The Australian government unveiled a A$17.6 billion economic plan to tackle the significant challenges posed by the spread of the coronavirus.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly,” Prime Minister Scott Morrison said on Thursday.
“The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected,” he added.
The stimulus includes A$1.3 billion to support small businesses and safeguard the jobs of around 120,000 apprentices and trainees and a A$6.7 billion to boost cash flow for employers.
As part of stimulus, pensioners and other eligible individuals will receive a one-off A$750 tax free payment. The payment will be made from March 31.
The government will provide cash flow support to businesses with a turnover of less than A$50 million, which is set to assist nearly 690,000 firms.
In order to support business investment, the government will increase the instant asset write off threshold to A$150,000 from A$30,000 until June 2020. This will cost A$700 million to the government.
Further, A$1 billion is allocated to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
“Given Australia’s strong economic and fiscal position, the international credit rating agency Standard and Poor’s indicated that temporary stimulus would be “unlikely to strain Australia’s creditworthiness, Treasurer Josh Frydenberg said.
The large fiscal stimulus package may be able to prevent a recession, Marcel Thieliant, an economist at Capital Economics, said. But the central bank is expected to cut rates to 0.25 percent and launch quantitative easing over the next few months.
Last week, the Reserve Bank of Australia had reduced the interest rate by 25 basis points to a new record low of 0.50 percent. Deputy Governor Guy Debelle on Wednesday said a mix of fiscal and monetary policy will help the economy to navigate through difficult period.
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