Australia May Spend Up to $6.6 Billion to Ease Virus Impact

(Bloomberg) -- Australia’s fiscal stimulus package to protect the economy against the impact of the coronavirus may be up to A$10 billion ($6.6 billion).

The Australian newspaper reported Monday that the package would be almost A$10 billion ($6.6 billion) after The Sunday Telegraph said it was likely to be $5 billion. Treasurer Josh Frydenberg, in an opinion piece in the Australian today, said that the virus is having “a significant impact” on tourism, education, agriculture and manufacturing.

“The government will soon be releasing its economic response,” Frydenberg said in the article. “Our fiscal measures are designed to keep businesses in business and Australians in jobs, recognizing that this health crisis is creating both supply and demand constraints across the economy.”

Australia is expected to reveal details of its plans on Tuesday, when Prime Minister Scott Morrison and his Cabinet meet.

Governments around the world have already pledged more than $54 billion in budget support to counter the virus’s impact. Morrison has yet to put a figure on his plan, which he has said will be “targeted, measured and scalable,” with an emphasis on protecting business cash flow and jobs.

Initial estimates of the coronavirus’s impact from the nation’s Treasury and central bank suggest the economy is likely to suffer a quarterly contraction for the first time in nine years. For Australia, the blow is coming hot on the heels of a summer of devastating wildfires that were already expected to crimp growth.

While the country had only reported 74 confirmed cases of the virus as of Sunday, including three deaths, its economy is particularly exposed to China, the center of the outbreak. China is Australia’s key market for commodity exports and a vital source of tourists and students for the services sector.

The Australian Financial Review reported the package may feature tax breaks to spur emergency investment by big businesses while the Australian newspaper earlier said stimulus could include cash payments to households.

The Sunday Telegraph report said the government was looking at wage subsidies and payments for small businesses. It also said the government may encourage pensioners to spend more by lowering the amount they are allowed to earn from financial assets before receiving government assistance.

To contact the reporter on this story: Brett Miller in Tokyo at bmiller30@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, James Ludden, Alexandra Veroude

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