Australia Unveils Stage Two Economic Package Worth A$66.1b

Australia Unveils Stage Two Economic Package Worth A$66.1b

Including the new package, a total A$189bn is being injected into the economy by ‘all arms of the government’ to ‘help build a bridge to recovery’.

The Australian government has announced a second stage stimulus package worth AUD 66.1 billion (USD 38.5 billion) to cushion the economic impact of the coronavirus and “help build a bridge to recovery”.

The first stage package was announced earlier this month, containing AUD 11.4 billion in funding to provide cash for low-income earners, tax-free cash payments for companies, wage subsidies for apprentices, among others.

Also announced this month was AUD 90 billion from the RBA (Reserve Bank of Australia) and AUD 15 billion from the government to deliver easier access to finance.

Including the new package, a total AUD 189 billion (about 9.7% of GDP) is being injected into the economy by “all arms of the government in order to keep Australians in work and businesses in business”.

“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” Prime Minister Scott Morrison said, announcing the new measures.

“These extraordinary times demand extraordinary measures.”

The second stage economic package includes:

Support for workers and households

expanding eligibility to income support payments and establishing a new coronavirus supplement to be paid at a rate of AUD 550 per fortnight for six months (total cost AUD 14.1 billion)
providing a further AUD 750 payment to around 5 million social security, veteran and other income support recipients and eligible concession card holders (total cost AUD 4 billion)
allowing individuals in financial stress to access (tax-free) up to AUD 10,000 of their superannuation in 2019-20 and a further AUD 10,000 in 2020-21 (total cost AUD 1.2 billion)
reducing superannuation minimum drawdown requirements for account based pensions and similar products by 50 percent for 2019-20 and 2020-21
reducing social security deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA, benefitting around 900,000 income support recipients, including Age Pensioners (total cost AUD 876 million)

Assistance for businesses to keep people in a job

 

providing up to AUD 100,000 to eligible SMEs, and not‑for-profits (including charities) that employ people, with a minimum payment of AUD 20,000, to boost cash flow so they can keep operating and retain staff
raising the (tax-free) cash payment from the first package to 100 percent of salary and wages withheld (up from 50 percent), with the maximum payment being increased from AUD 25,000 to AUD 50,000, and the minimum payment increased from AUD 2,000 to AUD 10,000 (total cost AUD 31.9 billion)

Regulatory protection and financial support for businesses to stay in business

establishing the ‘Coronavirus SME Guarantee Scheme’ to help SMEs access working capital by guaranteeing up to AUD 20 billion (representing 50 percent) of new loans issued by eligible lenders, in complement to measures announced by banks to assist SMEs with financing
providing temporary relief for financially distressed businesses by raising the threshold at which creditors can issue a statutory demand, shielding directors from personal liability for trading while insolvent, and other measures
providing up to AUD 715 million in support for Australian airlines and airports to ensure the aviation sector receives timely cash flow

The full list of measures is available here.

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