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Matt Coughlan and Paul Osborne
(Australian Associated Press)
Help to retain apprentices, $6.7 billion in tax-free money for small business and an expansion of the instant asset write-off will be offered under a Morrison government plan to boost the economy.
As well, media reports suggest pensioners and welfare recipients will get cash payments of around $500.
Treasury expects the coronavirus will detract 0.5 percentage points from Australia’s growth figures in the March quarter.
Economists say whether Australia avoids recession will be determined by the length of time coronavirus continues to disrupt the nation.
Prime Minister Scott Morrison is determined to keep economic growth in positive territory.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly,” Mr Morrison said.
Under the plan to be unveiled on Thursday, the government will offer up to $7000 each quarter for each apprentice in wage assistance to small businesses to retain existing apprentices and trainees.
As well, small businesses will be able to re-employ apprentices and trainees who lose positions because of any coronavirus downturn.
The wage subsidy is worth about $1.3 billion.
Businesses with turnover under $50 million will have access to a tax-free payment of up to $25,000 to help boost cash flow.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
Businesses that pay salary and wages will receive a minimum $2000, even those not required to withhold tax.
It’s estimated the measure will cost $6.7 billion over four years, benefiting almost 700,000 businesses and 7.8 million workers.
The government will also spend $700 million over four years to expand the instant asset write-off.
The threshold will be raised from $30,000 to $150,000 and expand access to businesses from an annual turnover from up to $50 million to $500 million.
It’s expected to drive interest in the purchases of cars, utes and trucks, harvesters and tradies’ equipment.
Treasurer Josh Frydenberg said the government could only roll out the package because the budget and economy was at a position of strength.
“The government has worked hard over the last six and a half years to return the budget to balance so we have the flexibility to respond to the serious economic challenges posed by the coronavirus,” he said.
“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.”
Meanwhile, Mr Morrison has urged big business to support workers during the coronavirus crisis or risk brand damage.
“I’d be encouraging employers to take a flexible and forward-leaning approach in supporting their employees during this process,” he told reporters in Canberra.
Mr Frydenberg met with bank CEOs on Wednesday to discuss the impact of the virus on the economy.
“Australia’s banking system is strong and well capitalised to support households and businesses during this challenging time,” he said.
Banks will offer a range of assistance, from waiving fees and charges to interest-free periods, debt consolidation and a deferral of scheduled loan repayments.
Opposition Leader Anthony Albanese said Labor would support any necessary funding for the virus response.
“The cost of inaction will be far greater than the cost of action,” he said.
Mr Albanese said workforce issues would have to be solved, particularly for health sector staff.
The Australian Council of Trade Unions has demanded the government legislate two weeks of paid leave for all workers to deal with the virus.