The stimulus plan released by the Australian government will help support the residential construction market, experts say.
The government announced yesterday a $ 17.6 billion economic plan to help mitigate the potential risks from the coronavirus epidemic.
The package includes four parts, which include support for business investment; provide cash assistance to help small and medium businesses; expand aid to the most seriously affected sectors, regions and communities; and providing stimulus packages to households that will benefit the economy as a whole.
What does the package include?
Although these measures are all temporary and targeted, Prime Minister Scott Morrison has declared that they will ensure that the country responds to the immediate challenges posed by COVID-19.
"Just as we have acted decisively to protect the health of the Australian people, based on the best evidence and best medical advice, our support program responds to the economic challenges presented by this pandemic in a timely, proportionate and targeted ". Morrison said in a statement.
The stimulus payments to households will represent $ 4.6 billion of the economic package. The package will provide a one-time stimulus payment of $ 750 to retirees, social security, veterans and other income support recipients, and eligible franchise card holders.
The payment will be tax exempt and will not count as income for social security, allowances to farm households and payments to veterans. Payments will be made from March 31, 2020 on a progressive basis. About 90% of payments are expected to be made by mid-April.
An amount of $ 1 billion is also included in aid to regions and severely affected sectors such as tourism, agriculture and education.
This assistance will include exemption from fees and charges for tourism businesses operating in the Great Barrier Reef Marine Park and Commonwealth National Parks.
Additional assistance to help businesses determine other export markets and supply chains will also be included in the economic package.
The government will use $ 3.2 billion to provide an investment incentive limited to 15 months. This will help businesses speed up capital cost allowances.
An additional $ 700 million will be used to increase the immediate write-off threshold from $ 30,000 to $ 150,000 and to expand access to businesses with cumulative annual sales less than $ 500 million.
To provide cash assistance to businesses, the government will allocate $ 6.7 billion. This should benefit around 690,000 companies employing around 7.8 million people.
In addition, $ 1.3 billion will be provided to small businesses to support the jobs of approximately 120,000 apprentices and interns.
Read also: Will the coronavirus affect real estate prices?
Good decision for the residential sector
Tim Reardon, chief economist at the Housing Industry Association (HIA), said the stimulus package was a good decision, especially the specific assistance for apprentices, who are usually the first to be affected. during periods of economic downturn.
"The Australian government has pledged $ 1.3 billion to support the retention of apprentices by providing small businesses with up to $ 21,000 per apprentice to subsidize apprentices' wages of approximately 50 %, "said Reardon.
The package will also help small businesses to mitigate losses during the cycle.
"Extending the immediate asset write-off system to businesses with sales of up to $ 500 million and asset values ??of up to $ 150,000 will also help small businesses of the construction industry, "said Reardon.
Master Builders Australia CEO Denita Wawn said the government was determined to do whatever it takes to build confidence amid the COVID-19 epidemic.
"We strongly support measures to support businesses, especially small businesses, to keep workers and apprentices employed. The danger of economic shocks is that the labor market recovers more slowly than the rest of the economy, so the measures to compensate employers reduce their workforce is very well targeted, "she said.
However, Wawn said there was a need for the government to step up and ensure that construction of ongoing projects continues and that developments planned to begin are not delayed or withdrawn.
"Our industry also remains nervous about the duration of the inevitable shortage and delayed delivery of imported construction products. This is a blow to our industry which is looming in the coming months and measures Additional and extensions of some stimulus may be needed to help the industry weather this storm, "said Wawn.
In a previous analysis, Kristin Brookfield, director general of industrial policy at HIA, said that the residential construction industry should remain one of the priorities of the Australian government when it thinks ways to stimulate the economy.
"Australia is emerging from a slowdown in residential construction, and in the face of the coronavirus shock, stability and clear direction to ensure that the housing market does not shrink is essential", a- she declared.
Brookfield said the guarantee of a stable residential construction sector will help build confidence in the industry and in consumers.
The impacts of the coronavirus remain to be discovered?
Adrian Kelly, president of the Real Estate Institute of Australia, said in a statement that the market would likely be more affected by the decline in consumer sentiment than the real coronavirus itself.
"I already hear a lot of stories by which potential sellers decide not to sell at this time, preferring to wait for things to normalize," he said.
Kelly said, however, that it would be better to sell in a market where competition is less, since buyers will continue to buy regardless of how the sellers might feel.
"I suspect that any drop in consumer sentiment is likely to be amplified in the big cities than in the regions of Australia. I have no doubt that once this situation is managed and under control, our markets will return to normal as they did after the bush fires earlier this year, "he said.
