Protecting Australians and the Economy From the Effects of COVID-19
The Government has acted swiftly and decisively to address the significant impacts of COVID-19 on Australia’s health system, the economy and jobs, by providing an unprecedented level of support to assist households, keep businesses in business and keep Australians in jobs. In the Federal Government’s economic and fiscal update on 23 July 2020, there were no surprises and it was what businesses expected, and there remains a high degree of uncertainty surrounding how the virus will evolve and its full economic impacts. JobKeeper is playing a critical role in our economy, not just today but over the months ahead as businesses continue to do it tough.
Of most significance to business owners was the extension to JobKeeper albeit with staged reductions and re-qualification criteria which business owners should be aware of. The eligibility test would be adjusted so employers only had to show a fall in turnover in the quarter to the end of September compared to the same period last year in order to qualify, opening the payments up to more people. The latest information is available on the ATO website.
The domestic and global outlook has deteriorated sharply. The world is experiencing it’s most severe economic crisis since the Great Depression. Real GDP is forecast to have experienced it’s sharpest fall on record in the June quarter. The Government is providing timely economic support and according to treasury.gov.au:
‘The Government’s economic support package of $259 billion represents fiscal and balance sheet support across the forward estimates of 13.3 per cent of annual GDP. Direct fiscal measures are equivalent to around 6.9 per cent of GDP.”
Activity was expected to pick up in the September quarter and beyond, with the projected easing of restrictions in most parts of the country, however the “second wave” impact has altered this view and negatively impacted business confidence in all states with Victoria currently being worst affected. The economy is however, forecast to recover faster than in past recessions as we return to the new normal due to the unwinding of restrictions, but it will be a long road back with lingering effects from the crisis on confidence, balance sheets and the labour market. The unemployment rate will remain elevated for some time.
Further forecasts and projections are scheduled to be delivered on 6 October 2020, which will provide more time for the economic and fiscal impacts of COVID-19 both in Australia and around the world, to be better understood. This will also ensure that the 2020-21 Budget can be set out on the path the economic recovery.
For further insight on the budget updates in relation to your business please contact us today.