The Federal Government has released the second stage of its economic plan for the impact of the coronavirus.
The latest $66.1 billion economic support package will include support for households, assistance for businesses to keep people in a job and regulatory protection and financial support for businesses to stay in business.
The Federal Government will provide up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments are intended to help businesses’ cash flow to keep operating, pay their rent, electricity and other bills and retain staff.
Employers will receive a payment equal to 100 percent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. The minimum payment is also being increased from $2000 up to $10,000. These payments will be available from 28 April 2020.
The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
This measure is expected to benefit around 690,000 businesses employing around 7.8 million people.
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.
This measure is expected to cost $31.9 billion over the forward estimates period, including the value of the measure announced in the first stimulus package.
For regulatory protection and financial support for businesses the Federal Government will establish the Coronavirus SME Guarantee Scheme. This will support small and medium enterprises (SMEs) to get access to working capital to help them through the impact of the virus.
Under the scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. Government support is expected to enhance lenders’ willingness and ability to provide credit to SMEs with the scheme able to support $40 billion of lending to SMEs.
The scheme is aimed to complement the announcement that the Federal Government has made to allow SMEs to get access to credit faster, while also complementing announcements made by Australian banks to support small businesses with existing loans.
For workers, the Federal Government is temporarily expanding eligibility to income support payments and establishing a new limited-time Coronavirus supplement to be paid at a rate of $550 per fortnight. This measure is estimated to cost $14.1 billion over the forward estimates period.
The Prime Minister Scott Morrison said the Federal Government was acting to cushion the blow from the coronavirus for businesses and households to help them get through to the other side of the crisis.
“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,” Mr. Morrison said.
“We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible.”
The Treasurer Josh Frydenberg said the $189 billion economic support package was the equivalent of 9.7 per cent of GDP.
“The Federal Government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months,” Mr. Frydenberg said.
“These extraordinary times demand extraordinary measures.”