The Government on 22 March announced a second stimulus package, including $550 extra per fortnight for welfare recipients in a package worth $66 billion.
Below last updated 24 March
Below first published 22 March, updated 24 March.
This $550 per fortnight is in addition to regular welfare payments, and applies to:
- JobSeeker (Newstart)
- Youth Allowance
- Parenting Payment
- Farm Household Allowance
- Full-time students
The payments will last for six months, and asset tests and waiting times for the JobSeeker allowance will also be waived.
Payments will also be available to sole traders and casual workers affected by lay-offs spurred on by coronavirus (COVID-19).
The stimulus package also includes an extra $750 one-time payment for people on social security and veteran benefits, on top of the first $750 handed out in the first round of stimulus.
Payments will be automatically paid to an estimated five million people on 13 July.
Treasurer Josh Frydenberg said the extra $550 essentially doubles welfare payments.
“(The new payment) will be available to sole traders, casual workers who meet the income test,” he said.
“This means, anyone eligible for the maximum jobseeker payment will now receive more than $1100 a fortnight, effectively doubling the jobseeker allowance.”
- For pensioners, deeming rates will also be cut by a further 0.25%.
- People will also be able to access $10,000 from their superannuation in 2019-20, and 2020-21, which will not be taxed, and withdrawals will not affect Centrelink or veterans' payments.
- For small business, the government will guarantee loans up to $250,000, and they will also receive cash payments up to $100,000.
The news comes after the Government announced its first $17.6 billion stimulus package just last week.
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Beneficiaries of stimulus round two
The key beneficiaries of the $66 billion stimulus package - other than for the payments outlined above - are:
Pensioners and retirees
Pensioners will see a further cut to the deeming rate by a further 25 basis points, which is what the government 'deems' pensioners' assets to be earning in interest. The deeming rates in most cases will now be:
- 0.25% for the first $51,800 for singles, or $86,200 for couples.
- 2.25% for over that amount.
This will apply from 1 May 2020, and is said to benefit about 900,000 income support recipients, including aged pensioners.
For retirees, there will be a temporary reduction in the superannuation minimum draw down rates, affecting account-based pensions and the like.
The Government says this will benefit retirees by providing flexibility in managing their super.
There will be a 50% rate reduction for 2019-20 and 2020-21. Currently the rates in many cases are:
- Under 65: 4%
- 65-74: 5%
- 75-79: 6%
- 80-84: 7%
- 85-89: 9%
- 90-94: 11%
- 95 or older: 14%
There are certain exemptions to this rule - consult your accountant or financial planner for more information, or visit the ATO website.
Those in financial stress will be able to access up to $10,000 of their superannuation this financial year, and in 2020-21.
Tax will not be paid on the money they access, and withdrawals won't affect Centrelink or veterans' payments.
Not-for-profits and small businesses with turnover of less than $50 million will receive a tax-free cash payment of up to $100,000, with a minimum payment of $20,000 for those eligible.
This will be delivered as a credit on activity statements from late April.
The Government will also guarantee unsecured loans up to $250,000 over three years.
It expects 690,000 businesses and 30,000 NFPs will benefit from this, estimated to employ 7.8 million people.
Apprentices and trainees
While apprentices and trainees aren't receiving any direct benefits, small businesses of these employees that are eligible can receive a 50% wage subsidy for nine months from 1 January 2020 to 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee.
What are the experts saying about the $66 billion stimulus?
Many experts and industry leaders after the first round of stimulus were not satisfied that the $17.6 billion would be effective, but there has been much more widespread support of round two.
The cut to deeming rates and drawdowns were necessary to assist older Australians whether they invested cash in a bank or in the share market which has lost a third of its value since this crisis began.
This change (to super drawdowns) was necessary to see us through the Global Financial Crisis and is desperately needed again now. The drawdown rate starts at 4% and rises with age requiring superannuants to draw down more and more of their money. The rate is calculated on the superannuation fund balance at the beginning of the financial year and now does not reflect the current turmoil in financial markets. Halving the rates is very welcome.
- National Seniors Australia chief Ian Henschke
This is a very welcome package of measures announced by the Government today. The Coronavirus SME Guarantee Scheme in particular will be critical in helping banks such as NAB support businesses who need a quick cash flow injection to stay open and keep people in jobs.
NAB strongly supported and advocated for the establishment of this scheme. We will now work with the Government to implement these measures as quickly as possible and help ensure everything that can be done is being done to support Australians through this.
- NAB chief Ross McEwan
Small business advocates
The residential building industry is dominated by small family owned businesses, operated by people who will be pleased to know that the Government has accepted that small businesses need special support in the fight against COVID-19.
The measures that the Government has announced will help many small businesses continue to operate in this uncertain environment. At this stage the home building industry is still very much open for business.
As an industry that employs over 1 million people and injects billions into the economy, the residential building industry can play a key role in keeping the economy ticking over and lead the economic recovery that will happen once the virus passes.
- Housing Industry Association managing director Graham Wolfe
Social service groups
We welcome this crucial doubling of Newstart and Youth Allowance for six months. This will come as a huge relief to so many right now. This increase is vital in order to prevent more people from falling into the poverty trap.
We need a permanent increase to give people certainty and we will continue to work with the Government on securing the certainty that people will need, particularly at this deeply troubling time. We need to provide confidence to reduce anxiety and fear.
- Australian Council of Social Services chief Cassandra Goldie
What does stimulus mean for the economy?
The $66 billion combined with the $17.6 billion announced earlier this month dwarfs the Rudd Government's 2009 package, which was around $40 billion.
All states and territories have also announced their own stimulus packages, with a focus on small businesses.
In just over a week since the first stimulus package, coronavirus has caused a near total shutdown of borders around the world - airlines cancelled almost all international flights, and the stock market experienced its worst percentage fall since 1987.
The Australian Dollar also fell to near-18 year lows, buying around USD 0.57 at the time of writing.
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