Australia is facing a global health crisis which is having a significant economic impact. We have moved quickly to put in place health measures to protect the community from the spread of COVID-19.
That includes a $2.4 billion package which will establish 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 which 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 temporary. They are targeted. They are 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 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. It’s available for 15 months to June 30 next year.
In Victoria, 970,000 businesses employing more than two million people will be able to access these measures, which are
designed to keep those 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, expected to 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 per apprentice and 117,000 apprentices will have additional job security as
a consequence. More than 30,000 of those apprentices are employed in Victoria.
Those 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 $750. More than 1.5 million Victorians will benefit. Recipients include those on Newstart, the Disability Support Pension, Carers’ Allowance, Youth Allowance, Veteran Support payments, FamilyTax 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 for targeted assistance to the areas most heavily affected by COVID-19.
That will include the waiver of certain fees and charges for tourism businesses operating in commonwealth national parks such as the Great Barrier Reef, increased domestic tourism promotion and more assistance through Austrade to help identify alternative export markets and address supply chain breakdowns.
As occurred with the bushfires, the ATO will provide relief for those significantly affected, with deferral of various tax obligations by up to four months. The government is also 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 points,
benefiting about 900,000 social security recipients, including 560,000 aged pensioners.
These are challenging times but Australia is up for this challenge. Our economy has continued to grow and is resilient. The genesis of this economic shock was outside our control but how we respond is not.
Over the past 6½ years, our disciplined approach to economic management has balanced the Budget and leaves us well placed to respond from a position of strength.
In the back half of last year, the Reserve Bank Governor reminded Australians the fundamentals of the economy were “very strong”. This should give us confidence in our ability to not only meet these challenges, but come out stronger on the other side.
This package of measures is designed to do just that. It is both substantial and considered and will help the nation navigate its way through this difficult period as the impact of the virus evolves.
Josh Frydenberg is the Federal Treasurer.