This morning when Mr Morrison delivers his keynote speech at the Australian Financial Review Business Summit in Sydney he is expected to give more insight into the promised stimulus package, with details of the plan now in the process of being finalised.
The package will be delivered this week and will see the Morrison Government give up its Budget surplus in order to deal with how the coronavirus outbreak has impacted the Australian economy.
“As we finalise the Government’s fiscal response in coming days, our objective is to keep people in jobs, keep businesses in business and ensure we bounce back stronger on the other side,” Mr Morrison is expected to say in his speech today.
“It’s about supporting community confidence, employment and business continuity. This means boosting domestic consumption, reducing cash flow pressures for vulnerable businesses, and supporting new investments to lift productivity.”
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He will reveal the “seven principals” that have guided the stimulus package response, which include the measures taken being proportionate, timely and scalable, targeted, aligned with other policies, using exiting deliveries measures where possible, being temporary and must lift productivity.
“By following these principles we will protect the structural integrity of the budget and maximise the impact of our measures to protect the livelihoods of Australians and our economy,” Mr Morrison is expected to say.
“And in doing so we will prevent the need for future governments to spend the better part of a decade restoring the fiscal position and even longer paying back the debt.
“When the economy bounces back, our budget will also bounce back. The stronger the recovery, the stronger the economy, the stronger the budget.”
Mr Morrison is expected to point to Australia’s “strong fiscal position” as the reason the country can deal with the impacts of the coronavirus.
“We didn’t rebuild our fiscal strength by increasing taxes or cutting essential services. Instead, we went on a path of strengthening the budget by restraining growth in recurrent expenditure and growing the economy,” Mr Morrison will say.
“And we resisted repeated calls for cash splurges as part of our unwavering plan to rebuild our fiscal buffers so we could respond when it is truly needed.
“And that time is now. This is what we have been preparing for.”
Mr Morrison will say the coronavirus outbreak could potentially have greater economic impacts on Australia than the Global Financial Crisis and that it is important for the government to “learn from the mistakes” made during that time.
“In our response we must be careful to solve this problem, not the last one. And we need to solve it for Australia, for our circumstances, and not appropriate the diagnosis for other economies,” he will say.
“We also need to learn from the mistakes made during the global financial crisis – especially when it comes to a clear fiscal exit strategy.
“The range of possible economic outcomes will depend on the spread, severity and duration of the health crisis and its interaction with demand-side and supply-side effects.”
Though the Morrison Government has previously criticised Labor for its “cash splash” stimulus package to the global financial crisis, Sky News Political Editor Andrew Clennell recently revealed a similar approach may not be ruled out.
He said Mr Morrison is in discussions with his team for ways to distribute close to $10 billion in stimulus to help the economy, and is considering a Kevin Rudd-style cash handout as part of the package.
Clennell said “even cash handouts to ordinary citizens” were still “on the table” but the idea was facing fierce opposition from Finance and Treasury officials who were reluctant to offer the package to ordinary citizens.
“Even cash handouts to ordinary citizens are still on the table as the Government wrestles with its stimulus package,” Clennell said.
“I understand cash handouts similar to what occurred in the Rudd era have not been ruled out but Finance and Treasury officials are said to be pushing back against this sort of stimulus and the PM would seem reluctant on it as well.”
The stimulus package has been tipped to include tax incentives to help businesses with cash flow, alongside tax deductions for new investments.
Funding will be also aimed at infrastructure spending, which normally translates to major road and rail projects.
“It will be worth billions in the terms of the impact it will have,” Treasurer Josh Frydenberg told Sky News last week.
“The package of measures will be responsible and will be scalable.”