GOVERNMENT STIMULUS PACKAGE III
The Federal Government has now gone "all in" with a "whatever it takes" attitude to fighting the economic calamity that accompanies the medical crisis that is the COVID-19 pandemic.
The support so far:
The Reserve Bank of Australia (RBA) is supporting the financial system with rate cuts and liquidity injections.
The government has now announced three stimulus packages.
The first was to support welfare recipients via cash handouts and apprentices and to provide extra medical funding at a cost of $18.8 billion.
The second was to protect the most vulnerable amongst them pensioners and small businesses (see my previous report here) at cost of $66 billion.
The Third stimulus is the big one at a whopping cost of $130 billion over six months.
With RBA support all up the cost comes in a $320 billion - so far!
STIMULUS Package III
The government has stepped into the breach to avoid an economic catastrophe for the country with mass unemployment and a feared break down of society.
This sounds dramatic because it is. Australia has never seen anything like this before and the government will not die wondering what it could have done to save an economy that has had to be shut down due to the spread of the pandemic.
The government has announced that it will support employers to retain an estimated 6 million jobs in the private economy by a direct subsidy of $1,500 per fortnight for every eligible employee as of 1 March.
Companies will qualify if there turnover as of 1 March has declined by 30% from a previous period for smaller business or 50% for large business - threatening the jobs of their employees.
This covers a huge portion of the economy
By subsidising these jobs to the tune of $3,000 per month the hope is that this will give employers the breathing space they need to keep those employees and not force them onto the unemployment lines.
It will allow a big swathe of the economy to go into "hibernation" for up to six months to allow the economy to start up again - hopefully - after the virus has run its course.
It is high stakes but seems a good strategy. It is targeted at a level that will see those who have already lost their jobs in the most hard hit industries of retail, hospitality, tourism - whether permanent casual or sole traders - to stay linked with their former or current employers and ride out the crisis.
Employers will nominate their staff and be paid the subsidy by the ATO to ensure the staff are retained. It is clever and strategic and has been welcomed by all sides – business, unions and employees
Let’s hope it works.
HUDSON is here to help
As we have done for 28 years we are here to provide professional and effective advice for our many members.
The nature of how we provide our services to you, our loyal members, mean that your trusted qualified and experienced adviser is only a call away. If you are concerned about the current situation or need to speak with your advisers about any of the above matters or simply want a review of your overall situation including your finances and insurances simply telephone 1800 804 296 and book in a call.
This is historically an unprecedented event for Australia and the world.
Tragically there will be untimely deaths from this event.
There will be economic fallout and the government and the RBA is doing all it can to assist in this difficult time.
We will get through this in the next 3 to 12 months but with much uncertainty on the ultimate timetable and outcomes both medically and economically.
Our best advice at this stage is to stay safe, prepare for disruption, and take advice from your Hudson Adviser before you act on any investment decisions.