The Federal Government has released its second stimulus package, which will see a total of $189 billion injected into the economy to keep businesses in business.
This funding figure includes $66.1 billion of new funding from the latest economic support package.
The package will include assistance for businesses to keep people in a job, regulatory protection and financial support for businesses to stay in business, and support for households including casuals, sole-traders, retirees and people on income support.
Up to $100,000 is available for eligible small and medium sized businesses that employ people, with a minimum payment of $20,000, to help them keep operating, pay the rent and bills, and retain staff.
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 increased from $25,000 to $50,000. Additionally, the minimum payment has been increased from $2000 to $10,000. It will be available from 28 April 2020.
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The Federal Government aims to incentivise businesses to hold on to more of their workers by linking the payments to staff wage tax withholdings. The payments are tax free and will flow automatically through the Australian Taxation Office.
It expects 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 expected to be 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 estimated to cost $31.9 billion over the forward estimates period, including the value of the measure around the first package.
In addition, the Federal Government will establish the Coronavirus SME Guarantee Scheme, which will support small and medium enterprises (SME) to access the working capital needed to get through the impact of the coronavirus.
Under the scheme, the Federal Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. It aims to do so by enhancing lenders’ willingness and ability to provide credit to SMES, with the scheme able to provide up to $40 billion of lending to SMEs.
It aims to complement the reduction in red tape to help SMEs get access to credit faster and the announcement made by Australian banks to support small businesses with existing loans.
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,” Morrison said.
“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.
“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.”
Treasurer Josh Frydenberg said the $189 billion economic support package was the equivalent of 9.7 per cent of GDP.
“The 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,” Frydenberg said.
“These measures build significantly on what we have already announced.
“These extraordinary times demand extraordinary measures.”