TREASURER JOSH FRYDENBERG AND PRIME MINISTER SCOTT MORRISON. SOURCE: AAP/MICK TSIKAS.
The government has finally dropped its long-awaited coronavirus stimulus package, pledging $17.6 billion to bolster the economy as the illness continues to spread.
The $17.6 billion package is focused on keeping small businesses afloat, and their employees in work, and will be targetted to support the most affected sectors and communities, the government’s statement said.
The government says the package is “temporary, targetted and proportionate”, and is designed to prop the economy up, so it can best recover when the coronavirus crisis subsides.
It includes cash grants of up to $25,000 for small businesses, $750 one-off payments for potential consumers, and a significant temporary extension to the instant asset write-off scheme.
There will also be administrative relief for some tax obligations, including potential deferrals, on a case-by-case basis.
Speaking in an interview with Nine News this morning, Prime Minister Scott Morrison said the cost of the package is equal to about 1% of GDP.
Legislation is set to be drafted this week, he said.
While the measures are intended to be temporary, the Prime Minister suggested it has the potential to be extended, if required.
“We’re in a position to ramp this up should that be required,” he said.
Here’s what we know.
$25,000 payout for small businesses
One of the most significant offerings for small business is a grant payout of up to $25,000 for small-to-medium businesses with employees, costing a total of $6.7 billion.
Businesses with turnover of up to $50 million, that employ staff in the period between January 1 and June 30 2020, will be eligible for the funding.
According to the Australian Financial Review, those that pay income tax on behalf of employees are likely to be eligible for a payment equal to 50% of tax withheld on employees’ salary, to a maximum of $25,000.
Those that pay wages but are not required to pay tax are likely to receive a minimum payment of $2,000.
Crucially, the government says these grants will be issued automatically, based on business activity statements or instalment activity statement from April 28.
Funds will be paid within 14 days, the government said.
Keeping apprentices employed
In a similar measure to keep employees in their roles, the government has pledged $1.3 billion to keep 117,000 apprentices and trainees employed at small businesses.
ABC reports the government will offer SMEs up to $21,000 per apprentice — $7,000 per quarter for the first three quarters of 2020.
Again, the payouts will be equal to 50% of the apprentices’ wages.
“We want to ensure that as we go through these difficult months and quarters ahead, that young people and apprentices will be able to continue,” Morrison reportedly said.
“As a result, we’ll be ensuring that we will provide a wage subsidy which will support 117,000 apprentices right across Australia.”
Instant asset write-off extension
Morrison has also pledged to significantly extend the instant asset write-off for small and medium businesses, in a bid to encourage investment.
Currently, the tax write-off is available for businesses with a turnover of up to $50 million, for purchases of up to $30,000.
That will be extended to include companies with turnover of up to $500 million, and purchases of up to $150,000.
The extension will apply until June 30 2020.
The measure is expected to cost about $700 million, but in the Nine News interview, Morrison said it’s intended to help the economy recover in the future.
“That’s about putting the investment into the economy, so on the other side, the economy bounces back,” he said.
In addition, the government is accelerating depreciation deductions, through a limited 15-month investment incentive.
Until June 30 2021, businesses with a turnover of less than $500 million will be able to deduct an additional 50% of an asset cost in the year the asset was purchased.
Both these measures start today, and are expected to help 3.5 million businesses.
“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,” the release says.
The government has confirmed it will provide one-off payments of $750 to people on Newstart and to pensioners, in order to boost the economy by getting people spending.
The payment is tax-free, and will not count as income.
There is no mention of support for casual workers, although Morrison told Nine News he would “have a bit more to say about that later today”.
The Prime Minister maintained, however, big businesses that employ casual workers have a role to play here too, and suggested state governments may have to step in as well.
Finally, the government will commit $1 billion to support businesses in sectors that have been particularly affected, such as travel and tourism.
This support will include waiving fees and charges for business operating in the Great Barrier Reef Marine Park, and in other national parks, plus assistance in identifying new export markets and supply chains.
There will also be a push to promote domestic tourism, the government says.
This article was updated on March 15 2020.