Wright Place Blog

This week, we summarise what is currently on offer for people financially impacted by Coronavirus.

At the start of April, stimulus packages totalled approximately $331.6 billion, or 16.6% of GDP.

Monetary Policy:

Over March, The Reserve Bank of Australia reduced the cash rate, and launched unconventional monetary policy. The RBA have reduced the cash rate to the effective lower bound of 0.25%. The RBA signalled there would be no further reductions to the cash rate, and that it would not be lifted until inflation was comfortably between 2-3%, and the labour market was trending towards full employment.

• A 3-year funding facility is available to authorised deposit-taking institutions. The funding facility will have a fixed lending rate of 0.25%. Lenders may receive funding to the equivalent of 3% of the credit outstanding to households and businesses. Additional funding will be available for business lending, but not for residential mortgage lending. Treasury is supporting smaller lenders with a $15 billion advance.
• A yield target of 0.25% has been set for 3-year government bonds. The RBA will target lower rates through the purchase of various government bonds and semi-government securities. This is aimed at putting more money in the hands of investors, and the target yield may be subject to change.
• The Australian Prudential Regulation Authority (APRA) is enabling the implementation of these policies. The regulator has postponed the implementation of further capital reforms to 2021, and has relaxed expectations of capital ratios.

Fiscal Policy:  Federal Government initiatives announced so far total $213.6 billion.

For businesses:

• Wage subsidies of $1,500 per fortnight for eligible employees and employers.
• The national cabinet has announced a framework for commercial tenancies. This framework is targeted at small and medium sized businesses that qualify for the JobKeeper assistance program.
• Operational cost support of between $20,000 and $100,000 for small to medium sized businesses and not-for-profits
• Increases in the instant asset write-off threshold from $30,000 to $150,000, and increased accessibility to include businesses with aggregated annual turnover of less than $500 million up from $50 million
• A 15-month investment incentive program, delivered through accelerated depreciation deductions
• A 50% subsidy for apprentice’s or trainee’s wages
• Temporary relief for financially distressed businesses through a lift in the statutory demand threshold, time for a company to respond and directors relieved of duty to prevent insolvent trading
• Funding of $1 billion to support regions and sectors most affected by the COVID-19 outbreak, which include areas heavily reliant on tourism, agriculture and education
• A 50% loan guarantee (the SME Guarantee Scheme)  for small to medium sized enterprise borrowers to support new short-term unsecured loans
• Temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers

For households:

• A 6-month moratorium on evictions for residential and commercial property tenants has been announced. This is for tenants who are unable to pay rent due to financial stress induced by circumstances around COVID-19. According to a press conference on March 30, compensation for landlords, such as a rent guarantee, is “still being worked through”.
• $750 will be provided to low income households on government assistance this year and next financial year
• The JobSeeker payment has been temporarily lifted by $550 per fortnight
• Early access to up to $10,000 in superannuation is available for eligible unemployed Australians
• Temporary reduction of superannuation minimum drawdown rates will be implemented.

Queensland Government – $4 billion

• Land tax relief for tenants to offer rent reductions, as well as a range of guidelines for landlords to help tenants through the downturn
• Payroll tax refund and relief totalling up to $950 million
• A $500 million package to train and redeploy workers
• Interest free loans for up to 1 year for the retention of workers
• $1bn industry support package for large businesses making a key contribution during the crisis
• $100 million for business electricity bill support

Source: CoreLogic – Click here to read article in full.