The federal government will tip another $66 billion into Australian small and medium-sized businesses to help them keep paying staff as the effects of the COVID-19 outbreak sweep through the economy.
Under the new spending, to be announced by the Prime Minister and Treasurer on Sunday, businesses with a turnover of $50 million or less will be eligible for cash payments worth up to $100,000, to be delivered through the tax system, significantly extending the $25,000 payments already announced under the first round of financial support.
The government will also unveil a new coronavirus small-to-medium enterprise guarantee scheme, giving three-year loans of up to $250,000 to businesses, through eligible lenders. Those loans, to start from April 1, will be unsecured and repayment free for six months. The $40b scheme will guarantee 50 per cent of the amount through eligible bank and non-bank lenders.
When combined with the first round of stimulus spending already announced and moves by the Reserve Bank to free up funds for lenders, the total spending so far adds up to an unprecedented $189 billion, or nearly 10 per cent of the country's GDP.
And more could be on the way, with a third round of spending understood to be under consideration.
Under the cash payments, businesses will receive a payment equal to the amount of tax they withhold and report to the Australian Tax Office, up to a maximum of $100,000. Each eligible business that pays salaries will receive a minimum payment of $20,000, even if they aren't required to withhold tax and report it to the ATO and will also be open to not-for-profit charities.
Government figures estimate the wage support will go to 7.8 million Australians, including up to 115,000 in the ACT, 2.5 million in NSW and 2 million Victorians.
It comes as countries around the world dramatically increase their own measures to stave off economic disaster.
On Saturday, the United Kingdom government announced it would use taxpayer funds to meet meet 80 per cent of the wages of workers temporarily stood down by businesses hit by the crisis. The UK also moved to shut down all pubs, clubs and restaurants as the number of new confirmed virus infections continued to skyrocket.
As a percentage of national GDP the Australian stimulus announced to date is around twice the size of support announced by countries including Canada and South Korea.
Prime Minister Scott Morrison said the government's plan was to try and cushion the expected blow the virus was going to have on the local economy and to try and keep as many workers employed as possible.
"We want to help businesses keep going as best they can or to pause instead of falling apart. We want to ensure that when this crisis has passed, Australia can bounce back," Mr Morrison said.
"This is all about getting through the next six months or longer as the virus takes its course. Our support is all about building an economic bridge to get us to the other side, so together, we get through this," he said.
Treasurer Josh Frydenberg said the government's plan was to keep businesses open so that once the crisis passed they could rebound as quickly as possible.
"These are extraordinary times requiring extraordinary measures but Australians can be reassured their government is working day and night to protect their health, wellbeing and livelihoods," Mr Frydenberg said.
The government is expected to hold off announcing a third round of support until it has a clearer picture of the financial impact the virus is having on the Australian economy.
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