesses can already deduct in the first year and is available for 15 months to June 30, 2021.
In South Australia, 250,000 businesses employing more than 480,000 people will be able to access these measures, which are designed to keep these businesses investing and reward them for investing even more.
There are another two new measures that will boost cash flow boost to small and medium-sized employers. The first is a payment of up to $25,000 to businesses that employ people and have a turnover of up to $50 million.
The payment will be delivered automatically through the tax system without any new forms being required.
The payments, which we expect will go to almost 700,000 Australian businesses, are tax-free. The second is a 50 per cent wage subsidy for apprentices and trainees in businesses with fewer than 20 employees.
Employers will receive up to $21,000 an apprentice, and 117,000 apprentices will have additional job security as a consequence. More than 9000 of these apprentices are employed in South Australia.
These two measures, which cost about $8 billion, are designed to keep businesses in business and Australians in jobs. The Government will also deliver a one-off stimulus payment to households, with 6.5 million Australians receiving a payment of $750.
More than half a million people in South Australia will receive this payment. Recipients include those on Newstart, the Disability Support Pension, Carers’ Allowance, Youth Allowance, Veteran Support payments, Family Tax Benefits, Commonwealth Senior Health Card holders and 2.4 million aged pensioners across Australia.
This one-off payment, which costs $4.8 billion, will flow automatically from March 31 and provide additional income to millions of Australians that will be spent across the economy.
A new regional and community support fund is also being established, with an initial allocation of $1 billion to provide targeted assistance to the areas most heavily affected by the coronavirus.
In addition to the stimulus package, the Government is lowering the deeming rates at a cost of $600 million to reflect recent changes in interest rates. Both the lower and upper deeming rates will be reduced by 0.5 percentage point, benefiting about 900,000 social security recipients, including 560,000 aged pensioners.
These are challenging times but the Australian people and our economy are up to this challenge. Our economy has continued to grow and remains resilient.
The genesis of this economic shock was outside of our control but how we respond is not.
In the back half of last year, our economy continued to grow and the Reserve Bank Governor reminded all Australians that the fundamentals of the economy are “very strong.”
This should give Australians confidence about our ability to not only get through these challenging times but come out stronger on the other side.
This package is both substantial and considered and will help the nation navigate its way through this difficult period as the impact of the coronavirus evolves.
JOSH FRYDENBERG IS THE FEDERAL TREASURER