GRACosway Weekly Wrap Up: Further economic stimulus expected
- The Reserve Bank has dropped the official cash rate to 0.25 per cent in an emergency rate cut, and advised it will undertake quantitative easing to boost the economy.
- PM Scott Morrison declared a human biosecurity emergency and announced a raft of new measures to slow the spread of the coronavirus, including further travel restrictions.
- Australian banks will defer loan repayments for six months for small businesses affected by coronavirus.
- The latest Newspoll reveals the two-party-preferred vote has remained steady at 51-49 in favour of Labor. PM Scott Morrison has seen a bump in his approval rating and leads Opposition Leader Anthony Albanese as preferred PM 42-38.
- Pharmacists will enforce the Government’s direction to limit dispensing and sales of prescriptions and some over-the-counter medicines.
- Australia’s military is on standby to send engineers and health professionals to assist with the coronavirus outbreak response.
- Ratings agency S&P has warned the world will suffer a recession, and has estimated Australian unemployment will reach 7 per cent.
- The Government has issued a directive that Australian schools should remain open at this stage in order to minimise disruption.
- New allegations of war crimes by Australian personnel in Afghanistan have been labelled as “deeply disturbing” by Defence Minister Linda Reynolds.
Australian coronavirus cases surge
The coronavirus outbreak has continued to dominate headlines this week as the number of cases in Australia surged above 700. Prime Minister Scott Morrison declared a human biosecurity emergency on Wednesday and announced new measures to ‘flatten the curve’ and slow the spread of coronavirus in Australia. A ban on non-essential gatherings of more than 100 people is now in place, along with level four travel restrictions and new visitation rules for aged care homes. The Prime Minister urged Australians not to travel overseas, saying “the travel advice to every Australian is do not travel abroad…that is a very clear instruction”.
The PM took aim at hoarders and panic buyers responsible for stripping supermarket shelves bare, labelling their actions as “disappointing”. The PM has also confirmed that schools across the country will remain open at this stage, warning that closures would result in major disruption, job losses and significant impacts on the availability of healthcare workers. On Thursday, the Prime Minister confirmed that Australia will close its borders to all non-citizens and non-residents from 9pm this evening in a further attempt to slow the spread of the virus.
Social distancing in Parliament
A scaled-back Federal Parliament will return next week with only 40 per cent of MPs and staff in an attempt to practice social distancing and prevent further spread of the virus. The move comes after Home Affairs Minister Peter Dutton was diagnosed with coronavirus late last week, along with LNP senators Susan McDonald and Andrew Bragg this week. The PM and Leader of the Opposition Anthony Albanese came to an agreement which will see up to 30 pairs granted for MPs in the House of Representatives, meaning only 60 out of 151 MPs will need to be physically present in Canberra next week. The arrangements are in place to enable the Parliament to pass the $17.6 billion stimulus package announced last week.
Further economic stimulus
The official cash rate has been reduced to a record low 0.25 per cent in an emergency cut by the Reserve Bank of Australia (RBA) on Thursday. The RBA announced it will commence its first ever first-ever quantitative easing program through the purchase of Australian government bonds, while also confirming it will provide a three-year funding facility to deliver cheap loans for Australian banks. Governor Philip Lowe said the bank will hold the cash rate at 0.25 per cent until progress is being made “towards full employment” and it is confident that inflation will be “sustainably within the 2-3 per cent target band”.
The Government is reportedly preparing to release a second stimulus package as the economic impact of the virus continues to be felt across a broad range of industries. Minister for Finance Mathias Cormann said the second package will focus on supporting businesses and workers who are most affected by economic downturn, including those in the hospitality, tourism, events, sports and arts industries. The stimulus is set to be announced before Federal Parliament returns next week.
Lifeline for aviation
On Tuesday, the Government announced a $715 million relief package for the aviation industry, including the waiving of fees backdated to 1 February – an estimated reimbursement of $159 million. The package follows significant pressure on Qantas and Virgin Australia, with both airlines forced to ground almost all international flights and a significant proportion of domestic flights. Qantas CEO Alan Joyce described the virus as the “single biggest shock” ever experienced by the global aviation industry. Minister for Trade Simon Birmingham backed the airlines, saying that a “strong airline sector in Australia is not negotiable”.
A scaled-back Federal Parliament will sit next week to pass the Government’s $17.6 billion coronavirus stimulus package. Elsewhere, Parliament will sit in NSW, SA, Tasmania and the NT.