In response to the coronavirus pandemic, the federal government has announced a $17.6bn economic stimulus package, equivalent to 0.9% of GDP.
The package is “front loaded” to ensure as much money as possible flows into the economy as quickly as possible, with $11bn of the package to be “out the door” by June.
There are four elements of the stimulus package targeted at different areas of the economy, but the Coalition says it may spend more “if more is needed”.
Who gets household stimulus payments?
Around 6.5 million lower income Australians will receive a one-off $750 payment aimed at boosting domestic demand in the economy, costing the budget $4.76bn.
The payment will be made to all social security, veteran and other income support recipients and eligible concession card holders. This includes those on Newstart, those on a seniors card, and families receiving family tax benefits.
Around half of those that will benefit are pensioners.
What if I get more than one social security payment? Will I get more?
No. There will be one $750 payment per eligible recipient.
The payment will be tax-free and will not count as income for social security, farm household allowance and veteran payments.
When will I get it?
The payment will be made from 31 March this year.
What if I am an employee and not receiving any social security benefits? Will I get anything?
No. The government has focused most of the package on supporting business, with wage subsidies for small and medium-sized business and support for apprentices.
It has targeted the household stimulus at low-income earners, as they are most likely to spend it.
What does business get?
Small and medium-sized businesses will receive up to $25,000 to cover the costs of employee wages and salaries, paid by the Australian Taxation Office based on tax withheld.
This measure will cost $6.7bn and will happen automatically based on the business activity statements lodged by business.
About 690,000 businesses employing around 7.8 million people are expected to be eligible for this payment.
What about apprentices?
Again, the government has focused its funding to employers, with the aim to keep people in jobs.
This will see $1.2bn made available as a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020.
Where a small business is not able to retain an apprentice, the subsidy will be made available to a new employer that employs that apprentice, whether that is a large business or a registered training organisation.
How many people will that help?
The government estimates that up to 70,000 small businesses will access the incentive to support around 117,000 apprentices.
What if I am a sole trader? Will I get anything?
No. The government says those who don’t employ anyone will benefit indirectly from the money flowing to low-income earners that they expect will quickly enter the economy. They will also be able to access business investment incentives.
What are the business investment incentives?
The government is allocating $3.9bn in incentives to encourage businesses to spend.
This includes increasing the instant asset write-off, by lifting the threshold to $150,000 (from $30,000) – and making more businesses eligible to use it.
It will also introduce a time-limited 15-month incentive to invest, by accelerating depreciation deductions.
Who is eligible and how do these incentives work?
Businesses with a turnover of less than $500m will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
The investment measures are expected to support more than 3.5 million businesses (over 99% of businesses) employing more than 9.7 million employees.
What is the point of this?
The government wants business to keep spending by offering incentives to buy things such as cars and industrial equipment. The aim is to bring forward planned spending in the economy to help stave off recession and hopefully boost consumption to ensure people stay in work.
What is the fund for severely affected regions?
The government has also announced a $1bn fund to support regions most significantly affected by the coronavirus outbreak.
It says that those “disproportionately affected” include those heavily reliant on industries such as tourism, agriculture and education.
How will this be spent? Can I apply to the fund?
The government says details still need to be nutted out with the states, but has outlined a number of things that it will be used for.
First, it will be used to waive fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and for waiving entry fees for commonwealth national parks.
It will also include additional assistance to help businesses identify alternative export markets or supply chains.
Targeted measures will also be developed to further promote domestic tourism.
The Australian Taxation Office is also providing administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis.
The ATO will set up a temporary shop front in Cairns within the next few weeks with dedicated staff specialising in assisting small business.
In addition, it will consider ways to enhance its presence in other significantly affected regions, making it easier for people to apply for relief. The ATO is considering further temporary shopfronts and face-to-face options.
When asked how the fund would work, the prime minister, Scott Morrison, said he envisaged that affected small businesses may be able to access grants similar to those provided to businesses in bushfire-affected regions.
When will this fund be operational?
The fund will be discussed with state and territory leaders at a meeting of the Council of Australian Governments on Friday, with money to be spent “as soon as practicable”, according to Treasury.
Is that it?
For now, yes. But the government is flagging that more stimulus may be necessary, with most of the measures “scaleable”.
Morrison has flagged that the package could be updated in the May budget, depending on how the coronavirus plays out, and how severely the economy is affected as a result.