Economic issues
- Federal, State and Territory response: It’s not easy keeping up with all the economic support spending unveiled by Australian governments in response to COVID-19. Here we attempt to document the spending.
- Total stimulus & support: An estimated $339,485 million or around 17 per cent of GDP has been pledged by Australian governments to help the country deal with the virus crisis.
The trade data is instructive on income flows in the economy and consumer and business activity.
What does it all mean?
- Collectively, Federal, State and Territory governments and the Reserve Bank are doing all that it takes to support Aussie households and businesses get through the global virus crisis (GVC). An estimated $339.5 billion of measures have been announced, equivalent to around 17 per cent of the economy.
- Measures have focussed on payroll tax relief; rent relief; low or no-interest loans; grants to the vulnerable; funding for the health sector; funding for significantly-affected businesses and sectors such as airlines, tourism and education.
- While much success has been achieved in ‘flattening the curve’ – reducing the number of confirmed COVID-19 cases – and reducing active cases – more progress is required. And that may mean more funds will need to be advanced by government. Not just in the survival stage but also the recovery phase.
- The National Cabinet met with the Reserve Bank Governor and Secretary to the Treasury on April 16. The Prime Minister noted:
- “At those briefings it was reinforced again to the National Cabinet, on a point that we strongly concur with, the need to synchronise our health and economic responses to the virus. We must consider these responses conjointly and understand the impacts of each, whether that’s in the modelling work that we’re doing, with the responses and measures we’re putting in place, this has to be considered together and understood together.”
- “They also highlighted, though, the need to ensure that on the other side of the virus, as we make our road out, that any sense of business-as-usual when it comes to the policy frameworks that we had prior to the election will need to be reconsidered on the other side to ensure that we can achieve the growth that will be necessary in our economy to get people back into work, to get our economy back on track.”
What do the figures show?
Federal Government & Reserve Bank
- March 12: First economic package $17.6 billion (support cash flow and investment spending of business and provide payments to vulnerable Australians)
- March 19: Reserve Bank monetary package includes $90 billion three-year funding facility and $15 billion from the Government to improve access to finance.
- March 22: Second package $66 billion (keep business in business and keep workers in jobs)
- March 30: Third package $130 billion (includes new wage subsidy ‘JobKeeper’ program)
Also
- March 18: $715 million airlines package
- March 28: Regional Airlines Network Support $198 million
- March 20: $444.6 million aged care support
- April 12: Higher Education relief Package
- April 13: $3 million support frontline health workers
- April 16: $165 million for airlines to maintain critical air routes
NSW
- March 17: $2.3 billion economic stimulus package ($1.6bn tax cuts, job creation; $700m for health)
- March 27: 2md stage economic package including $1 billion fund for jobs
Also
- April 2: $750 million Small Business Support Fund (grants up to $10,000 for small business
- April 7: $100 million to support health workers
- April 9: $51 million free pre-school for six months
- April 13: $440 million land tax break
- April 17: $82 million for council childcare centres
- April 17: $50 million fee waivers for trades and construction sector
Victoria
- March 21: $1.7 billion Economic Survival package (includes $500m Business Support Fund)
- April 1: $1.3 billion to create 4,000 ICU beds, equipment, capital works and training
Also
- March 15: $100 million for elective surgery
- March 19: $437 million health fundin
- April 5: $45 million for sessional kindergartens
- April 15: $500 million support for residential & commercial tenancies
- April 16: $24.5 million emergency funding
- April 17: $3 million family violence
- April 17: $260.8 million emergency funding for TAFE
Queensland
- March 24: $4 billion package (support health, jobs, households & business)
Also
- March 2: payroll tax deferral
- March 17: $500 million in loans to support workers; extend payroll tax deferral
- March 25: $24.7 million support for vulnerable
- April 6: $17.5 million to help health workers self-isolate
- April 8: $5.5 million domestic violence
- April 12: $17 million relief package (including free community kindergarten)
- April 14: $28 million for community based health service groups
- April 18: Government offers $200 million for national support package for Virgin Airlines
South Australia
- March 11: $350 million package including bringing forward infrastructure projects
- March 26: Second package $650 million Jobs Rescue Package
Also
- March 16: $50 million for local jobs
- March 19: $12 million skills package
- March 29: Fast tracking infrastructure
- April 3: Fee relief tourism businesses; Defer licence fees for minerals & petroleum sector
- April 4: $16 million for training providers
- April 5: $1.6 million for vulnerable
- April 9: $190 million funded from Jobs Rescue Package ($10,000 grants for small business)
- April 10: $5.2 million for taxi industry
Western Australia
- March 16: $607 million supports households and small business
- March 31: $1 billion economic & health relief package (includes $500m health & front line service delivery)
Also
- March 30: $159 million rent relief for small business
- April 8: $91.2 million police package
Tasmania
- March 18: $420 million Support & Stimulus package
- March 26: $565 million Social & Economic Support package
Also
- April 8: Round 2 of emergency grants open
- April 11: Boosted Digital Ready for Business grants to $400,000
- April 16: school levies refunded
ACT
- March 20: $137 million first phase includes rates rebate and commercial rates relief
- April 2: $214 million second phase of $351 million Economic Survival package
Northern Territory
- March 18: $60 million economic stimulus package includes home & business improvement
- March 24: $65 million (includes $50 million Small Business Survival plan) as part of Jobs, Rescue & Recovery plan
- April 8: $180 million Business Relief for Payroll, Power, Rent and Rates
- April 16: second stage of Small Business survival plan (includes $20m for operational costs)
- April 16: $30m home improvement plan doubled
NT Government says now investing $300 million to protect the economy and save jobs
What is the size of the stimulus
- The estimated size of all the measures announced to date has been estimated at $339,485 million. The estimate will need to be reviewed to ensure all the announcements represent ‘new’ money and weren’t covered in prior releases. Some of the measures are not costed. The list may not be exhaustive.
What are the implications for investors?
- Australian governments have stepped up to the plate, providing extra funds to support businesses, households and the health sector on almost a daily basis.
- While the stimulus has been significant, the measures have largely been in line with the advisable criteria of targeted, scalable and temporary.
- It is premature to focus on how the measures will be paid. Far more important is the aim of getting the country through the crisis and then getting to the point that restrictions can be eased. The ultimate goal is to retain as many businesses as possible, for people to retain jobs and to protect the most vulnerable in society.
- Australian governments went into the crisis with finances in good shape. The aim will be to get the economy growing again so the revenue can be generated to meet the cost of the support measures.
