Australian Government’s Plan to Revive Their Economy From Covid-19
2020 has been a very difficult year for everyone. The pandemic knocked off all the plans everyone had. Countries had to take preventive and corrective measures to deal with the pandemic and while some countries suffered and are still suffering badly, some countries like Australia managed to control the pandemic and brave through the economic crisis.
Australia has shown the best resilience towards the economic crisis created by the pandemic and the credit for this goes to both the government and the public at large.
The economic response of the Australian government was designed to counter the effects of a once in a lifetime economic and financial crisis. As they say, desperate circumstances call for desperate measures. This is exactly the approach that the Australian government took.
The Australian government realised that in order to minimise the effects of the economic and financial crisis, it needed to provide a security net to the businesses and households. This was done through the JobKeeper payment and boosting the cash flow of businesses in order to prevent mass layoffs and unemployment spikes as seen in the US. The government supported the individuals through the Coronavirus supplements and through the early release of the superannuation.
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This is what the government initially focused upon and these measures to a very great extent cushioned the Australian economy from the effects of the financial crisis, thereby allowing the economy to rebound after the first wave of the pandemic.
The measures that the government is currently taking include the following
- JobKeeper payment which amounts to almost AUD 101 billion, sustaining over 3.5 million Australians.
- Supporting apprentices and trainees is a AUD 2.8 billion plan that is supporting up to 180,000 individuals.
- Income support for individuals is providing AUD 16.8 billion in support.
- Tax free cash flow boosts to almost 0.8 million businesses.
- AUD 40 billion loans to small businesses.
- Early release of the superannuation fund for almost 3 million individuals
- AUD 12 billion in pension support
- Home building grants for almost 1 million individuals to kick start the construction sector.
- JobMaker hiring credit, to provide jobs for up to 450,000 Australians.
- JobTrainer fund to help those entering the labor market learn new skills at zero or subsidised cost.
- Personal Income Tax cuts, to provide relief to 11 million average Australians.
- Tax incentives for businesses looking into new investment opportunities.
- Infrastructure stimulus to support over 40,000 jobs in the construction sector.
In addition to this, the budgeted economic response measures for the year 2021 amount to $324 million as of now, with the possibility of expansion depending upon the situation.
Similarly the budget for the health response measures to be taken in 2021-2022 amount to $1 billion as of yet, with a possibility of expansion depending upon the situation.
The government will continue to provide testing and treatment support to the health sector. Additional funds of over $4.5 billion have been set aside in the budget to provide critical health care and support.
The government aims to provide safe and easy access for all of the Australians to the vaccine and any other treatments that may be available in future. The government has for this purpose set aside $1.7 billion in order to purchase almost 84.8 million doses of the Oxford-AstraZeneca vaccines. This will be enough for the whole population of Australia because each vaccine, as of now requires 2 doses per person. Which means that the government will have roughly 41 million doses available for a population of around 25 million people.
The total support provided by the government since the onset of the pandemic can be bifurcated as follows
- $257 billion for the JobMaker plan and economic stimulus package. This amounts to almost 13% of the GDP
- $272 billion for the Covid health package, this amounts to roughly 13.7% of the GDP.
- Balance sheet support which amounts to $235 billion.
The purpose of these allocations is to provide a cushion to the economy and to invigorate the economy once the lockdowns end and economy comes back to life. The government understands that there is a risk of spike in unemployment and inflation, which is why the JobMaker plan has been prepared.
JobMaker plan is aimed to create a stable economic recovery, while keeping unemployment as low as possible. The focus of the JobMaker plan is going to be the private sector, which is expected to take the lead in generating jobs.
One aspect of this plan is the planned investment in the construction sector over the ten year period. While the JobMaker plan spans over the next 4 years, the construction sector investment will continue for a decade. The aim is to use the construction sector to create a big push, which will bring to life the peripheral industries and thus create jobs and more opportunities for Australians.
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