Second financial assistance package for operators


Virus response escalates business incentives, adds individual measures

Second financial assistance package for operators
Federal treasurer Josh Frydenberg

 

Some 10 days after the federal Treasury announced a stimulus package for businesses and individuals financially affected by the coronavirus (Covid-19), a second round has followed as the impacts continue to intensify.

The package expands on some of the steps outlined in the first announcement, particularly around business operations, while introducing new measures particularly aimed at individuals whose employment and income has been hit.

According to Treasury, the overall value of the combined stimulus activity reaches $189 billion.


The details of the first package are available here


BUSINESS

The headline announcement sees a payment of up to $100,000 to eligible small and medium businesses, with a minimum payment of $20,000.

Entities with aggregated annual turnover under $50 million and that employ workers are eligible. 

An increase from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment increased from $25,000 to $50,000 and the minimum payment increased from $2,000 to $10,000.

The payment will be available from 28 April 2020 and is tax free. An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.

Further, an SME guarantee scheme will see the government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.  

A temporary relief for financially distressed businesses will increase the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond.

Temporary relief is also available for directors from any personal liability for trading while insolvent.

INDIVIDUALS

A coronavirus supplement of $550 per fortnight will be paid for the next 6 months. 

This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.

A further $750 payment will be made to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement. from 13 July 2020

Individuals in financial stress can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21, with temporary reduction superannuation minimum drawdown rates by 50 per cent.

There is also a reduction of social security deeming rates on top of previously announced changes by a further 0.25 per cent.

MIXED RESPONSE

The Australian Trucking Association (ATA) was quick to laud the announcement, particularly the JobSeeker element for owner-drivers .

"Although trucking businesses in the grocery and fuel supply chains are working flat out, others face months of reduced or no work," ATA Geoff Crouch says.

"In our discussions with Treasury and our formal submission to the Government last week, we argued that businesses needed a loan guarantee; the Government has delivered.

"The expanded JobSeeker Payment addresses one of the key issues we raised in our discussions with Treasury and in our formal submission to the Government last week. The industry’s 28,900 owner drivers are critical to Australia’s supply chains but were not eligible for support under the Government’s first economic package.

"We thank the Government for listening to the concerns that we raised, and strongly congratulate them for the decisive action they have taken. It will help ensure that many of our owner drivers will remain in the industry for the long term."

The Transport Workers Union (TWU), however, is not as effusive, saying the measures don't provide long-term support.

"The offer of up to $100,000 to small businesses to keep workers employed will get burned through in a matter of weeks for many companies. For workers employed in larger businesses, there is no support," national secretary Michael Kaine says.

It points to workers accessing dwindling superannuation funds because of market turmoil as the wrong move.

"It is nothing short of fiscal stupidity to expect workers to dip into superannuation savings which in recent weeks have been reduced significantly.  It will lock workers into significant market losses.

"That is not just unfair, it is also dangerous as it will leave workers and the economy in a worse off position to bounce back from the crisis once the pandemic is under control."

Following on from its industry roundtable agreement last week, the TWU calls on further measures to inlcude:

  • Government to cover the wages of workers stood down; up to 80% of their salary, as per the UK Government announcement
  • When Government salary payment begins, workers no longer have to use their leave
  • Before any forced leave imposed, companies to agree to not pay shareholder dividends or executive bonuses before workers back to work and all leave has been recredited.

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