Josh Frydenberg says the government will use the tax and transfer system to boost the economy
Josh Frydenberg says the Morrison government will use the tax and transfer system to get financial support to Australian households as quickly as possible as part of a looming stimulus package to counter the negative economic impact of the coronavirus.
Ahead of a cabinet deliberation about the stimulus package expected on Tuesday, the treasurer was asked by reporters on Monday how the government intended to administer assistance to households, given the Coalition has criticised the Rudd government’s stimulus package deployed during the global financial crisis.
As recently as late last week, the finance minister, Mathias Cormann, declared households should not expect Kevin Rudd-style cash payments to stimulate the economy in the wake of the coronavirus.
Frydenberg told reporters on Monday when it came to households: “We have our existing systems, the tax and transfer systems. In terms of the specific details, I will leave that to our announcement, but what we will be focused is ensuring the support gets out there as fast as possible.”
The treasurer said the multibillion-dollar package, which the government has been working up over the past couple of weeks in anticipation of a sustained economic hit from both the bushfires and the coronavirus, would be “very comprehensive and very substantial”.Ahead of a cabinet deliberation about the stimulus package expected on Tuesday, the treasurer was asked by reporters on Monday how the government intended to administer assistance to households, given the Coalition has criticised the Rudd government’s stimulus package deployed during the global financial crisis.
As recently as late last week, the finance minister, Mathias Cormann, declared households should not expect Kevin Rudd-style cash payments to stimulate the economy in the wake of the coronavirus.
Frydenberg told reporters on Monday when it came to households: “We have our existing systems, the tax and transfer systems. In terms of the specific details, I will leave that to our announcement, but what we will be focused is ensuring the support gets out there as fast as possible.”
Frydenberg hinted the government would roll out the first phase of assistance to households and business imminently, then likely revisit again at the May budget. He said the measures would be “scalable”.
The treasurer said the virus had inflicted supply and demand side constraints on economies, including Australia, “and that’s where our package will be focused”.
The government has signalled a new business investment allowance, a financial boost for pensioners through changes to deeming rates, and immediate support for small and medium-sized businesses will form part of the looming package.
Frydenberg said on Monday the stimulus package, which is expected to be announced before the prime minister and the premiers meet this Friday in Sydney for the Council of Australian Governments, would not include updated economic forecasts taking into account the hits inflicted on the budget by the summer bushfire crisis and the virus. Forecasts, he said, would be updated in the May budget.
Last week, the Treasury secretary, Steven Kennedy, revealed that the department was forecasting a 0.7% contraction in economic growth in the March quarter, equivalent to lost activity worth about $3.5bn.
Speaking in Brisbane, the shadow treasurer, Jim Chalmers, encouraged the Morrison government to move quickly and substantively with the stimulus package. “We need to make sure that whatever the government announces is not too little too late.
“We need to make sure that whatever they announce is big enough and fast enough to make a genuine difference in a floundering economy,” Chalmers said.
The shadow treasurer also advocated support for workers whose incomes will be disrupted by the illness, and for businesses. “We need the government to focus on those most affected by these challenges – whether it be workers without paid sick leave, whether it be businesses in the affected sectors having trouble with cashflow”.
The industrial relations minister, Christian Porter, will meet on Tuesday with unions and employer groups. Australia’s 3.3-million-strong casual workforce is posing particular challenges now the coronavirus is being transmitted in the community.
The government’s advice to workers to self-isolate and work from home in the event of illness is not a solution available for many casual and service industry workers. Labor has proposed a Newstart-like payment be made available to workers forced to self-isolate.
The ACTU national secretary, Sally McManus, wants to put compensation for casual workers on the table, highlighting the flow-on effects from workers suddenly being denied an income. “It should be just paid leave,” McManus said, suggesting employers be compensated by the government once the crisis has passed.
Porter’s office said Tuesday’s meeting was a first-step discussion about the potential issues facing Australia’s business community and workforce.
Frydenberg said the government was “very conscious” workers would be concerned about job security, and would be an issue discussed at Porter’s roundtable on Tuesday. The treasurer urged businesses to be cooperative and flexible.
Advocates have also drawn attention to the government’s plan to scrap the sickness allowance, as part of a plan to roll seven social services payments into the one JobSeeker payment.
That is due to take affect on 20 March, with those impacted being told to apply for the JobSeeker payment, which comes with mutual obligations those self-isolating will most likely be unable to meet.
The social services minister, Anne Ruston, has already ruled out any changes to Newstart, saying any future raises to the rate would be part of measures separate to the coming stimulus plan.
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