Australian PM urges states to put up an extra $40bn in Covid economic stimulus | Australia news

Australia’s states have been challenged to provide an extra $40bn in economic stimulus and will have to measure their travel restrictions against a new definition of coronavirus “hotspots” in a bid to ease the movement of goods and people.

Scott Morrison announced the plan on Friday after the national cabinet meeting, also revealing he had asked the foreign, defence and home affairs ministers to provide options to better support 18,800 Australians stuck overseas due to caps restricting arrivals to Australia.

With new coronavirus cases falling to an average of 269 a day in the past week, Morrison and the acting chief medical officer, Paul Kelly, expressed hope that the worst of the second wave was over.

Morrison said Australia must continue its suppression strategy with a balanced approach in which economic disruption “needs to be considered”, holding out New South Wales as an example of rigorous testing and contact tracing that can enable economic and social life to resume while living with the virus.

The secretary of Treasury, Steven Kennedy, and the Reserve Bank governor, Phil Lowe, addressed national cabinet on Friday, calling on the states and territories, which have already provided $48bn of stimulus, to chip in a further $40bn to address unemployment in the short and medium term.

Lowe, who has consistently called for further economic support despite warning against the “free lunch” of financing deficits by buying government bonds, said this level of debt could comfortably be absorbed.

Addressing reporters in Canberra, Morrison signalled the federal government would consider calls to delay scheduled superannuation rises from 9.5% to 12%, but said there was no “undue haste” to decide because the first 0.5% rise is not due until July 2021.

“I will do and the government will do what is in the best interests of getting people in jobs and staying in jobs,” he said.

Morrison suggested the government would decide based on the state of the economy in 2021, but “that doesn’t mean you necessarily go down that path [of delaying the superannuation increase]”.

National cabinet agreed that the Australian Health Protection Principal Committee would draw up a definition to identify coronavirus “hotspots”.

Queensland, Western Australia, South Australia and Tasmania have banned interstate travel even from jurisdictions with no community transmission. Queensland has labelled the Australian Capital Territory a hotspot despite it having no active cases.

“When you have restrictions put on people’s movement based on what is and isn’t a hotspot there needs to be a clear medical and scientific definition … these decisions cannot be made on an arbitrary basis,” Morrison said.

This was a “process of transparency, letting sun shine in”, which it “would be odd” for states to operate outside, he said.

But Morrison conceded that weighing up the cost of travel bans would still be “decisions for state governments”, referring further questions to the premiers of those states and noting he “hadn’t asked” Western Australia to adjust its policy.

The commonwealth government intervened in high court cases challenging the border bans in Queensland and Western Australia, but was forced to withdraw due to the popularity of the measures and pressure from the WA premier, Mark McGowan.

After evidence from the Department of Foreign Affairs and Trade on Thursday that 18,800 Australians are still overseas and intend to return home but face a “significant challenge” to the cap of 4,000 arrivals per week, Morrison acknowledged the cap had caused “real hardship”.

But he defended Australia’s policies, which include a ban on overseas travel from which just one in four applicants have been granted exemptions. He argued that restrictions on the ability to “leave and return” had prevented a second wave on the scale of France, where travellers had brought the virus back from hotspots.

Morrison said “right now” he did not propose lifting the number of arrivals but the cap would be reviewed fortnightly, signalling capacity could increase when Melbourne resumed international flights and hotel quarantine.

Morrison said he had asked the ministers Marise Payne, Peter Dutton and Linda Reynolds to “bring forward measures … to see how we can better support those who are still overseas”.

“We acknowledge that some of them are in difficult circumstances … We will be doing more to assist them to come home within those caps.”

As business groups grow increasingly frustrated at the effect of state border bans on the movement of tourists, goods and workers, national cabinet agreed that within a fortnight state ministers would agree on a code to regulate cross-border activities for agricultural workers.

With land borders closed to Victoria, farmers have been told to fly hay, sheep and beekeeping equipment through capital city airports to get around restrictions.

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