Australia to Unveil Wage Subsidies, Limits Foreign Takeovers

Edward Johnson

(Bloomberg) -- Australia will announce further income support for workers on Monday as part of a third stimulus package as the coronavirus savages the economy.

Treasurer Josh Frydenberg also announced tighter restrictions on foreign takeovers, ensuring all proposed overseas investment in Australian businesses will trigger government scrutiny, regardless of the value.

The government is battling to cushion the impact of the outbreak and safeguard jobs and has already passed more than A$80 billion worth of fiscal stimulus. In an interview with Sky News Monday, Frydenberg declined to comment on the scale of the planned wage subsidies, reported to be up to A$1,500 a fortnight per employee for the next six months.

“The announcement today is all about providing additional income support,” Frydenberg said. The Australian Financial Review reported at the weekend the subsidy will be similar to the 75%-80% program enacted by Canada, Denmark and the U.K.

The virus has smashed the economy and Australia’s unemployment rate could soar to 12%, from 5.1% in February, as tens of thousands of workers lose their jobs amid the shutdown. Fashion and homewares chain Country Road on Saturday joined a swathe of retailers closing their doors as consumer confidence slumps and people stay at home. Prime Minister Scott Morrison on Sunday limited public gatherings to just two people under tighter social-distancing controls as the national death toll climbed to 16.

Australia Limits Public Gatherings to 2 as Death Toll Rises

Australia’s banks are extending a six-month deferral of loan repayments to 98% of companies, according to the Australian Banking Association. The support was initially extended only to small businesses.

Under new rules announced by Frydenberg, all proposed foreign investment in Australia will require scrutiny by the Foreign Investment Review Board. The change removes thresholds for scrutiny that ranged from A$1.2 billion to A$275 million depending on the buyer or nation.

“This is not an investment freeze,” Frydenberg said in a statement. “Australia is open for business and recognizes investment at this time can be beneficial if in the national interest.”

“However, these measures are necessary to safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and Australian businesses,” he added.

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