IPA COVID-19 Economic Update – 26 March 2020

A new daily email 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 Daniel Wild, Director of Research at the Institute of Public Affairs: 

“Federal and state governments must reduce taxes and cut red tape to support jobs and economic recovery.”

“Daniel Andrews is acting recklessly in pushing to shut down the Victorian state economy which would entrench unemployment and business closures.”

“Flattening the health curve must be balanced with flattening the unemployment curve. The social, health, and cultural consequences of mass unemployment could be worse than the direct impacts of the virus.”

Research prepared by IPA Research Fellows Kurt Wallace and Cian Hussey. 

Australia

• 2,793 cases at 3:00pm.
• 280,000 people lodged an ‘intent to claim’ with Centrelink before 2:30pm on Wednesday.
• There has been a significant expansion in testing – all healthcare workers, and those caring for the elderly, will now be tested for coronavirus if they show any symptoms. Additionally, anyone in an area where there has been a cluster of cases will be tested if they fall ill.
• Labor has ended their support of the government’s response with leader Anthony Albanese calling for stricter immediate shutdowns, a fast-tracked third stimulus, bigger wage subsidies and a more expansive social welfare system.
• The increase in cases in Australia has been driven by travellers returning to Australia, rather than community transmission, according to Australian National University Medical School professor Peter Collignon.

Australian States

• South Australia: A $650 million jobs support package has been announced.
  • Payroll tax relief up to $60 million with a 6 month waiver of payroll tax for all SMEs payroll sup to $4 million.
  • Deferral of payroll tax for 6 months for all other companies that can demonstrate an impact on cash flow.
  • Land tax relief, details unclear.
  • Waive liquor license fee for venues forced to close by lockdown measures.
  • $300 million business and jobs support fund, details to come.
  • $250 million community fund, details to come.
  • $500 one off boost for every individual receiving Centrelink Jobseeker payment
  • Public sector workers will be given an additional 15 days personal leave for coronavirus, with councils expected to offer the same.

• Tasmania: Government has ordered all visitors to leave by midnight Sunday. They have announced an additional $580 million support package, adding to the previously-announced $420 million package. The new package includes:
  • $150 million boost to health spending, a freeze on all power, water and electricity prices for homes and small businesses and the waiving of first quarter utility bills for all small businesses.
  • Interest free loans and tax and charges waivers for businesses shut-down or severely impacted.
  • $40 million small business grants program and extension of payroll tax relief for hospitality, tourism, seafood and other impacted companies.
  • Plan to negotiate with councils to freeze rates.
• New South Wales: The NSW Parliament has passed the COVID-19 Legislation Amendment (Emergency Measures) Bill 2020 which enables the government to limit the ability of landlords to collect rent or evict tenants for 6 months. Victorian Premier Daniel Andrews has flagged that Victoria will follow suit.
• Western Australia: WA has introduced a limit on the sale of alcohol in an effort to minimise social disruption and ensure hospitals were not tied up treating alcohol-related injuries. The limit will be reviewed after two weeks.

New Zealand

• NZ began its stage four lockdown today, where everything except essential services are closed and people are ordered to stay home.
• PM Jacinda Ardern announced new support measures including rent and eviction freezes (similar to NSW), and $27 million extra funding for women’s shelters and other community services.
• As at 9am, a total of $1.5 billion had been paid out to 244,887 workers under the country’s wage subsidy scheme. A further 100,000 requests have been approved and nearly 50,000 are still to be processed.

United States

• The more than $2 trillion stimulus package has now been passed by the Senate and will move to the House of Representatives.
• Includes cash payments to American families with $1,200 per adult, or $2,400 per couple, with additional amounts for children. Payments will be phased out started at annual incomes of $75,000 for individuals or $150,000 per couple.
• $500 billion for loans to businesses, including $25 billion for passenger airlines, $4 billion for cargo airlines, and $17 billion for companies that are deemed “critical to maintaining national security”. Remaining $454 billion to be disbursed through government loans and loan guarantees. Distributions will be overseen by an inspector-general and a five-person congressional panel. Businesses tied to President Trump and his family, members of Congress, and heads of executive agencies will not be eligible for government help.
• $367 billion in loans and grants to small businesses with fewer than 500 employees.
• Unemployment benefits will increase by $600 a week for four months. Benefits have been extended to include the self-employed and workers in temporary jobs within the ‘gig economy’.
• Extra $150 billion in funding for hospitals, personal and protective equipment for healthcare workers, testing supplies, increased workforce and training, and new construction to house patients.

Canada

• $52 billion (Canadian) stimulus package.
• Package includes $2,000 per month for four months for those who have lost their job.
• Additional deferment of $55 billion in taxes.

United Kingdom

• Prince Charles has tested positive for coronavirus.

Announced stand-downs and layoffs from large companies

This is a running count of announced stand-downs and layoffs and is compiled of companies that have made a public announcement including a specific number of employees let go.

Running total – 96,657

• Qantas 20,000
• Crown 20,000 (Crown estimates it has 4,000 small businesses that depend on it)
• Premier Investments 9,000
• Star Entertainment 8,100
• Virgin 8,000
• ALH Group 8,000
• Mosaic Group 6,800
• Flight Centre 6,000
• Accent Group 5,000
• Michael Hill 2,500
• Helloworld 1,575
• Viva Leisure 1,002
• Woodside 500
• Manly Fast Ferry and Captain Cook Cruises 180

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.

Stimulus measures – updated 26 March

Commonwealth

• A $40 billion discretionary fund has been set aside under the control of the Finance Minister.
• Sky News has revealed that federal treasury officials are preparing advice to the government on a potential wage subsidy for businesses forced to shut down due to coronavirus.

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.

Announced stand-downs and layoffs from large companies – 85,457, as per ASX.

• Qantas 20,000
• Crown 20,000 (Crown estimates it has 4,000 small businesses that depend on it)
• Star Entertainment 8,100
• Virgin 8,000
• ALH Group 8,000
• Mosaic Group 6,800
• Accent Group 5,000
• Flight Centre 3,800
• Michael Hill 2,500
• Helloworld 1,575
• Viva Leisure 1,002
• Woodside 500
• Manly Fast Ferry and Captain Cook Cruises 180

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.

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.

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.
• 24 hour trading allowed for supermarkets and pharmacies.

Queensland

• $4 billion stimulus announced.
• $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.
• Limit on the sale of alcohol to one carton of beer, cider, or pre-mixed spirits, or three bottles of wine, or one litre of spirits, per person per day. The limit will be reviewed after two weeks.

South Australia

• Premier Steven Marshal announced a Jobs Rescue Package, known details include:

• • $60 million in payroll tax relief. 6 months waiver for all SMEs with wages up to $4 million
  • $500 one-off payment to everyone receiving the Jobseeker payment from the federal government.

• $350 million stimulus package, all spending no tax relief
• Major road and hospital upgrades, tourism upgrades, increased funding for Economic and Business Growth Fund.
• 24 hour trading allowed for supermarkets and pharmacies.

Tasmania

• Total stimulus/support package of $1 billion.
• $580 million support package includes:
  • $150 million boost to health spending, a freeze on all power, water and electricity prices for homes and small businesses and the waiving of first quarter utility bills for all small businesses.
  • Interest free loans and tax and charges waivers for businesses shut-down or severely impacted.
  • $40 million small business grants program and extension of payroll tax relief for hospitality, tourism, seafood and other impacted companies.
  • Plan to negotiate with councils to freeze rates.
• $420 million stimulus package includes:
  • $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

• The more than $2 trillion ($3.47 trillion AUD) has been passed by the Senate and will now move to the House of Representatives.
• Includes cash payments to American families with $1,200 per adult, or $2,400 per couple, with additional amounts for children. Payments will be phased out started at annual incomes of $75,000 for individuals or $150,000 per couple.
• $500 billion for loans to businesses, including $25 billion for passenger airlines, $4 billion for cargo airlines, and $17 billion for companies that are deemed “critical to maintaining national security”. Remaining $454 billion to be disbursed through government loans and loan guarantees. Distributions will be overseen by an inspector-general and a five-person congressional panel. Businesses tied to President Trump and his family, members of Congress, and heads of executive agencies will not be eligible for government help.
• $367 billion in loans and grants to small businesses with fewer than 500 employees.
• Unemployment benefits will increase by $600 a week for four months. Benefits have been extended to include the self-employed and workers in temporary jobs within the ‘gig economy’.
• Extra $150 billion in funding for hospitals, personal and protective equipment for healthcare workers, testing supplies, increased workforce and training, and new construction to house patients.

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.

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