IPA COVID-19 Economic Update

A new daily update by free market think tank the Institute of Public Affairs, providing the latest economic data and policy measures for journalists, commentators and IPA members.

Latest daily comment attributable to John Roskam, Executive Director at the Institute of Public Affairs:

“Not all this extra spending has to be new money and debt. There should be a 20% reduction in public service pay until the crisis is over”

“There needs to be a sense of shared sacrifice from the public service. We have seen a disconnect of bureaucrat elites from the productive economy”

“The Prime Minister is absolutely right to say that everyone who has as a job in this economy is an essential worker”

Research prepared by IPA Research Fellow’s Kurt Wallace and Cian Hussey.

Australia

2,364 cases at 12pm.
Scott Morrison announced the establishment of the COVID-19 Coordination Commission to coordinate action between the private and public sector. Led by Neville Power. The board will be made up of Greg Combet (former Labor Minister), Jane Halten (former head of the Department of Finance), Paul Little (former head of Toll Holdings), Catherine Tanner (RBA board), David Thodey (CSIRO), Phil Gaetjens (Secretary of Department of PM and Cabinet), and Mike Pezzullo (Secretary of Department of Home Affairs).
All elective surgery other than Category 1 and urgent Category 2 are suspended from midnight 25th March until further notice. Applies to both public and private hospitals.
New lock down measures announced: weddings limited to five people, funerals to 10, beauticians, tanning salons, tattoo studios etc must now be closed, hairdressers/barbers to limit visits to 30 minutes.
The government is preparing a major mental health package to deal with anxiety, isolation, and loneliness. Details to come.
Hospitality businesses will be able to cut employee hours and send workers on leave at half pay with 24 hours notice. The United Workers Union and Australian Hotels Association have come to an agreement, approved by the Fair Work Commission, to allow greater flexibility until the end of June (with an option to extend).
MPs, top public servants, judges and ministerial staff will have a pay freeze this year.
Government is evaluating TraceTogether, an app to better trace contacts of people diagnosed with coronavirus.
NSW could release prisoners if there is an outbreak of coronavirus in prisons.
Daniel Andrews said there will be a stage 3 and that NSW and VIC are likely to go ahead of the other states and territories.

Announced stand-downs and layoffs from large companies – 61,385, as per ASX.

Qantas 20,000
Crown 20,000 (Crown estimates it has 4,000 small businesses that depend on it)
Virgin 8,000
ALH Group 8,000
Helloworld 1,575
Michael Hill 2,500
Star Entertainment 810
Woodside 500

Cafes alone employ 150,000 people, pubs and nightclubs 80,000, casinos 30,000, gyms and fitness centres 22,000 and zoos and amusement parks 12,000.

United States

Trump claims he would like to have the country “opened up and just raring to go by Easter.”

United Kingdom

Death toll has reached 335.
People may only leave home to exercise once a day, travel to and from work when it is “absolutely necessary”, shop for essential items and fulfil any medical or care needs.
More details on the 4 reasons for leaving home: https://www.gov.uk/government/publications/full-guidance-on-staying-at-home-and-away-from-others/full-guidance-on-staying-at-home-and-away-from-others

Stimulus measures – updated 25 March

Commonwealth

A $40 billion discretionary fund has been set aside under the control of the Finance Minister.

Households ($25 billion)

$14.1 billion welfare.
– expanded eligibility to income support payments.
– additional $550 per fortnight.
$1.6 billion welfare expansion to students.
– expands the $550 per fortnight payment to students not included under the original plan.
$8.8 billion handouts.
– two rounds (originally one) of $750 payments to income support recipients.
$1.2 billion early superannuation access.
– tax-free withdrawal of up to $20,000 in superannuation.
Temporary reduction in super drawdown rates.
– reduce minimum drawdown rates by 50 per cent for FY19 and FY20.
$876 million lower social security deeming rates.

Business ($38.8 billion)

$31.9 billion cash flow boost for employers.
– total payment between $20,000 and $100,000.
Temporary relief for financially distressed businesses.
– changes to requirements around insolvency.
$700 million increased instant asset write-off.
– Lifting asset threshold to $150,000 (was $30,000).
– businesses eligible with turnover of up to $500 million (previously $50 million).
$3.2 billion accelerating depreciation deductions.
$1.3 billion wage assistance for apprentices and trainees.
$1 billion for affected regions.
$715 million for airlines and airports.
– relief from a range of government taxes and charges.

Lending ($125 billion)

$20 billion SME loan guarantee.
$15 billion from government for SME lending through the banks.
$90 billion from RBA for SME lending through the banks.

More details: https://treasury.gov.au/sites/default/files/2020-03/Overview-Economic_Response_to_the_Coronavirus_0.pdf

Across the country, all pubs, clubs, nightclubs, casinos, gyms, indoor sporting venues, places of worship, cinemas and entertainment venues, beauticians, tattoo parlours, and nail and tanning salons close. Cafes and restaurants to provide delivery or takeaway only. Funerals are limited to 10 people, and weddings to five. All other businesses can remain open, subject to 4 square metre rule.

Victoria

Three-stage, $1.7 billion stimulus announced.
$550 million payroll tax refund for 24,000 SMEs with a payroll of less than $3 million (refunds available from Friday, March 27).
$500 million fund for hardship payments, small grants and tailored support.
$600 million for a range of measures, including waiving liquor licence fees for 12,500 venues.
School term will end today, rather than the end of the week, and schools will reopen on 14 April.

New South Wales

$2.3 billion stimulus package announced.
$700 million extra funding for NSW Health.
$450 million to waive payroll tax for businesses with payroll of up to $10 million for the next three months.
$56 million to bring forward payroll tax cuts by raising the threshold limit to $1 million in 2020-21.
$80 million to waive a range of fees and charges for small businesses.
$250 million to employ additional cleaners of public infrastructure.
$250 million to bring forward maintenance on public assets.
$500 million to bring forward capital works and maintenance.

Queensland

$4 billion stimulus to be announced Tuesday 24/03/2020.
$300 million household relief package will give households $200 off their utility bills.
$2.5 billion directed towards workers and businesses, including $500 million to assist workers who lose their job or income. Liquor licence fees are being waived, rent relief for businesses who rent premises from the state government, and sole traders and SMEs will receive a $500 rebate on their power bill for the year.
$1.2 billion expanding fever clinics, emergency department capacity, acute care services and regional aeromedical services for remote communities.
Includes two months worth of payroll tax refunded to SMEs and a payroll tax holiday for the April-June quarter. Large businesses can apply to access this payroll tax holiday if they are impacted by coronavirus.
Other measures:
- $500 million in 12-month, interest-free loans.
- $27.5 million Immediate Industry Recovery Package to provide relief to affected industries, businesses and workers.
- $17 million vaccine package.
- $8 million funding relief for the arts sector.
- Allowed distribution centres and loading bays to operate 24/7 to allow supermarkets to restock shelves.

Western Australia

$607 million stimulus package.
$402 million freeze on household fees and charges, including electricity, water, motor vehicle charges, emergency services levy and public transport fares.
$114 million to support SMEs
$91 million to double the Energy Assistance Package to $600 for eligible concession card-holders.
$1 million payroll tax threshold brought forward to 1 July, 2020
SMEs can apply to defer payment of 2019-20 payroll tax until 21 July 2020
Require all people arriving after 1:30pm Tuesday 24 March to quarantine for 14 days, effectively closing borders

South Australia

$350 million stimulus package, all spending no tax relief
Major road and hospital upgrades, tourism upgrades, increased funding for Economic and Business Growth Fund.

Tasmania

$420 million stimulus package
$1 million over next three months to organisations such as Salvation Army, Red Cross to support self-isolated individuals
One off payments of $250 for individuals and up to $1,000 for families who are required to self-isolate
$1 million emergency accomodation support for people who must self-isolate but cannot return to usual residence.
$4 million for primary health and mental health sectors
$20 million interest free loans for small businesses in certain sectors with a turnover of less than $5 million
Payroll tax waived for hospitality, tourism and seafood industry businesses. Other businesses must apply for payroll tax waiver.
$50 million to fast track maintenance on public buildings.
Other small business grants, payroll tax rebates and funds to support training and employment.

Australian Capital Territory

$137 million stimulus.
$150 rates rebates for every household, $200 rebate for those on utilities concession.
Vehicle registration, public transport fares and parking fees frozen.
$2,622 credit to commercial rates bill.
$750 rebate to small businesses through the next electricity bill.
Businesses paying up to $10 million in wages can defer payroll tax for 12 months. “Affected” industries receive a one-off six month waiver.
Taxi and rideshare fees waived. Food and liquor license fees waived.
$20 million fund for simple infrastructure works on public buildings.
$500,000 in arts grant funding brought forward.
$7 million for non-government organisations to meet increased demand for social services.

Northern Territory

$65 million stimulus.
$30 million home improvement scheme.
$20 million business improvement grant.
$5 million immediate work grant.
$5 million structural adjustment package.
All regular increases to government fees and charges, including electricity costs, put on hold.
Payroll tax exemption for hiring Territory employees extended to 30 June 2021.

America

Trump stimulus to be worth around $2 trillion ($3.47 trillion AUD).
$1,200 hand out per adult.
– plus $500 for every child in those families.
– phased out for those earning over $75,000 to $99,000.
$300 billion SME loans.
– loans capped at $10 million.
– part of the loan forgiven if companies do not lay off employees through end of June.
$500 billion for emergency relief and taxpayer protections. Of this:
– $58 billion loans and loan guarantees for airlines.
– $17 billion for companies deemed important to national security.
– $425 billion for businesses, cities and states.
$150 billion for loans and loan guarantees for “other eligible businesses”.

United Kingdom

£350 billion government-backed loans, grants and tax cuts for companies.
£10 billion to pay workers who lose their jobs up to 80% of their wages.
VAT (GST equivalent) payments suspended for April-June, a £30 billion tax holiday.
Unlimited 12-month, interest free loans for businesses.
£7 billion additional welfare support, including increase in universal credit payments.
£1 billion support for renters.
Self-employed workers entitled to equivalent of statutory sick pay.