Australian Prime Minister Scott Morrison yesterday announced a A$130 billion (S$114 billion) scheme to provide replacement wages for up to six million people who may lose their jobs otherwise due to the Covid-19 outbreak.
Describing the package as an "economic lifeline", Mr Morrison said the aim was to ensure that struggling businesses retained staff while the economy went into hibernation. The six-month scheme will be offered to almost half the workforce and will provide people with A$1,500 per fortnight, or about 70 per cent of the average wage.
"We are living in unprecedented times... this calls for unprecedented action. Our government has made a decision no government has made before in Australia in response to crises such as these. And I hope and pray they never have to again," he said.
Australia has about 4,250 confirmed cases of Covid-19. Eighteen people have died.
To try to control the outbreak, the government has banned entry to all travellers, other than citizens and residents. States have closed schools and non-essential businesses, and some are limiting public gatherings to two people.
Australia, like many other countries, is set to enter a recession later this year, ending its world-beating 28-year run of continuous growth.
An estimated one million people have lost their jobs due to the pandemic. Significantly, the wage entitlements announced yesterday will not be made through the welfare system. Instead, payments will be made by the federal government directly to businesses, which will then pay their employees.
Self-employed, part-time and casual workers are also eligible. Businesses will be eligible only if their turnover has dropped by at least 30 per cent due to the pandemic. For larger companies with turnover of more than A$1 billion, their turnover must fall by at least 50 per cent to be eligible.
Within an hour of yesterday's announcement, 8,000 businesses had registered to access the payments.
Mr Morrison said the scheme was crucial to avoid economic collapse due to the sudden halt to business activity, warning that the pandemic could lead to countries descending into chaos. "This will not be Australia," he said.
Business groups have welcomed the measures, urging employers to rehire staff if possible.
Economist Shane Oliver from AMP Capital said the scheme will lead to hefty public debt but was necessary to try to avoid a potential depression.
Meanwhile, the government has also moved to ensure that foreigners do not try to take over struggling Australian companies, which have been hit hard or suffered plunging share prices due to the pandemic.
The Foreign Investment Review Board will now screen all investments to ensure they are in the national interest. Previously, countries with free trade deals with Australia, such as China, the United States and Singapore, needed to have standard investments in Australian companies approved only if the deal was worth more than A$1.2 billion.
Treasurer Josh Frydenberg said this measure was temporary and not an "investment freeze". "Australia is open for business," he said.
The government and the central bank have announced packages worth A$320 billion to help the economy weather the crisis. This amounts to about 16 per cent of the nation's gross domestic product.
