PM commits an extra $66.1 billion to businesses and households
The Federal Government has announced a third stimulus package targeted at those receiving government benefits and Covid-19 affected business.
Included in the $66.1 billion package is support for Australia's households, and assistance for SMES struggling to pay their employees.
It brings the total injected into the economy by the Government to $189 billion, and follows the $17.6 billion first economic stimulus package, $90 billion from the RBA and $15 billion from the Government to make access to finance easier.
"We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back," says the Prime Minister.
"Our focus is on cushioning the blow and providing hope to every Australian that we will get through this and come out the other side together.
"The next few months are going to be a difficult journey 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."
Support for SMES
In addition to previously announced support for Australian businesses affected by the coronavirus the Government has committed a further $31.9 billion to try and keep employees in jobs.
Eligible SMES can apply for up to $100,000 to employ people, with a minimum payment of $20,000.
Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.
"By linking the payments to business to staff wage tax withholdings, businesses will be incentivised to hold on to more of their workers," says the Federal Government.
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
The Government says this measure will benefit around 690,000 businesses employing around 7.8 million people and around 30,000 not-for-profits.
A Coronavirus SME Guarantee Scheme will also be established under which the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMES.
It comes in conjunction with last week's announcement form the Reserve Bank of Australia of a $90 billion term funding facility intended to reduce the cost of lending.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.
Support for workers and households
The Government will establish a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
This supplement will be paid every fortnight for the next six months and will be paid on top of regular payments already received by those on income support.
This measure is estimated to cost $14.1 billion over the forward estimates period.
In addition to the $750 stimulus payment 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, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
This second payment will be made automatically from 13 July 2020 to around 5 million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners.
Those in financial stress as a result of Covid-19 will be allowed to tap into their superannuation.
Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans' Affairs payments.
CBA to extend $10 billion to small business support
In addition to the Australian Government's SME Guarantee Scheme Commonwealth Bank (ASX: CBA) will make available up to $10 billion of additional unsecured credit to support SMES.
The measure will mean SMES can access an unsecured business loan through the Commonwealth Bank for three years of up to $250,000 at historically low rates.
Interest rates on unsecured small business loans will be up to 500 bps lower than current rates. No interest will apply unless the loan is used, no repayments will be required for six months, and there will be no establishment or monthly account fees.
Australian businesses with less than $50 million turnover are eligible.
"We welcome today's announcement by the Government, which will help hundreds of thousands of small businesses stay afloat and millions of workers keep their jobs over the next six months," says CBA CEO Matt Comyn.
"It will help businesses reopen and help people get back to work following this unprecedented set of circumstances."
Updated at 1:41pm AEDT on 22 March 2020.
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