Australia Passes Record $80 Billion Employment-Rescue Package
(Bloomberg) -- Australia’s parliament passed a record A$130 billion ($80 billion) jobs-rescue plan late Wednesday, as the government continues efforts to buttress the economy from the coronavirus outbreak.
“It’s unprecedented in its scale and its scope, and around six million workers should be able to use this program to stay in a job,” Treasurer Josh Frydenberg said in a television interview. The package “will help build that bridge to the recovery on the other side.”
The support will see the government pay wage subsidies of A$1,500 every two weeks per employee to help struggling businesses keep people in work. It’s the latest step in Prime Minister Scott Morrison’s plan to ensure the economy can survive in “hibernation” during the health crisis and then quickly be revived when businesses such as restaurants, clubs, casinos and cinemas are allowed to reopen.
Since the coronavirus threat emerged, the conservative government has abandoned plans to return and keep the budget in surplus, pumping an unprecedented amount of stimulus into the economy in a bid to avert it from falling into a crippling long-term recession.
Total fiscal and monetary stimulus has now exceeded A$320 billion, or 16.4% of gross domestic product. Asked on Sky News Thursday whether further huge fiscal support was likely, Frydenberg said the A$130 billion “jobkeeper” package would be “hard to beat.” Australians would be paying back the debt burden “for years to come,” he said.
The jobs-rescue plan was passed on Wednesday in a special sitting of parliament with a reduced number of lawmakers.
In other economic measures, Morrison last week announced it will make childcare free to help workers stay in their jobs. On Tuesday, he said a new industry code of practice for commercial tenancies would be legislated to provide rent relief for businesses hit by the outbreak. Any decline in revenue for small- or medium-sized enterprise will be reflected in a proportionate drop in rent they have to pay, he said.
Still, Morrison’s government can only do so much. Some economists are forecasting that Australia’s unemployment rate could soar to 12%, from 5.1% in February, as potentially hundreds of thousands of workers lose their jobs amid the shutdown. The nation’s central bank has cutting its rates to 0.25% and shifted to bond-buying operations.
Morrison has grown more confident that social-distancing restrictions and the nation’s relatively high rates of testing appear to be working to control the outbreak and “flatten the curve” of growth. As of 3 p.m. on Wednesday, Australia had 6,013 confirmed cases, up 1.8% from the day before. Fifty people have died.
Authorities are warning they don’t want Australians to relax during the Easter break, which starts on Friday. In New South Wales, the most populous state that’s been hardest hit by the outbreak, police warned on Wednesday they will use the holiday period to patrol country roads, back streets, main highways and caravan parks to ensure people are complying with the restrictions.
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