AUSTRALIA – ECONOMIC POLICY

Wage subsidies not enough for small business

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Original article by John Kehoe
The Australian Financial Review – Page: 8 : 25-Mar-20

Former Treasury official Steven Hamilton has urged the federal government to increase the wage subsidies for small and medium enterprises in response to the pandemic. He warns that the SME sector will be "completely wiped out" if the government does not act, while the nation will face a long and deep recession. Andrew Boak of Goldman Sachs agrees that the government’s existing wage subsidy measures will not be sufficient to avert large-scale job losses.

CORPORATES
GOLDMAN SACHS AUSTRALIA GROUP HOLDINGS PTY LTD, GEORGE WASHINGTON UNIVERSITY

Brace for a record fall in GDP

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Original article by Patrick Commins
The Australian – Page: 4 : 25-Mar-20

JPMorgan economist Ben Jarman expects GDP to fall by 10 per cent in the June quarter due to the coronavirus lockdown measures. The previous largest quarterly decline in GDP was just two per cent in 1974. Jarman also forecasts that the unemployment rate will rise to 11 per cent during the quarter, a view shared by Bill Evans of Westpac. However, Evans expects GDP to fall by just 3.5 per cent in the quarter. Westpac economists have also forecast a Budget deficit of $90bn in 2019-20 due to the federal government’s stimulus measures, and a deficit of $160bn in 2020-21.

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JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Jobless rate could hit 13.8pc despite priming of the pump

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Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 23-Mar-20

The federal government and the Reserve Bank have now announced a combined $189bn worth of coronavirus stimulus measures. This includes cash payments for small businesses and non-profit organisations. However, many companies that operate in sectors that employ a lot of people will not be eligible for financial relief. The construction, retail, hospitality, recreation and education are major employers; it is estimated that the unemployment rate would rise from 5.1 per cent to 13.8 per cent if they shed just 25 per cent of their workforce, or about 1.2 million people.

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RESERVE BANK OF AUSTRALIA

Third bailout being prepared as $66b injected to help first blows

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Original article by Phillip Coorey
The Australian Financial Review – Page: 1 & 4 : 23-Mar-20

The second stage of the federal government’s stimulus package includes the introduction of a welfare wage for workers who lose their jobs due to the coronavirus pandemic. They will be eligible for a fortnightly payment of up to $1,100, while the existing Newstart allowance will be increased and renamed the Jobseeker Payment. Workers who are stood down will also be able to withdraw up to $20,000 from their superannuation fund. Meanwhile, businesses with annual turnover of up to $50m will be eligible for a cash payment of up to $100,000. The government and the nation’s banks will also jointly provide a $40bn loan facility for small and medium enterprises.

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AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Operation Covid: save jobs

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Original article by Geoff Chambers, Simon Benson, Ewin Hannan, Robyn Ironside, Greg Brown
The Australian – Page: 1 & 6 : 18-Mar-20

The global death toll from the coronavirus has risen to 7,950; more than 197,000 people worldwide have been diagnosed with the respiratory illness, including 452 in Australia. The federal government will respond to the crisis with new measures aimed at supporting businesses and protecting jobs, in addition to the $17.6bn stimulus package that has previously been announced. Council of Small Business Organisations Australia CEO Peter Strong says many businesses could collapse without financial relief, with the potential loss of 500,000 jobs. The government will also provide a $715m financial assistance package for airlines, with Qantas CEO Alan Joyce warning that the virus is the "single biggest shock" the sector has ever seen.

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COUNCIL OF SMALL BUSINESS ORGANISATIONS OF AUSTRALIA LIMITED, QANTAS AIRWAYS LIMITED – ASX QAN

Boosted funding for at-risk industries

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Original article by Geoff Chambers, Simon Benson, Richard Ferguson
The Australian – Page: 1 & 4 : 17-Mar-20

Legislating the federal government’s $17.6bn economic stimulus package will be a priority when parliament resumes on 23 March. The government will pursue additional stimulus measures that will target industries that will be hardest hit by the coronavirus pandemic; the Budget in May is also tipped to include more government support for businesses. Meanwhile, the national cabinet will consider restrictions on gatherings in enclosed spaces such as cinemas and restaurants. The existing ban on gatherings of more than 500 people has resulted in the cancellation of many cultural and sports events.

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AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

PM’s cash splash to save jobs

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Original article by Simon Benson, Geoff Chambers
The Australian – Page: 1 & 4 : 12-Mar-20

Prime Minister Scott Morrison is confident that all necessary legislation for the federal government’s economic stimulus package will be passed in the last sitting week of Parliament prior to the Budget in May. The package will cost almost $18bn in total, in addition to the government’s $2.4bn health plan in response to the coronavirus. Small and medium enterprises will be a focus of the package; they will receive a cash payout of between $2,000 and $25,000, plus a wage subsidy to ensure that they continue to employ apprentices. The threshold for the instant asset write-off will be increased from $30,000 to $150,000. The stimulus package will rule out a Budget surplus for 2019-20.

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AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Fast cash to calm virus storm

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Original article by Simon Benson, Patrick Commins
The Australian – Page: 1 & 6 : 10-Mar-20

Cabinet’s expenditure review committee is set to approve the federal government’s economic stimulus package within days. Prime Minister Scott Morrison will use a speech on 10 March to argue that the stimulus must be targeted and position both the domestic economy and the federal budget to rebound when the coronavirus crisis is over. He will also urge large companies to support their employees, customers and suppliers, and to ensure that small businesses are paid promptly. National Australia Bank’s chief economist Alan Oster says the package must be worth at least $10bn and should include measures such as a business investment allowance and income tax cuts.

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AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Jobs subsidy plan to bust recession

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Original article by Phillip Coorey, Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 6-Mar-20

Treasury expects the impact of the coronavirus to reduce economic growth by at least 0.5 per cent in the March quarter, while the recent bushfires will cut growth by a further 0.2 per cent. The federal government’s stimulus package will aim to prevent economic growth from also being negative in the June quarter; it will include wage subsidies, a business investment allowance and tax breaks to assist with cash flow. Greens leader Adam Bandt says the stimulus package should also include an increase in unemployment benefits and financial assistance for workers who are not entitled to paid sick leave.

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AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN GREENS, AUSTRALIAN LABOR PARTY

Billions in stimulus to stop slump

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Original article by Phillip Coorey, John Kehoe
The Australian Financial Review – Page: 1 & 6 : 5-Mar-20

Finance Minister Mathias Cormann has warned that the coronavirus will have a "material impact" on Australia’s economic growth in the first half of 2020. Amid growing concern that the nation could go into recession for the first time since 1990-91, the federal government is set to announce a stimulus package that will hit the Budget bottom line. The package will focus on jobs, small business cash flow and capital investment; it is expected to include a business investment allowance that was to have been announced in the May Budget. The stimulus package is likely to result in a deficit for 2019-20.

CORPORATES
AUSTRALIA. DEPT OF FINANCE