The federal government has signed off on a final multi-billion dollar business assistance package for NSW, Victoria and the ACT, but will switch off financial support once vaccination rates reach 80% of the adult population.
Following a decision to wind down income support payments, the federal government is set to announce it will provide a final boost for businesses aimed at bridging the final six weeks of lockdown before states reach the 80% double dose target.
NSW and the ACT are projected to reach the 70% target by 10 October and 80% by 21 October, with Victoria forecasting it will reach the targets on 26 October and 5 November respectively.
Under the co-funded deal agreed with the Victorian government to be announced on Thursday, $2.27bn will go to three separate business grant programs, tapering off from the end of October as the state reaches the 70% vaccination rate.
Once the state reaches 80% and businesses “progressively and safely open”, the business support funding from the commonwealth will cease.
The funding includes $1.26bn for the business cost assistance program, $600m for the small business Covid hardship fund, and $407m for the licensed hospitality fund.
The federal treasurer, Josh Frydenberg, said the tapering of business support, which mirrored the changes announced for income support on Wednesday, was in line with the national plan agreed by state and territories.
“The jointly funded business support package tapers once the state reaches 70% full vaccination rate, to ensure support is focused on those industries that remain closed or severely restricted,” Frydenberg said in a statement.
“We can’t eliminate the virus, we need to learn to live with it in a Covid-safe way. Our economy has bounced back strongly before once restrictions are eased and is well-positioned to do so again when lockdowns lift.”
He said once the 80% double dose mark had been met, it would be up to each state to determine if any additional targeted business support was needed in their jurisdictions, “as a result of any health restrictions they elect to impose.”
About 124,000 Victorian businesses will automatically receive grants until the end of October under the business assistance program – the fifth round of the grants – but in November, only businesses that “remain closed or severely restricted” will be eligible.
More than 9,000 hospitality businesses will receive automatic payments of between $5,000 and $20,000 per week until the end of October, but rates will be reduced from November.
In addition, 30,000 businesses will be able to apply for $600m in one-off $20,000 hardship payments.
The Victorian treasurer, Tim Pallas, said the funding would ensure businesses had the best chance of “sustaining the final weeks of lockdown” and recovering strongly.
“We are opening up and our roadmap shows us how we get there – this jointly funded package will underpin businesses across the state, help them to keep their workers on and plan for a really positive future.”
Details were still being finalised with NSW on Wednesday night, but the federal government was expected to extend its business support at current levels until a 70% vaccination target was met on 10 October. At this point, the support – which is pegged to business payroll – would gradually reduce, with the federal government ceasing financial support when the state reached 80%.
The NSW package is estimated to cost around $500m a week, with the cost shared 50-50 between the state and federal government.
Once NSW reaches the 80% target, the business assistance package is expected to be solely funded by the NSW government.
On Wednesday, the NSW premier, Gladys Berejiklian, said the state government was still in negotiations with the federal government on extending business support, with the hope of a more “targeted” approach as the state moved out of lockdowns.
“I suspect we will have a much more targeted approach because the business community is so diverse, businesses range in size and what they are doing and some weathered the storm really well and have done really well and others haven’t,” she said.
The premier said the state wanted to ensure businesses remained viable until lockdowns ended, but she was confident demand would see employment pick up rapidly once restrictions were eased.
In the ACT, payments will be extended to small and medium sized businesses, with $10,000 for all employing businesses and $3,750 for non-employing businesses who were eligible in earlier rounds.
Another top-up payment will also be granted to larger businesses of between $10,000 and $30,000 for businesses with a turnover of more than $2 million.
A separate grant program for tourism, events, hospitality, fitness and the arts industries will also be expanded, with grants starting at $5,000 for non-employing businesses, up to $25,000 for employing businesses with turnover greater than $5m.
The ACT’s chief minister, Andrew Barr, said the business grant program, which had so far totalled $2bn in support, had been an “important lifeline to businesses”.
The federal government’s decision to wind up federal support payments, which have cost $291bn since the start of the pandemic, comes as it hardens calls for states to adhere to the plan signed off by national cabinet, which agreed to a gradual easing of restrictions once vaccination rates were above 70% and 80%.
In a further move towards normalising “living with Covid”, the federal government was poised to announce its plans for ending international border closures and putting in place home quarantine arrangements for overseas arrivals.
While NSW, Victoria and the ACT have outlined plans for easing restrictions at between 70% and 80%, the mostly Covid-free states of Queensland, Tasmania and WA have indicated they will wait until higher vaccination rates are reached before relaxing state border controls.
The gap in vaccination coverage is becoming more acute as states with Covid outbreaks rapidly accelerate their vaccine roll-out, with NSW recording an 86.7% single dose rate and a 62.9% second dose, while WA, Queensland and SA lag behind with a first dose rate of about 65% and less than half with two doses.
The NSW chief health officer, Dr Kerry Chant, said on Wednesday she was hopeful of reaching a vaccination rate of 95%, which would be in line with the rate achieved in the United Arab Emirates, which has the world-leading vaccination rate of 92.5% fully vaccinated.
Across Australia, 77% of people aged over 16 have received a single dose, while 53.4% have received two doses.