12th March, 2021
The Government’s next phase of economic stimulus has arrived, with $1.2bn to boost domestic tourism and an expanded loan scheme for small business.
With the Government’s JobKeeper scheme wrapping up at the end of March, a campaign to assist organisations still dealing with economic challenges has been launched, targeting small businesses and those working in the tourism industry.
Despite the apparent ‘V-shaped’ economic recovery that has seen Australia make up 85 percent of what was lost as a result of the COVID-19 pandemic, many SMEs and tourism businesses still require Government support to stay afloat as Australia’s vaccine rollout continues.
This article covers some of the most recent announcements from the Government and what they will mean for businesses, including Tourism Aviation Network Support, the expanded SME Loan Guarantee Scheme and an extension of the Business Evenets Grants Program.
Designed to encourage Australian domestic holiday travel, the TANS program will subsidise 800,000 flights, effectively halving the cost of each ticket.
In a statement launching the initiative, Prime Minister Scott Morrison referred to this $1.2 billion support package as Australia’s “ticket to recovery”, and said that he expected the funds to stimulate the entire travel industry, including tourism operators, travel agents and airlines.
Discounts will be offered on tickets to some of the nation’s most iconic holiday spots, including Gold Coast, Cairns, the Whitsundays and Mackay region (Proserpine and Hamilton Island), the Sunshine Coast, Lasseter and Alice Springs, Launceston, Devonport and Burnie, Broome, Avalon, Merimbula, and Kangaroo Island.
Subsidised airfares will be available from 1 April 2021.
Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack believed that TANS will act as a catalyst for the tourism and travel industry to revert back to their pre-pandemic operating capacity.
“We’re also backing the workforces of our international airlines and the teams and infrastructure they need so that when tourism takes off again and our borders reopen, our airlines are ready to go,” he said.
To achieve this, McCormack highlighted that the TANS package will also be providing financial support to the broader aviation network, with airports receiving funds to cover costs associated with ramping up operations.
Established in March 2020, the SME Loan Guarantee Scheme was designed to provide businesses with direct access to loans through a combination of guarantees provided by Government and banking associations.
To date, the scheme has administered 35,000 loans worth more than $3 billion.
The phase two expansion will see loan amounts increasing from a maximum of $1 million to $5 million, and the Government/Bank ratio split for guarantees to change from 50:50 to 80:20.
Additionally, turnover caps will increase from $50 million to $250 million and loan terms will be increased from five to ten years.
According to Treasurer Josh Frydenberg, the revamped loan scheme has been designed to help SMEs stand on “their own two feet” as JobKeeper winds up and the economy continues to recover.
“The expansion and extension of the loans will back businesses that back themselves and will help businesses who continue to do it tough build a bridge to the other side of the crisis and keep their staff employed,” the Treasurer said.
Another key component of the revamped loan scheme is that loans will be able to be used to refinance existing loans, providing access to more concessional interest rates and extended loan terms.
Interest rates will be determined by the lender, but will be capped at 7.5 percent.
While loans can be used for a broad range of business activities, the Government has excluded the purchase of residential property, financial products, lending to an associated entity, and leasing or purchasing existing assets that are more than half way through their effective life.
In addition to the turnover requirements, a business needs to have been accessing the JobKeeper scheme between 4 January and 28 March of this year (2021) in order to be eligible for a loan.
As part of this announcement, some of the Government’s other existing support programs established in 2020 were also extended beyond their initial end date.
Notably for SMEs, the Business Events Grant program that supports organisations holding multi-day events has received a three-month extension.
The program will continue to cover up to 50 percent of costs incurred for holding business events during the 2021 calendar year.