Retirees and businesses are set to receive financial support as the government teases a multi-billion dollar stimulus package due to be officially announced by the government within days.
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Treasurer Josh Frydenberg said the plan will include funding for infrastructure spending, with tax incentives to support businesses and new investments also expected.
However, Frydenberg on Thursday denied it would be a Rudd-style “cash splash” and would not get in the way of the government’s coveted budget surplus.
Former prime minister Kevin Rudd in 2009 implemented a post-GFC stimulus package that saw Australians earning up to $80,000 receive a $900 cash bonus directly into their bank accounts.
Speaking to 9 Network on Thursday morning, Frydenberg said the government’s fiscal measures are aimed at supporting businesses, cash flow and jobs but supported. He said an investment allowance was also “on the table”.
"It will be worth billions in the terms of impact it will have," he told Sky News.
"The package of measures will be responsible and will be scalable."
Retirees to receive support
Self-funded retirees are also tipped to receive support, with Frydenberg noting the record-low cash rate is affecting retirees’ investment returns.
“We are now having another look at the deeming rate. We do recognise that both depositors and also borrowers are affected [by rate changes].”
The deeming rate is the assumed rate of return on investment. It was revised down last year to reflect the lower cash rate, but further cuts could push the government to lower it again.
Troubling economic times
Prime Minister Scott Morrison first flagged the stimulus package earlier this week as Australia’s economic troubles progressively worsened due to the spread of coronavirus, or COVID-19.
Morrison said a stimulus package would come into place to protect jobs as the country’s China and Iran travel ban – compounded by a devastating bushfire season - threatened hundreds of thousands of jobs.
Up to 133,200 jobs in the tourism and transport industry could go, the Tourism and Transport Forum said this week.
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"It will be a targeted plan. It will be a measured plan. It will be a scalable plan,” Morrison said, hours before the Reserve Bank of Australia announced it would cut the official interest rate to a record low of 0.5 per cent.
"It will be targeted on the real diagnosis of the economic issue we are looking to confront here.
"We will ensure that we do not make the same mistakes of previous stimulus measures that have been put in place."
Previous stimulus packages
Former prime minister Kevin Rudd introduced two stimulus packages during his tenure, with the first in 2008 worth $10.4 billion and the second package worth $42 billion in 2009.
While popular, his second package was criticised as it plunged the budget into deficit, something Morrison commented on.
“There is a lot of learning from what happened last time and it is important that as the business sector bounces back, as it will on the other side of this, this is why this health crisis with economic, significant economic implications, is different from a global financial crisis,” he said.
“If you don’t work to get the details of a package like this right, then it can have very serious implications, both economically and more broadly, and frankly, we saw that last time, and we don’t intend to repeat those mistakes.”
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