CANBERRA (BLOOMBERG) – Australia unleashed an additional A$66 billion (S$55.8 billion) in stimulus for the coronavirus-stricken economy, including cash payments of as much as A$100,000 to small businesses, in a second package aimed at averting recession and saving jobs.
The plan will provide A$25.2 billion in support to businesses and not-for-profit charities, Prime Minister Scott Morrison said Sunday (March 22).
It will also partially guarantee loans to support A$40 billion in lending to small and medium-sized firms.
Unemployment benefits will double and the worst-hit workers will be allowed to access pension savings early.
The new measures dwarf the government’s initial A$17.6 billion stimulus package announced on March 12.
As the crisis continues and the economic impact becomes clearer, the government also expects to announce a third fiscal injection as Australia’s economy spirals toward its first recession since 1991.
“There will be more packages, there will be more support,” Mr Morrison said at a press conference at the parliament in Canberra.
“We’ll be supercharging our safety net, we’ll be supporting our most vulnerable.”
All told – including support for the banking system from Australia’s central bank – some A$189 billion is being injected into the domestic economy in an unprecedented release of funds to get through the crisis.
That’s the equivalent of about 10 per cent of Australia’s gross domestic product.
Preparing the country for at least six months of hardship, Mr Morrison said all non-essential travel in Australia should now be canceled.
He urged the country to heed social-distancing advice and warned “more draconian” restrictions were on the way.
“The next few months are going to be a difficult journey,” Mr Morrison said.
“But we all have a role to play to adapt to the changes we’re facing, to cushion the impact of what is happening and to pull together so we can bounce back when we get to the other side.”
The Reserve Bank of Australia cut interest rates to a record 0.25 per cent on Thursday and will aim to keep three-year government bond yields at the same level.
The central bank has also announced a term funding facility of at least A$90 billion for the banking system to support business credit.
In a complementary program, the government is investing up to A$15 billion to help smaller lenders support consumers and businesses.
The new package announced Sunday will be available to businesses with revenue under A$50 million and also some not-for-profit charities.
Firms will get 100 per cent of the tax they withhold from their employees’ salary and wages, with a minimum payment of A$20,000 and maximum support of A$100,000.
The government will also guarantee 50 per cent of loans taken out by firms affected by the outbreak, to be used for working capital.
For the next six months, those eligible to receive income support will receive an extra A$550 each fortnight, on top of their normal payment.
The early release of pension savings will put as much as A$27 billion back into the pockets of working Australians.
Mr Morrison, who has described the coronavirus as a “once in a 100-year type of event,” closed the nation’s borders to non-residents on Friday and has banned indoor gatherings of more than 100 people.
Cases of coronavirus in Australia reached at least 1,098 as of Sunday morning, up 224 from a day earlier.
Mr Morrison’s conservative government is seeking to legislate both its fiscal packages during a unique sitting week in Canberra’s Parliament House from Monday.
Just 90 of the 151 lower-house lawmakers will convene, with support staff stripped back, in a bid to halt the spread of the virus.
The opposition Labour party has indicated it will support the measures, meaning they should become law in the coming week.
When parliament will sit again after that isn’t clear. On Friday, Mr Morrison announced that the annual budget, originally due on May 12, is now scheduled for Oct 6.
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