“This plan is about keeping Australians in jobs,” Prime Minister Scott Morrison told a news conference in Canberra on Thursday, as he put forward a stimulus package worth A$17.6 billion, or US $11.4 billion.
He went on: “This plan is about keeping a business in business and this plan is about ensuring the Australian economy bounces back stronger on the other side of this and, with that, the budget bounces back with it.”
The government will spend 11 billion Australian dollars ($7.1 billion) before June 30, the end of the financial year. The rest is to be spent before July 2021. Parts of the package need parliamentary approval.
Payments to households and businesses
Up to 6.5 million people on government benefits, nearly a quarter of the population, will get a one-off payment of 750 Australian dollars each ($485). Pensioners, the unemployed and recipients of family tax benefits are covered. Morrison said pensioners are “the biggest beneficiaries” and make up around half of the people who will be paid. Another report put the start of those payments at March 31.
Small and medium businesses can receive cash of between 2,000 Australian dollars ($1,294) and 25,000 Australian dollars ($16,184), meant to help pay wages or hire extra staff. The package also subsidises the wages of 120,000 apprentices.
Tourism gets its own fund of 1 billion Australian dollars ($650 million). The sector had been sluggish since the wildfires late the previous year.
Morrison called it “a comprehensive, a well-thought-through, a well-targeted plan, which is designed to support the Australian economy and jobs and businesses through the difficult months ahead.”
Why now
The measures are the first stimulus in Australia since the global financial crisis more than a decade ago, which the country got through without a recession. Morrison’s conservative government is trying to head off the country’s first recession in nearly three decades. Economists expect the widening epidemic to cause a recession in the second quarter, even though only about 120 people in Australia had been infected.
Australia had recorded 127 cases and three deaths. Local health officials were struggling to contain the virus. On Wednesday, Morrison pledged 2.4 billion Australian dollars ($1.6 billion) for the health system, including up to 100 fever clinics in areas of need. The stimulus was announced a day after the World Health Organization described the outbreak as a pandemic for the first time.
Earlier in the month the central bank cut its benchmark rate by a quarter of a percentage point to a record low of 0.5%.
Markets were not calmed. The ASX 200 fell by 3 per cent after the announcement, then by more than 5 per cent once the United States announced a ban on European travel. The spending also likely ends Morrison’s hopes of delivering Australia’s first budget surplus.
Sources
- Australia unveils $11.4B in coronavirus outbreak stimulus
- Australia unveils $11.4 billion stimulus to curb coronavirus impact
