Shares surge as federal government fires a new $130bn bazooka
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“Extraordinary times call for extraordinary measures,” Treasurer Josh Frydenberg said this afternoon.
Just prior to that, Prime Minister Scott Morrison had unveiled a new $130bn stimulus package to help fend off the economic impact of the coronavirus.
The core pledge of the new announcement is to provide a fortnightly “JobKeeper” payment of $1,500.
The aim of the funds is to allow employers to keep staff in their job, where normal business operations have been severely impacted or forced to go on hold.
The payments will help “support the jobs and livelihoods of what we anticipate will be almost 6 million Australians who will need that lifeline”, Morrison said.
Local stocks had been having a good day prior to the announcement, with the ASX200 climbing by around 4 per cent into the 4pm close.
But in the brief trading window after 4pm following Morrison’s announcement, the index surged to close 7 per cent higher — its largest daily percentage gain on record. The Small Ords index finished 3.99 per cent higher.
The government’s latest round of spending will be made in addition to the $66bn stimulus package it announced last week, which provided further $550 per fortnight to eligible welfare recipients.
All up, the total amount pledged as part of the emergency fiscal response now total more than $200bn.
It follows an unprecedented round of monetary policy stimulus on March 19, when the RBA announced a government bond-buying problem along with a $90bn funding facility to foster bank loans to small business.
Frydenberg said the JobKeeper payments represent “around 100 per cent of the median wage in the most affected sectors — retail, hospitality and tourism”.
In addition, people who have lost (or will lose) their job and have a partner in work will still be eligible, as long as their partner earns less than $80,000 (up from $48,000).
The payments will be made available for full-time and part-time workers, sole traders and casual employees who have been in their job for at least 12 months.
Frydenberg said the new support package is broader than the one introduced by the UK government, because it includes “all employees, not just those who have been stood down”.
The payments will come into effect in May, and be backdated to today. Eligible companies will be those that have reported a decrease in turnover of at least 30 per cent (for turnover less than $1bn) or 50 per cent (for turnover more than $1bn).