Federal Government’s 2nd Economic Response to the Coronavirus
The Government is acting decisively in the national interest to support households and businesses and address the significant economic consequences of the Coronavirus.
The spread of the virus worldwide has broadened and is expected to be more prolonged. Governments, both international and domestic, have announced stricter mitigation measures to slow the spread of the virus, which are having significant economic impacts.
While the full economic effects from the virus remain uncertain, the outlook has deteriorated since the Government’s initial Economic Response announced on 12 March 2020.
As a result, the Federal Government has just announced its second business stimulus package worth $66 billion, meaning a total of $189 billion is being injected into the economy by various arms of the federal government.
The Government has said there will be more stimulus packages to come.
A full economic overview can be found here.
The Federal Government’s economic response is targeting three main areas:
- Support for Individuals and Households
- Support for Businesses
- Supporting the Flow of Credit
Support for Individuals and Households:
This assistance includes income support payments, payments to support households and temporary early releases of superannuation.
- Income support for individuals
- Payments to support households
- Temporary early release of superannuation
- Temporarily reducing superannuation minimum drawdown rates
- Reducing social security deeming rates
Support for Businesses:
The Government is supporting Australian businesses to manage cash flow challenges and retain employees. Assistance includes cash flow support to businesses and temporary measures to provide relief for financially distressed businesses.
- Boosting cash flow for employers
- Temporary relief for financially distressed businesses
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
Supporting the Flow of Credit:
The Government, the Reserve Bank of Australia and the Australian Prudential Regulation Authority have taken coordinated action to ensure the flow of credit in the Australian economy. Timely access to credit is vital for businesses to manage the impacts of the Coronavirus.
- Support for immediate cash flow needs for SMEs
- Quick and efficient access to credit for small business
- Reducing the cost of credit
Points from the Government’s Second Stimulus Package:
- In addition to the $750 stimulus payment for households announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders
- Early release of superannuation – the Government will allow individuals in financial stress (including job seekers, casuals and sole traders) as a result of Covid-19 to access up to $10,000 of their super in 2019-20 and a further $10,000 in 2020-21
- Employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%) with the max payment being increased from $25,000 to $50,000
- Coronavirus SME Guarantee Scheme – the Government will establish the SME Guarantee Scheme which will support small and medium businesses with access to working capital to help them get through the impact – Applications can be made online through the ATO website
- Sole traders will now be included in business relief measures. For example, if a sole trader is still trading and has seen decline in business, they can apply for a $550 a fortnight supplement
- Income recipients will get an additional $550 a fortnight – this includes JobSeeker payment (formerly Newstart), Youth Allowance, Parenting Payment, Farm Household Allowance, Special Benefit.
- All employing small businesses will receive at least $20,000 and larger SMEs can receive up to $100,000
- Retirees requirement to draw down on a minimum of 4% of their super each year has been halved to 2%
- Company directors will have temporary protection against trading while insolvent laws. Government will increase threshold at which creditor can put a company into insolvency from $2,000 to $20,000 and 21 days to 6 months to respond. Personal liability on directors trading while insolvent suspended for six months
An overview of the first stimulus package can be found here.
PLEASE ENSURE ALL MEMBERS OF YOUR TEAM, INCLUDING THOSE WORKING FROM HOME AND ON-SITE CHECK OUT OUR DEDICATED COVID-19 PAGE
The page is a round-up of the latest guidance, support, and announcements from SCA (NSW) on dealing with the COVID-19 outbreak, plus some further guidance and information from Government and other relevant bodies such as WHO.