From March 2020, containing the spread of COVID-19 in Australia has involved measures directly and indirectly impacting the property sector. To lessen the economic impact, a wide array of temporary monetary, fiscal and social policies have been introduced. Those most pertinent to our industry are summarised here.
Overall value of stimulus to date
At the start of April, stimulus packages totaled approximately $331.6 billion, or 16.6% of GDP
Over March, The Reserve Bank of Australia reduced the cash rate, and launched unconventional monetary policy
- The RBA have reduced the cash rate to the effective lower bound of 0.25%. The RBA signaled there would be no further reductions to the cash rate, and that it would not be lifted until inflation was comfortably between 2-3%, and the labour market was trending towards full employment (which has previously been cited as an unemployment rate of 4.5%)
- A 3-year funding facility is available to authorised deposit-taking institutions. The funding facility will have a fixed lending rate of 0.25%. Lenders may receive funding to the equivalent of 3% of the credit outstanding to households and businesses. Additional funding will be available for business lending, but not for residential mortgage lending. Treasury is supporting smaller lenders with a $15 billion advance.
- A yield target of 0.25% has been set for 3-year government bonds. The RBA will target lower rates through the purchase of various government bonds and semi-government securities. This is aimed at putting more money in the hands of investors, and the target yield may be subject to change.
- The Australian Prudential Regulation Authority (APRA) is enabling the implementation of these policies. The regulator has postponed the implementation of further capital reforms to 2021, and has relaxed expectations of capital ratios.
Federal Government initiatives announced so far total $213.6 billion
- Wage subsidies of $1,500 per fortnight for eligible employees and employers.
- The national cabinet has announced a framework for commercial tenancies. This framework is targeted at small and medium sized businesses that qualify for the JobKeeper assistance program.
- Operational cost support of between $20,000 and $100,000 for small to medium sized businesses and not-for-profits
- Increases in the instant asset write-off threshold from $30,000 to $150,000, and increased accessibility to include businesses with aggregated annual turnover of less than $500 million up from $50 million
- A 15-month investment incentive program, delivered through accelerated depreciation deductions
- A 50% subsidy for apprentice’s or trainee’s wages
- Temporary relief for financially distressed businesses through a lift in the statutory demand threshold, time for a company to respond and directors relieved of duty to prevent insolvent trading
- Funding of $1 billion to support regions and sectors most affected by the COVID-19 outbreak, which include areas heavily reliant on tourism, agriculture and education
- A 50% loan guarantee (the SME Guarantee Scheme) for small to medium sized enterprise borrowers to support new short-term unsecured loans
- Temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers
- A 6-month moratorium on evictions for residential and commercial property tenants has been announced. This is for tenants who are unable to pay rent due to financial stress induced by circumstances around COVID-19. According to a press conference on March 30, compensation for landlords, such as a rent guarantee, is “still being worked through”.
- $750 will be provided to low income households on government assistance this year and next financial year
- The JobSeeker payment has been temporarily lifted by $550 per fortnight
- Early access to up to $10,000 in superannuation is available for eligible unemployed Australians
- Temporary reduction of superannuation minimum drawdown rates will be implemented.
State fiscal stimulus
State government fiscal packages as at the end of March
New South Wales - $3.3 billion
- $440 million has been allocated for land tax relief for landlords who offer rent discounts to eligible tenants
- Temporary waiver of payroll tax for eligible businesses
- Deferral of rents for commercial tenants in government buildings
- $56 million to bring forward the next round of payroll tax cuts
- $80 million to waive fees and charges for small businesses, including for tradespeople
- Maintenance work on public assets, including social housing and crown land fencing
Victoria - $1.7 billion
- Payroll tax waivers for businesses with annual wages up to $3 million
- Landowners with at least one non-residential property and landholdings up to $1 million can defer land tax
- Rent relief for commercial tenants in government buildings
- A $500 million support fund for the most impacted sectors
- $500 million for supporting the deployment of displaced workers
Queensland - $4 billion
- Land tax relief for tenants to offer rent reductions, as well as a range of guidelines for landlords to help tenants through the downturn
- Payroll tax refund and relief totaling up to $950 million
- A $500 million package to train and redeploy workers
- Interest free loans for up to 1 year for the retention of workers
- $1bn industry support package for large businesses making a key contribution during the crisis
- $100 million for business electricity bill support
South Australia - $1 billion
- Payroll tax relief of up to 6 months for eligible businesses
- Land tax relief
- $300 million ‘Business and Jobs Support Fund’ for businesses affected by coronavirus
- A $500 payment to households receiving government benefits
Western Australia - $1.60 billion
- Rent relief for commercial tenants in government buildings
- Energy Assistance Payment (EAP) has been increased to $600
- Payroll tax relief for eligible businesses
- A one-off grant of $17,500 for small businesses that pay payroll tax
- Household fees and charges are deferred until 2021
Tasmania - $985 million
- $50 million to bring forward maintenance projects
- Interest-free loans to affected businesses
- Payments to low-income households and payments to households who need to self-isolate
Australian Capital Territory - $337 million
- Easing of taxes to landlords providing rent concessions
- $20 million fund for simple works on government assets
- A $250 cash payment to public housing tenants
- Household rate rebates and credits to businesses for commercial rates
Northern Territory - $115 million
- $30 million to incentivize home renovations under the ‘Home Improvement Scheme’
- All Territory businesses will be able to access a $10,000 grant.
- Payroll tax exemptions
- $50 million for a small business survival fund
The information provided in this publication is current as at 14th April 2020 and is of a general nature and should not be construed as specific advice or relied upon in lieu of appropriate professional advice. While CoreLogic uses commercially reasonable efforts to ensure the information is current, CoreLogic does not warrant the accuracy, currency or completeness of the information and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the Product Data.
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