Since the Morrison Government announced its first stimulus package just over a week ago, the global and domestic economic environment has deteriorated. We now expect the economic shock from the coronavirus to be deeper, wider and longer.
Every arm of government and industry is working to keep Australians in jobs and businesses in business as we build a bridge to recovery on the other side of the coronavirus. Yesterday, the Government announced a second $66 billion package designed to support businesses and cushion the blow for households with an unprecedented enhancement of Australia’s safety net.
It is consistent with our principles of being targeted, temporary, scalable and using our existing systems. Total government support for the economy announced over the past 10 days is $189 billion or 9.7 per cent of GDP.
The package has three parts:
Support for households, including casuals, sole traders, retirees and those on income support;
Assistance for businesses to keep people in a job; and
Regulatory protection and financial support for businesses to stay in business.
The Government is doubling the jobseeker allowance, formerly known as Newstart, through the introduction of a temporary coronavirus supplement. The Government will also waive the asset test and waiting periods for the JobSeeker allowance, allowing more Australians to more quickly access the support they need.
The Coronavirus Supplement will provide an additional $550 a fortnight on top of the existing jobseeker or Newstart allowance and will be available to sole traders and casual workers who meet the income test. This means anyone eligible for the maximum JobSeeker Payment will now receive more than $1100 a fortnight, effectively doubling the payment.
In the first package on March 12, we announced a $750 payment for Australians on income support. More than 1.5 million people will receive this payment in Victoria.
Yesterday we announced that from July 13, another $750 will be paid to those on income support and who are not eligible for the Coronavirus Supplement.
That includes those receiving the Age Pension, Carers’ Allowance, Family Tax Benefits and the Commonwealth Senior Health Card.
Our economic response will also allow those Australians in financial stress as a result of the coronavirus to access more of their own money in superannuation. From April, those affected will gain early access to their superannuation, capped at $10,000 this financial year, and a further $10,000 in the following financial year. These withdrawals will be tax-free and available to those who are eligible for the coronavirus supplement as well as sole traders who have seen their hours worked or income earned fall by 20 per cent or more as a result of the coronavirus.
This initiative builds on existing provisions allowing early access to super in the event of hardship or on compassionate grounds and is estimated to put up to $27 billion of superannuation back into the pockets of those who need it most.
The second part of our package sees a huge scaling up of support for small and medium-sized businesses. We are increasing cash payments to SMEs from up to $25,000 to up to $100,000 to boost their cashflow and help keep their workers employed. We are also extending this measure to about 30,000 not-for-profit organisations with an annual turnover of less than $50 million. It will be a lifeline for hundreds of thousands of employers like the local hairdresser, café owner and mechanic whose income has been significantly reduced. This will support the jobs of about two million workers in Victoria.
Over the course of the past week, $105 billion was injected into the financial system by the Government and the Reserve Bank of Australia, the purpose of which was to lower the cost and increase the availability of credit, particularly to small and medium sized businesses. The Government has gone one step further and is guaranteeing loans to small businesses in a 50/50 partnership with the banks and other lenders.
This $40 billion scheme, which will start in early April, will provide loans of up to $250,000 for up to three years to businesses with a turnover of up to $50 million.
No repayments will be required for the first six months and these unsecured loans will help build a bridge for small and medium-sized businesses to get to the other side of the coronavirus and I urge small businesses to talk to their bank.
The third part of our package will provide a regulatory shield for what are otherwise profitable and viable businesses that find themselves under severe financial pressure due to the coronavirus.
It’s time for more flexibility in our insolvency and bankruptcy laws, to keep businesses alive and able to trade through this period.
These extraordinary times demand extraordinary measures. We face a global challenge like we have never faced before.
But by working together, we will get to the other side and bounce back stronger.
Yesterday’s announcement will provide the hope and support millions of Australians need at this time.