“Be strong. Be kind. We will be OK.” That was the rallying call from the Prime Minister that accompanied the release of today’s economic support package by the Minister of Finance.
If you weren’t convinced by now, then the package should convince you that this is not a drill. This is big. Big enough to force a Government to spend 4 percent of GDP ($12.1 billion) in pretty close to one go.
Will it be enough? To be honest, we don’t know. It would be foolish to assert that we did. But it is reassuring that the Minister is signalling further parts to the package: “I want to make it clear that this is not a one-off package, it is just the beginning.”
In terms of the specifics, the package is broad-ranging and fairly close to comprehensive.
Interestingly, the package is not as targeted as we were being led to believe. In particular, the wage subsidy is for all businesses that self-identify as being affected by a large fall in revenue. That is across all sectors and all regions. And it is also for self-employed and sole traders. Noticeably, the sick leave assistance is also available for self-employed and contractors.
This is not a drill. This is big.
Similarly, relaxing provisional tax and the potential waiver of interest on late tax payments will also be welcome for small businesses operators.
And, a start on helping up the most vulnerable and least resilient in terms of lifting main benefits by $25 per week is also welcome. Some, if not many, will argue that this increase is small in comparison to just how far behind the start-line benefit recipients are. But the announcement that this is a permanent increase at least begins to partially rectify that inequity.
And it is indeed impressive that the officials have put such a package together in an incredibly short space of time. This augurs well with the promise to make payments as promptly as possible. For example, the wage subsidy is set to be paid out within 5 working days of application.
While this is not the end of the COVID-19 saga, it is incredibly promising that the Government (together with the Reserve Bank yesterday), not only recognises the severity of the situation, but is prepared to respond accordingly.