Morrison Government’s Next Major Fiscal Stimulus – How are Things Panning Out?

Australia has so far confirmed more than 450 coronavirus cases and five deaths due to the pandemic, raising concerns that the nation can become the next Italy if the spread of the disease is not controlled.

In an effort to offset the damage being done to employment and businesses from the pandemic, the Morrison government recently unveiled $17.6 billion stimulus package last week, in addition to its earlier $2.4 billion boost to health services. The stimulus package which was announced to keep the country out of a recession, mostly targeted welfare recipients, including pensioners and small and medium enterprises or businesses.

However, the package failed to curb panic selling in the financial markets, resulting in a sharp fall of 9.7 per cent in the S&P/ASX 200 at the close on 16^th March 2020.

Government’s Second Major Stimulus Package on its Way

Now, the government is set to announce its second-round of stimulus package for sectors that are bearing the brunt of the economic shock sparked by the pandemic like tourism, events, sport, airlines, and the arts. The government is planning to add a fresh suite of measures to its existing $17.6 billion package this time.

The government is seeking unprecedented measures to aid the nation through the spread of the pandemic. Canberra has also accelerated efforts to curb the spread of the coronavirus, taking several actions including the cancellation of non-essential gatherings of 500 people.

Recently, the Australian Prime Minister has issued an order that any organised non-essential gatherings of over 500 people will stand cancelled. However, this cancellation will not be extended to universities, public transport, schools or airports. It’s a precautionary step taken by the government to minimise the impact of COVID-19 on the people’s health. Moreover, Australians have been advised to reconsider their need to undertake international travel at this moment.

The government has also formulated a new national cabinet, comprising federal, state and territory leaders, which will offer consistency of decision-making and advice. The move has been taken to evaluate the nation’s response to coronavirus.

As the government is gearing up for the second major stimulus package, experts advise the government to announce fiscal stimulus worth 4 per cent of the GDP to prevent a recession. The government’s initial stimulus equated to 0.9 per cent of GDP.

Besides the federal government, the state and territory leaders have also beefed up their efforts to contain the spread of the coronavirus, by announcing stimulus packages, as discussed below:

NT Government Declared $60 million Stimulus Package

The Northern Territory (NT) government has also recently set aside $60 million stimulus package to protect the residents from the profound economic impacts of the pandemic.

Under the state government’s scheme, owners of investment and residential properties will receive a grant of $6,000 for renovations if they contribute or pay $2,000 of their personal money. Moreover, eligible businesses will receive a grant of $10,000 for upgrades, and an additional $10,000 if they contribute or pay $10,000 of their own money.

The government’s Jobs Rescue and Recovery Package is targeted to avert widespread job losses across the NT. Moreover, the state government has declared a home improvement scheme, under which homeowners can spend $1,000 and get a renovation grant of $4,000.

NSW Government Pumped $2.3 billion Economic Stimulus

Recently, the New South Wales or NSW government has also announced a $2.3 billion worth stimulus package to protect jobs and communities amidst COVID-19 pandemic over the coming six months.

The package includes $700 million for healthcare funding, targeted to assist in planning for additional COVID-19 testing, doubling ICU capacity, putting forth elective surgeries to private hospitals and establishing acute respiratory clinics.

Moreover, the government’s package focuses on supporting businesses and jobs, for which it has announced:

• $450 million - waiving payroll tax liability for companies with payroll of up to $10 million
• $56 million – putting forth the next round of payroll tax cuts
• $80 million – waiving charges and fees for small businesses
• $250 million – employing extra cleaners of public infrastructure
• Over $250 million – putting forth the maintenance on public assets
• $500 million – bringing forward maintenance and capital works

The government’s package seems to strengthen the health system and support in securing jobs during challenging times.

Tasmania $420 million Stimulus Package Has No Specific Tax-Related Measures

The Tasmanian Government has also announced a stimulus package worth $420 million in an economic response to the global pandemic. The government will offer one-off emergency relief payments worth $250 for people and up to $1,000 for families that need to be self-isolated by public health.

The government has also planned to provide $1 million for accommodation for front line workers in situations where the members of their family are not well. Moreover, $1 million has been allocated for families and individuals that have been placed on quarantine to home but are not able to go back to their regular residential place owing to self-isolation measures.

Besides these measures, the government has decided to offer $20 million in interest-free loans to businesses in the tourism, hospitality, exports and seafood sectors. In addition, $50m in interest-free loans will be provided over three years for local councils to renovate and upgrade tourism assets while improving employment.

Western Australia is No Behind! Announced $607 million Stimulus Package

The West Australian (WA) Government has also declared a $607 million stimulus package to prevent the adverse effects of the coronavirus outbreak. The government’s package is focused on supporting pensioners, households and small businesses.

Under the package, a freeze will be put on household charges and fees, including motor vehicle charges, water, electricity, public transport fares and the emergency services levy. Also, $402 million allotted in the Budget 2020-21 will go towards compensating for the freeze.

The package also incorporates the following allocations:

• $91 million – doubling the Energy Assistance Package in 2020-21
• $114 million – supporting WA’s small and medium businesses
• One-off grant of $17,500 for payroll tax paying businesses with payroll of $1 million to $4 million

In addition, the government has brought forward $1 million payroll tax threshold by six months to 1^st July 2020 and has allowed small and medium sized businesses impacted by coronavirus to apply to defer payment of their payroll tax for 2019-20 until 21^st July 2020.

In short, the Australian governments, whether at state, federal or territory, are leaving no stone unturned to stave off the economic shocks of the coronavirus pandemic. From small and medium businesses to families and individuals, the governments are stepping up with extraordinary measures for this challenging phase.