March 12, 2020 07:27:56
Businesses will get up to $25,000 and instant tax relief, while welfare recipients will be eligible for one-off cash payments as part of the Government’s widely-anticipated multi-billion dollar coronavirus stimulus package.
About 700,000 businesses will be able to get cash payments of between $2,000 and $25,000The ABC understands there will also be cash payments targeted at welfare recipients to keep the economy firingThe move would be sensitive given the debate surrounding the Rudd Government’s global financial crisis cash-stimulus payments
The ABC understands the support package will be worth more than $15 billion, spread over this financial year and next.
The Prime Minister Scott Morrison and Treasurer Josh Frydenberg will unveil the details of their entire stimulus plan today, to try to stop the economy sliding into recession.
The Government wants its package to be temporary and offer an immediate boost to the economy, rather than making structural changes to the budget.
Some changes will start immediately, with businesses able to access an expanded instant asset write-off from today, to try to get them spending — and money flowing — as soon as possible.
At the moment, small businesses with an annual turnover of less than $50 million can claim tax deductions of up to $30,000 for things like vehicles, tools and office equipment.
But the increase will now apply to much bigger businesses — with a turnover of up to $500 million — and for much bigger items worth up to $150,000.
Mr Morrison said the package would focus on keeping businesses open and people in work.
“Australia is not immune to the global coronavirus challenge but we have already taken steps to prepare for this looming international economic crisis,” he said.
“The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected.”
Cash stimulus to fire up economy
Nearly 700,000 small to medium businesses will also be able to get cash payments of between $2,000 and $25,000 to help pay wages or hire extra staff.
The measure is the largest part of the package, and is estimated to cost $6.7 billion.
The ABC also understands there will be cash payments targeted at welfare recipients to keep the economy firing.
It would be a politically sensitive move because of the debate surrounding the Rudd Government’s decision to hand out cash-stimulus payments during the global financial crisis more than a decade ago.
The Coalition, which included Mr Morrison, attacked Labor’s approach during the global financial crisis in 2008, saying it had blown the surplus by dishing out overly generous payments.
Labor argued its package kept the nation out of recession.
The Coalition supported the first round in Parliament — which included the cash payments — but rejected the second.
Former Labor Treasurer and ALP President Wayne Swan took a pre-emptive jab on Twitter, saying “Do you trust a man who has spent 12 years saying stimulus packages don’t work to be able to deliver one?”
Wayne Swan: Do you trust a man who has spent 12 years saying stimulus packages don’t work to be able to deliver one?
Chief economist at BIS Oxford Economics, Sarah Hunter, said cash payments to people on welfare payments like the pension or Newstart would be an effective way of stimulating the economy.
“They’re more likely to spend money that’s transferred to them than people on higher incomes,” she said.
“And that’s for obvious reasons, because they’re already on a low income and so they have to use the majority of the pay that they have, the income they have, for funding everyday living expenses.”
Australian Council of Social Service CEO Cassandra Goldie said welfare recipients would welcome a cash boost but argued the rate of Newstart needed to be increased as well.
“We don’t need a quick fix. What we do need is to build confidence over the medium term,” she said.
“The money will be spent but it won’t be enough, it certainly won’t be enough for people who are now in many cases facing deep concern of long term unemployment with the kind of economic conditions that we appear to be facing.”
Billions for apprentices and healthcare costs
Ahead of today’s stimulus announcement, Mr Morrison revealed the package will also include $1.3 billion in support payments to keep almost 120,000 apprentices employed.
Canberra carpenter Ben McGeechan said he would appreciate any extra help to keep his employees on.
He said he had already noticed a downturn in the construction industry, as coronavirus started impacting on global supply chains and local confidence levels.
“From your mum and dad, clientele, through to government departments and things like that, absolutely, I think people will be keeping their pennies close to them in these uncertain times,” he said.
“Being so unprecedented there’s no real end point at the moment, it’s hard to tell where it will take us and what the long term effects are going to be.”
The Government has also announced it would spend $2.4 billion on healthcare costs associated with the disease.
The move will see up to 100 coronavirus fever clinics set-up, and a new Medicare item created to deliver health advice remotely.
The Government has indicated the response will be “scalable”, leaving it open to delivering a second stimulus package, like the Rudd Government did during the global financial crisis.
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March 12, 2020 06:02:31