Australia will double unemployment payments to help the thousands who will lose their jobs from the coronavirus pandemic.
Prime Minister Scott Morrison on Sunday announced a second stimulus package and acknowledged the economic damage would be far worse than anticipated.
The extra $66 billion brings the giant rescue package to $189 billion, about 10 per cent of Australia’s GDP, to avoid economic catastrophe.
Thousands of Australians are already losing their jobs as cafes, pubs, and shops of all kinds are empty as many people avoid going out.
Those already unemployed or soon to be forced out of work will be able to get up to $1,100 a fortnight in Centrelink payments.
Scott Morrison (right, last week) has launched a second bailout package to save thousands of jobs and companies
Assets tests and waiting periods for the jobseeker allowance will also be waived so sacked employees can keep food on the table.
‘The coronavirus supplement will provide an additional $550 a fortnight on top of the existing jobseeker or new start payment,’ Treasurer Josh Frydenberg said.
‘It 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.’
Everyone earning less than $1,075 a fortnight will be eligible to receive the full benefit, with it scaling back with additional income.
Mr Frydenberg said this meant as casual workers had their ours cut and sole traders lost work, they could quickly supplement their remaining income.
The $750 payments to pensioners of various kinds will be doubled – the first being deposited into bank accounts on March 31 and the second on July 13.
They will be paid to 6.5 million people including 3.6 million pensioners, 1.1 million students and working-age welfare recipients and 1.5 million others including veterans and parents who receive family tax breaks.
Australians will also be able to withdraw from their superannuation tax free if they lose 20 per cent of their income.
‘It is estimated to put up to $27 billion of superannuation back into the pockets of hard-working Australians. This comprises less than a percent of the $3 trillion in superannuation today,’ Mr Frydenberg said.
Other measures were aimed at trying to keep small businesses afloat, including grants of up to $100,000 to help small businesses pay their staff.
Alongside the cash payments, the government is launching a massive loan scheme worth $40billion under which it will guarantee 50 per cent of cheap loans given from banks to struggling companies to keep them from going under.
As thousands of casual and full-time workers in retail, hospitality, tourism and other sectors face losing their jobs, Mr Morrison is expected to temporarily increase the Jobseeker payment.
The government is also likely to hand hundreds of millions of dollars to aged care homes to help them retain staff to cope with the pandemic, which is more dangerous to the elderly.
The second round of measures, combined with $17.6billion announced last week and $105billion given to banks for lending, mean the stimulus measures so far total $189billion, or 9.7 per cent of GDP.
This is considerably less than the UK’s rescue package of more than $800billion – around 18 per cent of the country’s GDP – which includes a government plan to pay 80 per cent of the wages of millions of workers.
However, Daily Mail Australia understands the prime minister is plotting a third round of measures to save the economy from collapse.
‘We want to help businesses keep going as best they can or to pause instead of falling apart,’ Mr Morrison said.
‘We want to ensure that when this crisis has passed Australia can bounce back. There is a lot of pain coming but we’re going to cushion the blow as best we can.’
It comes as the number of coronavirus cases in Australia soars past 1,000 with seven deaths amid warnings the nation’s hospitals will be overwhelmed in two weeks.
In the first package of measures, announced on March 12, Mr Morrison announced that a quarter of Australians would be given $750.
The cash will be handed out to 6.5million people including 3.6million pensioners, 1.1million students and working-age welfare recipients and 1.5million others including veterans and parents who receive family tax breaks.
The payments totalling $4.8billion will be begin on 31 March and will be transferred automatically through the tax system.
‘Australians will spend that money and that money will encourage economic activity,’ Treasurer Josh Frydenberg said.
In the first package, the government vowed to hand out tax-free cash grants of up to $25,000 to 7,000 small businesses who turn over less than $50million and employ people.
This has now been raised to $100,000 and extended to charities, taking the cost of the measure from $7billion to $32billion.
Mr Morrison also announced a 50 per cent wage subsidy for 117,000 apprentices worth $21,000 per apprentice. The cash will be paid to companies so they can afford to keep their young employees in work.
Thousands of casual and full-time workers in retail, hospitality, tourism and other sectors face the sack
Instant asset write offs will be expanded so tradies can buy trucks and other equipment worth $150,000 on the taxman until 30 June. The previous limit was $30,000.
Mr Morrison also vowed to make sure casual workers who can’t find work due to the virus will not have to wait to access the dole.
There is also a $1billion fund to help tourism businesses affected by the downturn, similar to a disaster recovery fund. The ATO is also allowing affected businesses to delay their tax obligations for four months.
The Prime Minister said the first package is worth $17.6billion over the next four to six months, giving the economy a boost worth $22.9billion or 1.2 per cent of GDP.
In addition to the stimulus packages, the government is reducing the deeming rate – which is used to assess pensioners’ and veterans’ assets – by 0.5 per cent so they can receive more money.
This measure will cost $600million and benefit 900,000 Australians, including 560,000 aged pensioners.
It comes after some experts feared the coronavirus crisis could cause Australia’s unemployment rate to almost triple to Great Depression levels of the 1930s.
Qantas is already temporarily retrenching two-thirds of its 30,000 staff as the airline suspends international flights until at least the end of May, like its rival Virgin Australia.
Casual jobs in retail and hospitality have also gone as the government bans indoor room gatherings of 100 or more people in a bid to contain the COVID-19 pandemic.
Digital Finance Analytics principal Martin North, an economist, said that in a ‘worse case’ scenario, Australia’s unemployment rate could surge from 5.1 per cent now to 14 per cent in 2021.
‘People aren’t going to buy stuff, people aren’t going to buy houses, people aren’t going to be building stuff – GDP is about activity and fundamentally, we are going to see activity right down to very, very low levels,’ he told Daily Mail Australia.
The government is also likely to hand hundreds of millions of dollars to aged care homes to help them retain staff to cope with the pandemic, which is more dangerous to the elderly
Should his prediction come true, Australia would have the highest jobless rate since 1932, at the height of the Great Depression, when unemployment peaked at 19.75 per cent.
It would also surpass the 9.9 per cent jobless rate experienced during the last recession in early 1991 and the subsequent jobless rate of 11.2 per cent by December 1992, which saw almost 1million Australians out of work.
This would see the number of jobless people in Australia skyrocket from 699,100 in February 2020, when the first cases of coronavirus outside China were confirmed, to 1.9million within little more than a year.