Federal Government extends stimulus to $189bn as virus fears impact retail revenue
The Federal Government announced on Sunday a further $66 billion of support for businesses and workers impacted by coronavirus. Questions remain as to how quickly the government can provide this relief, however, with retail revenue sharply dropping by 30 per cent in March according to the ARA.
As part of the second stimulus measures small and medium businesses, as well as not-for-profits, will receive between $20,000 and $100,000 rebate on income tax withholdings. The government expected this measure to help keep around 8 million people employed – though due to the early economic impacts of the virus many workers have already been stood down.
According to AAP, economists forecast nearly one million people could be out of work by October. In response to this, prime minister Scott Morrison announced that the Newstart payment would be revised as the Jobseeker Payment, and added a further $550 to the fortnightly payment.
With the additional measures included the Federal Government’s total announced stimulus reaches $189 billion – though it also implied a third round of stimulus payments are likely.
“[We will] preserve the business that comprise our economy so on the other side they can bounce back strongly and don’t have to reassemble themselves from the ruins,” Morrison told reporters on Sunday.
According to the Business Council of Australia chief executive Jennifer Westacott the package is the right one for the extraordinary circumstances the business community now finds itself in.
“This helps put a floor under the economy and the country. We strongly welcome the government’s swift action to provide a wage subsidy to keep workers in jobs, boosted income support, and more help for hard hit small and medium sized businesses,” Westacott said.
“Businesses, big and small, are the glue that keeps their communities together. When this crisis passes we will need the right policies in place to ensure they can ramp back up quickly.”
Westacott said it had become a national imperative to pull together and keep people working. National employer association Ai Group chief executive Innes Willox also welcomed the additional measures, though noted the government will need to continue to assess further actions as the situation unfolds.
“The pressures in the economy are becoming more widespread by the day. The impacts of COVID-19 will be felt for a long time both in our economy and on the structures and systems we had in place to protect and drive our living standards,” Willox said.
And while the Labor party is expected to support the initiatives, shadow treasurer Jim Chalmers said the support so far has been too slow.
“People are already getting laid off and businesses are already closing. The idea that not a cent of this assistance has flowed yet and that some of it won’t flow until the end of April or even July in some circumstances is not good enough,” Chalmers said according to AAP.
Rescue package needed to solve “catastrophic” impacts
Though the government’s measures cover business more broadly a targeted retail industry rescue package is fast becoming necessary, according to a joint message from the Australian Retailers Association (ARA) and the Shop, Distributive and Allied Employees Association (SDA).
ARA executive director Russell Zimmerman said on Sunday that the effects of and public reaction to the COVID-19 virus were fast becoming “catastrophic” for the retail industry – stating that its members had seen a 30 per cent reduction in revenue in March.
“Our latest feedback is that turnover has fallen much more sharply than that. Australian retail is the largest private sector employer in Australia… and those jobs are in grave danger of being lost,” Zimmerman said.
SDA national secretary Gerard Dwyer said the collapse in consumer spending had been virtually indiscriminate across all sectors of the industry.
“We must be empathetic: the collapse in consumer spending due to panic over Coronavirus will destroy hundreds of thousands of jobs unless drastic action is taken now,” Dwyer said. “We call on the government to convene an Australian retail industry rescue package task force to work with us to preserve retail and the jobs it provides.”
This package would include wage subsidies for retail workers, an underwritten line of credit so that retailers can trade without fear of insolvency, and a guarantee of retail rental payments to give retailers a chance of surviving disintegrating revenue.