Prime Minister Scott Morrison has announced a $17.6 billion stimulus package in response to the coronavirus outbreak. While there have been a limited number of cases in Australia so far, health advice suggests that the virus will continue to spread. The outbreak will not only affect people’s health but also have significant economic implications. While there remains significant uncertainty, the virus is already having a large impact globally, which is particularly evident from substantial falls in stock markets around the world in recent weeks, falling oil price reflecting slowing global demand, and a weakening Australian dollar.

What will I get the Australian government fiscal response?

For Business

The government has focused funding on employers, with the aim of keeping people in jobs. It also wants business to bring forward planned spending in the economy to help prevent recession and boost consumption to ensure people stay in work. To achieve these aims, the following measures will be implemented:

The instant asset write-off will be increased from $30,000 to $150,000 and expanded to businesses with annual aggregate turnover of below $500 million until 30 June 2020.
Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, until 30 June 2021. Existing depreciation rules will apply to the balance of the assets cost.
Businesses which employ staff and have a turnover of less that $50 million will be provided with between $2,000 and $25,000 of tax-free cash flow support. This will happen automatically based on Business Activity Statements.
Small businesses can apply for a wage subsidy of 50 per cent for apprentices and trainees for up to 9 months from 1 January 2020 to 30 September 2020.

For households and individuals:

The package also includes a stimulus targeted at low-income earners, as these people are more likely to spend the additional income. To this end, the government will provide a one off $750 payment to all social security, veteran and other income support recipient and eligible concession card holders. This covers around 6.5 million lower income Australians, including 2.4 million pensioners.

People who are aged over 22 and under the aged pension qualification age, have to be isolated from work, do not have employment entitlements such as sick leave, and meet residency, income and assets tests will be entitled to Sickness Allowance. This will be replaced by the JobSeeker payment from 20 March 2020. Young people under 22 who meet these requirements may be entitled to youth allowance.

Other households will not receive cash payments.

For Severely affected regions:

The government has created a $1 billion fund to support regions and communities severely affected by the coronavirus. In particular, this includes those heavily reliant on the tourism, agriculture and education industries. The Australian Tax Office (ATO) is also providing administrative relief for some tax obligations on a case by case basis.

What next?

A package of Bills will be introduced to parliament in the final Autumn sitting week in the week beginning 23rd March for Parliament’s urgent consideration and passage. The government has also flagged that stimulus package measures are “scalable”, and the package could be updated in the May budget. This will depend on the spread of coronavirus, and the severity of the economic impact.