Coronavirus Australia: Government to spend almost $20b in bid to prevent a recession

Small businesses will be paid to keep apprentices on while pensioners and dole recipients will get billions of dollars in cash payments worth hundreds of dollars apiece in an effort to shield the economy from the impact of the coronavirus.

Small business bosses will be offered subsidies if they don’t fire apprentices while pensioners and other welfare recipients are set to get billions of dollars in cash payments to combat a looming economic implosion due to the coronavirus crisis.

The emergency measures are part of stimulus package worth close to $20 billion to be rolled out by the Morrison Government to save businesses and jobs.

Subsidies for small business bosses to keep apprentices on is one of the measures to save businesses and jobs.

The government forecasts its new 50 per cent apprentice wage subsidy of up to $7000 per quarter will prevent as many as 40,000 young carpenters and cooks in NSW from joining the dole queue.

On Thursday the government is expected to reveal billions of dollars in bonus payments to pensioners and other welfare recipients considered most likely to spend extra cash and thereby bolster the economy.

The exact size of the one-off payments is not yet known. But it is likely that people on Newstart and other forms of taxpayer assistance will get hundreds of dollars per person.

Groups such as the Australian Council of Social Service say dole recipients should get as much as age pensioners.

Aged pensioners and other welfare recipients will also receive an extra handout to help boost the economy.

For apprentices, the salary support will cover the first nine months of 2020, stripping the federal budget of a combined $1.3 billion across this financial year and next. The 690,000 businesses around Australia with turnover of less than $50 million will also be able to get a tax rebate of up to $25,000. That is expected to cost $6.7 billion over two years.

Tax write-offs will be dramatically expanded to include larger companies and bigger purchases — measures that will see Treasury forgo about $700 million. To spark immediate investment, the raised thresholds will end on July 1.

Legislation to make the business stimulus plan a reality is already being drawn up and will be put before parliament in the week beginning March 23.

Details of the plan emerged as the number of confirmed cases of coronavirus in NSW rose to 65; nationally, the total reached 127 — up by 24 from Tuesday.

Among the new cases in NSW were three women who recently returned together from Italy.

Travellers from Italy have been banned and flights to the European country in lockdown from Australia have also been banned. Picture: Getty

In a new move, foreigners who have been in Italy are now banned from entering Australia for 14 days from the time they left the country.

Prime Minister Scott Morrison confirmed last night the budget surplus has been officially jettisoned.

He said the government was seeking to protect not just the health and wellbeing of older Australians but also their “economic needs”.

Help with training costs and special assistance for the hardest-hit sectors is also likely to be among other moves announced on Thursday, meaning the total size of the stimulus plan will be far greater than initial estimates.

Former Treasury boss Martin Parkinson on Wednesday said at least $10 billion had to be injected to avoid a deep recession.

“If you don’t do a minimum half a per cent of GDP you risk being seen to be doing too little,” Dr Parkinson said.

Spending of that scale would put the package on par with the first phase of Kevin Rudd’s response to the global financial crisis in 2008.

In recent days the government has been at pains to point out it backed that first phase, but opposed Labor’s $42 billion splurge that came four months later in February 2009.

Mr Morrison said the Coalition had voted for Mr Rudd’s initial tranche because it was delivered through existing mechanisms.

“The risk of cheques of going off to pets … didn’t exist,” he told Sky News.

Prime Minister Scott Morrison addresses the media on Wednesday. Picture: AAP

Former Treasury boss Martin Parkinson. Picture: Nikki Short

Treasurer Josh Frydenberg added: “In our response, we have been very careful not to repeat the mistakes of previous stimulus programs and not undermine the structural integrity of the budget.”

Mr Morrison said the new moves would help to support jobs and businesses.

“The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected,” he said.

The apprentice subsidy — which is slated to start on April 2 and could cover as many as 120,000 workers nationally — is mainly for employers with fewer than 20 staff.

But it will also be available for bigger businesses that hire trainees who are let go.

The tax rebate for businesses with turnover of less than $50 million offers a minimum of $2000.

But tens of thousands of small enterprises should get the maximum benefit of $25,000.

Treasury calculations suggest an enterprise with as few as eight workers could reap the full amount.

Mr Morrison also flagged casual workers worried about losing income while self-isolating should consider existing welfare payments, such as a sickness allowance of $519 for a fortnight for singles.

“There is a thing called the sickness payment … that provides the same as a Newstart payment in the right circumstances could potentially support (casual workers),” Mr Morrison said.