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Federal Government announces second COVID-19 economic stimulus plan

Federal Government announces second COVID-19 economic stimulus plan

On 22 March 2020, the Federal Government announced further economic stimulus measures for individuals, business and the banking sector to support Australia through the unprecedented societal and economic impact of COVID-19 (coronavirus).

  • Government announced second stimulus package
  • Support designed to assist businesses to retain employees and maintain operations
  • Changes to insolvency rules to offer temporary relief

The stimulus package is aimed to cushion the impact of coronavirus and provide a safety net for individuals most at risk, while also seeking to support a base level of economic activity that must be maintained to position Australia to return to ‘normal’ operations on the passing of the contagion. We have summarised the latest measures below.

It is imperative that businesses act decisively in this fast-moving environment. The engine room of the economy – Australia’s middle-market businesses, are nimble, innovative and resilient and subsequently well-positioned to respond to current challenges. However, it will not be without hardship and difficult choices. Strong leadership is critical to navigate the immediate threat, but also longer-term impacts

Businesses impacted in the immediate term should adopt a defensive mindset while seeking to main operational normality where possible. This is critical to cash flow, people retention and the ability to reactivate as conditions improve.

Government support for business Government support for individuals
For more information about how the measures support businesses, click here. For more information about how the measures support individuals, click here.

Key steps for businesses

As many businesses navigate the ongoing impacts of coronavirus, it’s critical to focus on the following areas to maintain business continuity:

  • Personnel: support and protect the health and wellbeing of your employees. Familiarise yourself with the government support available to you to keep people employed. They will be critical to your long-term success.
  • Customers: communicate with customers. Many businesses will need to adapt. Knowing your customers’ needs can assist in adapting efficiently in the most effective ways. This must include consideration and management of credit risk.
  • Supply chain: communicate with suppliers and monitor the capacity and interdependencies of your supply chains. Plan for the impact of disruption and have contingency such as building up stock levels or identifying substitutes.
  • Financiers: Most financiers have announced measures to support customers including maintaining existing facilities and even extending facilities. Businesses should familiarise themselves with what’s on offer. Financiers are currently inundated so allow as much time as possible to effect any changes needed. Also consider the new measures proposed in the credit package that are aimed at obtaining working capital loans at favourable rates and conditions from certain approved SME lenders.
  • Cash flow: in uncertain times cash is king. Forecast your short-term cash flow position for a minimum 12-week rolling period. This will assist with decisions required to keep the business viable. The forecast should consider the newly announced government support to businesses, financier support and the cash flow impact of difficult management decisions.
  • A view to the future: the recovery of business activity post-coronavirus will be slow. A recession is likely so begin to consider this and plan ahead by accounting for the likely activity level in your market and the need for investment, people and capital.

Contact your Pitcher Partners representative for more information or to understand how the second stimulus package announcement of 22 March 2020 applies to you and your business.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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