Morrison Government announces 2nd economic support package

Prime Minister Scott Morrison says due to the coronavirus his government needs to have economic support measures in place for at least the next six months. File picture

THE federal government has today announced a second economic support package, which the Prime Minister Scott Morrison said was about supercharging the safety net for Australians during the coronavirus crisis.

Mr Morrison said the medical advice was very clear and there was no quick solution.

“We have to steel ourselves for at least the next six months and the measures that we put in place we need to be prepared to carry on for at least the next six months.’’

Treasurer Josh Frydenberg said the $66 billion package would support households, including casuals, sole traders, retirees and those on income support.

“Since the government announced its first stimulus package just over a week ago, the global and the domestic economic environment has deteriorated,’’ he said.

“We now expect the economic shock to be deeper, wider and longer.

“Every arm of government and industry is working to keep Australians in jobs and businesses in business and to build a bridge to recovery on the other side.’’

Mr Frydenberg said the package would support households, including casuals, sole traders, retirees and those on income support.

“It will provide assistance for businesses to keep people in a job and it will provide regulatory protection and financial support for businesses to stay in business.

“Today, the government is announcing the doubling of the Jobseeker Allowance, formerly known as Newstart, through the introduction of a temporary coronavirus supplement.

“The government will also waive the assets test and waiting periods for the Jobseeker Allowance, allowing more Australians to more quickly access the support that they need.

“The coronavirus supplement will provide an additional $550 a fortnight on top of the existing jobseeker or Newstart payment and will be available to sole traders and casual workers who meet the income test.

“This means anyone eligible for the maximum jobseeker payment will now receive more than $1100 a fortnight, effectively doubling the jobseeker allowance.

“In the first package on March 12, we announced a $750 payment for Australians on income support.

“Today, we announce that from July 13, a further $750 payment to those on income support who are not eligible for the coronavirus supplement.

“This includes those receiving the age pension, the carer’s allowance, family tax benefits and the Commonwealth Seniors Health Card – in total, 5.2 million Australians.’’

Mr Frydenberg said the government was also reducing the deeming rates by a further quarter of a per cent to reflect the recent Reserve Bank interest rate cut, which would benefit more than 900,000 social security recipients on income-tested support.

“Our economic response will allow those Australians who are in financial stress as a result of the coronavirus to access more of their own money in superannuation,’’ he said.

“From April, those affected will gain access to their superannuation capped at $10,000 this financial year and a further $10,000 next financial year.

“These withdrawals will be tax free –  and available to those who are eligible for the coronavirus supplement, as well as sole traders who have seen their hours worked or income fall by 20 per cent or more as a result of the coronavirus.

“So if you’re a sole trader or you’re a casual and you’ve seen your income or your hours worked fall by 20 per cent or more as a result of the coronavirus, you will be able to get early access to your superannuation.

“Applications will be made online through a simple declaration to the tax office.’’

The government is also giving retirees more flexibility over their superannuation.

“Currently, retirees are required to draw down a minimum of 4 per cent a year from their superannuation, a number that increases with their age,’’ he said.

“The government is halving this requirement to 2 per cent for this year and for next year, to give retirees more discretion over the management of their assets.’’

Mr Frydenberg said the second part of the package was a massive scaling up of support for small and medium sized businesses across the country.

“We are increasing cash payments to SMEs to boost their cash flow and to keep their workers employed.

“All employing small businesses will receive at least $20,000 and some of the larger SMEs will receive up to $100,000.

“And we are extending this measure to around 30,000 not-for-profit organisations, which have an annual turnover of less than $50 million.

“This will be a lifeline for hundreds of thousands of employers like the local hairdresser, the local cafe, the local mechanic whose income has been significantly reduced over this difficult period.

“This is the single largest measure in this second package, and together with the first initiative in the first package for small businesses is worth $31.9b in total.

“This payment will be automatically paid through the tax system largely over the next six months with the first payment after April 28.

“No new forms will be required from Australian small and medium sized businesses.”

He said during the course of the past week, $105b was being injected into the financial system by the government and the Reserve Bank of Australia, the purpose of which was to lower the cost and increase the availability of credit, particularly to smaller, medium sized businesses.

“Today, the government is going one step further and is guaranteeing in a 50-50 partnership with the banks and other lenders, more lending to Australia’s small and medium sized businesses,’’ he said.

“This $40b scheme, which will start in early April, will provide loans of up to $250,000 for up to three years for a business with a turnover of less than $50m.

“No repayments will be required for the first six months.

“These will be unsecured loans and they will help build a bridge for small and medium sized businesses to the other side of the coronavirus, and I urge small businesses to go and talk to their bank about these new opportunities that are available.

“These funds will provide hope and confidence to a vitally important sector and together with the red tape reduction for SME lending announced on Friday, more credit will be coming their way.’’

The third part of the Morrison Government’s package is designed provide a regulatory shield for what are otherwise profitable and viable businesses that find themselves under severe financial pressure as a result of the coronavirus.

“Now is the time for more flexibility in insolvency and bankruptcy laws to keep these businesses alive and to trade through this period,’’ he said.

“The government is proposing to increase the threshold at which a creditor can take action to initiate insolvency or bankruptcy from as low as $2000 today to $20,000 and giving companies and individuals six months instead of 21 days to respond.

“We will also provide relief from directors, from personal liability, where the company is trading while insolvent.

“This relief will be provided over the next six months and will be vital to helping companies get through this period.

“As a result of the health related restrictions being put in place to reduce the impact of the coronavirus, it will not be possible for many companies to comply with their obligations under the Corporations Act, for example, holding general meetings in person.

“A temporary six-month power will be provided to me as the Treasurer to deal with these situations as they arise.’’