Federal Government announces second economic support package
22 March 2020
Prime Minister Scott Morrison and Treasurer Josh Frydenberg have today announced a second economic support package totalling $66.1 billion. The PM said the Government’s priority is to keep Australians in work, and the new measures were about seeing Australia through the “next six months or longer” and “cushioning the blow” of the impact of the virus.
The Stimulus consists of three parts:
1. Support for workers and households:
- $14.1 billion for the Coronavirus supplement – comprising a 6-month expansion of support payments. Services Australia will hire 5,000 staff to facilitate the delivery of the new measures.
- $4 billion in payments to support households – for those not eligible for the Coronavirus supplement, a further $750 payment to households will be made from 13 July 2020 to those receiving the aged pension and veteran and other support payments.
- $1.2 billion to release superannuation – members will be able to access $10,000 in 2019-20 and $10,000 from the superannuation in 2020-21. No tax will be paid on these withdrawals, and they will not affect social security eligibility. The Government will also temporarily reduce minimum draw down rates to 2 per cent (from 4 per cent) for those presently drawing on their superannuation, to enable more flexibility for retirees.
- $876 million to reduce social security deeming rates – in line with recent reduction in the interest rates. The reduction of 0.25 per cent reflects the latest rate reductions by the Reserve Bank.
2. Assistance for businesses to keep people in a job:
- $31.9 billion over the forward estimates to boost cash flow for small businesses – from 28 April a minimum payment of $20,000 will be provided through the ATO to 690,000 small businesses and 30,000 not-for-profits and charities which employ 7.8 million people. The total figure of $31.9 billion incorporates previous small business support measures announced earlier this month.
3. Regulatory protection and financial support for businesses to stay in business:
- $20 billion for the SME Guarantee Scheme – the Federal Government will underwrite up to $20 billion worth of loans as a 50 per cent guarantee to support lending of up to $40 billion for small to mid-size enterprises from bank and non-bank lenders. These loans will be capped at $250,000 each.
- The Government will provide the Treasurer a temporary 6-month power to exempt – at his discretion – companies unable to comply with requirements under Corporations Act. This includes the requirement to hold AGMs in person.
- The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company, and the time companies have to respond to that demand. The Government will also provide temporary relief for directors from any personal liability for trading while insolvent.
The new measures take Australia’s total economic assistance package to $189 billion, or the equivalent of 9.7 per cent of Australia’s GDP, including $17.6 billion from the Government’s first stimulus package, $90 billion from the Reserve Bank and $15 billion from the Government to deliver access to finance. The Government has also signalled further stimulus to be announced over coming weeks. In announcing the new funding, Treasurer Josh Frydenberg warned the global economic situation deteriorated. Mr Frydenberg said the impact to the global economy will be “wider, longer and deeper” than previously expected.
The PM also discouraged all non-essential domestic travel within Australia, and announced the next meeting of the National Cabinet would be brought forward to this evening, where stricter social distancing actions will be considered by State and Territory leaders.
The Prime Minister warned the Government is not able to prevent all of the hardships which will be experienced by Australians and, once again, criticised the gathering at Bondi Beach yesterday and warned State Premiers and Chief Ministers may have to take “far more draconian measures” to enforce social distancing and said, “more stronger measures will be coming”.
The Prime Minister also suggested that – following this week of reduced sitting – it may be another 6 months before the Parliament resumes.
Further information on today’s announcement is available from Treasury here.