Scott Morrison will jettison the budget surplus in an attempt to recession-proof the Australian economy with a wage subsidy for apprentices, a cash splash for welfare recipients, and tax breaks for small businesses.
The New Daily has confirmed the Prime Minister’s coronavirus stimulus plan will wipe out the forecast $5 billion surplus, sending the promised “back in black” budget back into the red.
Small businesses will also secure more generous instant asset write-off changes that will apply from Thursday until July 1 to encourage immediate investment.
Eligible employers with a turnover under $50 million will also secure up to $25,000 in tax-free payments to help cash flow at a cost to the budget of $6.7 billion over the forward estimates.
Any small business that withholds tax from the Australian Taxation Office on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
Warning there are predictions that the coronavirus will wipe 0.5 percentage points from Australia’s GDP in the March quarter, the Prime Minister will argue action is needed but insist the nation is “well placed” to manage the economic shock from the coronavirus.
“We’ve balanced the budget and managed our economy, so we can now use this to protect the health, wellbeing and livelihoods of Australians,” Mr Morrison said.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly.”
He said the various actions would protect the jobs of 120,000 apprentice tradies and trainees, and assist about 690,000 small and medium employers.
The measures will include wage subsidies of $7000 a quarter for each apprentice to retain existing trainees or to re-employ those who lose their jobs because of any coronavirus downturn.
Employers will secure a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage from January 1 to September 30.
Eligible businesses will be those with 20 full-time employees or less, but larger employees can also benefit if they re-engage an eligible out-of-trade apprentice or trainee.
The apprentice or trainee must have already been in training with a small business as of March 1.
Employers can register for the $1.3 billion subsidy plan from April 2.
Treasurer Josh Frydenberg said the measures will be temporary and would not repeat the “mistakes” of the Rudd government during the global financial crisis.
“In our response, we have been very careful not to repeat the mistakes of previous stimulus programs and not undermine the structural integrity of the budget,” Mr Frydenberg said.
“By acting decisively, this package will put Australia in the strongest possible position to deal with the economic challenges we face and to make sure our economy bounces back even stronger.”
Pensioners and Newstart recipients could also secure a one-off $500 cash splash to help protect the economy from the impact of the coronavirus and a recession, Sky News reported on Wednesday.
That’s about half of the $900 handout that PM Kevin Rudd used to fight the global financial crisis in 2009 and avoid a recession.
Asked on Wednesday if pensioners could expect a one-off cash splash, Mr Morrison said he was closely examining options for using the welfare system to deliver cash, and would announce more on Thursday.
Morrison has spent the last decade ridiculing our government’s stimulus strategy. Until now that is. When with absolute hypocrisy he embraces it. The uncomfortable truth is that when economic crises arise, responsible governments must respond. We did. https://t.co/46aM5wlNPk
— Kevin Rudd (@MrKRudd) March 10, 2020
Mr Rudd accused the government of hypocrisy because it has repeatedly rubbished his strategy of “go hard, go early and go households” during the GFC.
“In his belated response to the coronavirus crisis, Prime Minister Scott Morrison’s stated strategy to date seems clear. It’s that ‘he is not me’,” Mr Rudd said.
“Indeed, whenever he’s asked why he suddenly seems so interested in the dreaded ‘S’ word – stimulus – he protests ‘it’s not a Rudd stimulus’.
“Methinks he doth protest too much.
“I must confess I’m pleased about the distinction. That’s because I have no interest in being associated with Morrison’s tardy response to the public health and economic impact of the current crisis.”
The Prime Minister and Treasurer have previously flagged they are reconsidering the deeming rate, which determines access to the pension and part-pension, in light of record-low interest rates.
The stimulus package to be announced on Thursday is also expected to include significant funding for aged-care facilities caring for seniors, who are most at risk from the coronavirus.
Mr Morrison also said on Wednesday Australia would close its borders to travellers from Italy, extending the restrictions already in place for travellers from China, Iran, and South Korea.
They will remain until health authorities determine it is safe to lift them.
Australian citizens or permanent residents returning from those countries will be allowed into the country but will have to self-isolate for 14 days.