"The package is well-aimed at an already-slowing economy scarred by bushfires and drought and now confronting the escalation of COVID-19 into a global pandemic. Business and consumer confidence which were fragile as 2019 ended, have now turned down sharply.
"The package's redirection of taxpayers' money back into the economy together with lower-than expected tax collections will mean the federal Budget will not return to surplus as anticipated. Nevertheless, Australia's underlying budget position remains strong and it is much better to strike early in order to reduce the risk of a more substantial downturn with all the associated human and fiscal consequences.
"Ai Group applauds the Government's recognition that further measures may be needed as the situation evolves. Importantly, the meeting this week with state and territory leaders should consider concerted action on payroll tax relief – which should cover the larger employers who will not qualify for the Federal Government measures aimed at small and medium-sized business. The state and territory leaders should also consider easing state and local government regulatory barriers such as those that restrict the times trucks can deliver to retail outlets.
Boost to business and consumer spending
"The most immediate benefit to the economy will come when up to 690,000 smaller businesses and around 6.5 million recipients of income support spend additional income from the one-off cash grants. While some of this may be put aside for another day, much will boost retail sales and associated supply chains.
Instant asset write-off and depreciation changes
"The extension of the instant asset write-off provisions will provide powerful incentives for many small and medium-sized businesses to invest in capital equipment up to a value of $150,000.
"The temporary measure to accelerate depreciation deductions on new investment for small and medium-sized businesses is along the lines advocated by Ai Group and is particularly welcome as a measure that will both stimulate the economy and underwrite a major lift in business investment.
"Both these measures will help boost retail sales, machinery and equipment manufacturers and a range of investment-related business service industries and will underwrite jobs in these sectors. They will also provide a firm base from which businesses can work with their staff to lift productivity and build longer-term resilience and competitiveness.
"Ai Group welcomes the Government's initiative to support the continuation of employment of apprentices in small enterprises through 50% wage subsidies.
"Continuing to develop skilled trades people through a time of crisis is incredibly important. It will enable companies to thrive when they emerge from the uncertainty and adverse impacts of COVID-19. Importantly, young people who have started apprenticeships can continue. They will remain employed, continue to develop their skills and be an important part of the recovery post-COVID-19.
"A service to find new employers for displaced apprentices is also a welcome initiative. The sooner an apprentice returns to work and skills training the better the outcomes for all involved. The national Apprentice Employment Network is ideally placed to deliver this service.
Advice for businesses affected by bushfires
"Ai Group particularly welcomes the announcement of an additional 21 Business Advisers to support SMEs impacted by the recent bushfires for a two-year period. Assisting business from the adverse impact of the bushfires is a major support for regional communities as well as the broader economy," Mr Willox said.
Further detail: Summary of the Government's Economic Response to COVID-19
Media enquiries: Tony Melville – 0419 190 347