Prime Minister Scott Morrison on Sunday announced a second stimulus package and acknowledged the economic damage would be far worse than anticipated.
The extra $66 billion brings the giant rescue package to $189 billion, about 10 per cent of Australia’s GDP, to avoid economic catastrophe.
The second bailout package was announced ahead of Stage One restrictions on Sunday night which forces pubs, clubs, casinos, gyms, nightclubs and churches to close for six months.
THE SECOND STIMULUS PACKAGE – $66BILLION
Cash to keep Australians in jobs
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to the amount withheld, up to a maximum payment of $100,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.
This new measure is worth $25.2billion.
It is open to businesses with turnover under $50million and will now also be available to eligible not-for-profit charities
It will benefit around 690,000 businesses employing around 7.8 million people and 30,000 not for profits
Supporting small businesses with loans
A new Coronavirus SME Guarantee Scheme will be able to be accessed by eligible banks and non-bank lenders
The Commonwealth will guarantee 50 per cent of an eligible loan to small businesses that have been impacted by the coronavirus
The Scheme will have the capacity to support lending of $40billion to SMEs
SMEs that have less than $50m turnover per year will be eligible under the Scheme
Loans will be used for working capital purposes and be unsecured and it will be for loans granted within 6 months starting 1 April 2020
The Scheme will apply to new or existing customers of banks and non-bank lenders. It will be repayment free for 6 months
The maximum loan will be $250,000 for a term up to 3 years
It will not apply to re-financing of existing customers. Those already have existing loans that will benefit from the ABA announcement
THE FIRST STIMULUS PACKAGE – $123BILLION
Stimulus payments to households to support growth
· $4.8 billion to provide a one-off $750 stimulus payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
Around half of those that will benefit are pensioners. The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
There will be one payment per eligible recipient. If a person qualifies for the one off payment in multiple ways, they will only receive one payment.
Payments will be from 31 March 2020 on a progressive basis, with over 90 per cent of payments expected to be made by mid-April.
Delivering support for business investment
· $700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
For example, assets that may be able to be immediately written off are a concrete tank for a builder, a tractor for a farming business, and a truck for a delivery business.
· $3.2 billion to back business investment by providing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
These measures start today and will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees or 3 in every 4 workers.
The measures are designed to support business sticking with investment they had planned, and encouraging them to bring investment forward to support economic growth over the short term.
Cash flow assistance for businesses
· $6.7 billion to boost cash flow for employers by up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses.
The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax free.
This measure will benefit around 690,000 businesses employing around 7.8 million people. Businesses will receive payments of 50 per cent of their Business Activity Statements or Installment Activity Statement from 28 April with refunds to then be paid within 14 days.
· $1.3 billion to support small businesses to support the jobs of around 120,000 apprentices and trainees.
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Assistance for severely-affected regions
· $1 billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks.
It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism.
Further plans and measures to support recovery will be designed and delivered in partnership with the affected industries and communities.