SYDNEY (AUSTRALIA) – Australia will provide A$16.8 billion (9.31 billion pounds) to extend its wage subsidies for businesses affected by the coronavirus pandemic.
The six-month extension of the programme mitigates fears about the uncertainty prevailing around current A$70 billion scheme, originally scheduled for September 30.
However, under the new programme, subsidies will be reduced, which would extend to March 28, 2021 and is expected to be of use to about 1 million workers. Prime Minister Scott Morrison’s conservative government is aiming to relieve the economy from depending on fiscal support.
Morrison told in Canberra, “It has to scale down and work ourselves off these supports because they’re not enduring, they cannot be permanent, they were never designed to be permanent.”
Australia launched its programme in March as a means of support with workers from affected businesses of A$1,500, being paid every fortnight.
At least 3.5 million Australians have been benefitted by this. However, Morrison said changes were necessary to ensure that enough support is given to the economy without overpaying casual workers.
Morrison said his government will also cut down on unemployment benefits, which were increased in March. The benefits are likely to continue, however, they will be brought down to half.
Australia’s central bank has embraced the continuation of both wage and unemployment support.
“They’re both providing important support to households and businesses. They’re both playing an important role in reducing the costly scarring to the economy,” Philip Lowe, Governor of the Reserve Bank of Australia, said in a speech on Tuesday.
FISCAL CUSHION
The fiscal stimulus’ extension evades fears that Australia would have to bear the brunt of a hard economic landing post September, with unemployment already at a 22-year high.
Australia’s central bank said late last month the economy will need “considerable” support for a while, even as states and territories take measures to reopen their economies.
Joshua Williamson, head of Economics Australia and New Zealand, Citibank, said, “The risk of a hard landing for the economy has dramatically reduced. By extending the assistance schemes, the government has reduced the likelihood of a policy driven slump in economic activity in Q4.”
However, hopes for a quick recovery have been dampened as Australia is grappling to contain new COVID-19 outbreaks.
Australia has recorded about 12,000 infections, and the death toll has seen a rise too.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.