Today’s coronavirus stimulus package is unlikely to be the last
Hopefully the Morrison government’s $17 billion stimulus package is substantial enough that it might buttress investor confidence over the coming weeks, even as share markets plunge today at the official declaration of the COVID-19 pandemic, and borders begin to close around the world. Only last week, Treasurer Josh Frydenberg was cheerfully assuring us that the package would have “a ‘B’ in front of it”. That seems like an age ago. However, the key measures unveiled by the treasurer today appeared skewed towards businesses – the Australia Institute pointed out this afternoon that companies receive $3 of every $4 – and that’s disconcerting. The investment and wage growth that was promised from the company tax cuts never eventuated – instead, shareholders took increased dividends. Less than a quarter of today’s package goes to households. “The size is right for the initial response but the shape is wrong,” said the Australia Institute’s senior economist, Matt Grudnoff. Let’s hope he’s wrong.
The escalation of the coronavirus outbreak is increasingly alarming. The Grattan Institute’s John Daley today urged state and federal governments to act now to “completely” close borders, cancel mass events and shut down schools and universities, which could dramatically reduce the death rate from the coronavirus. The federal health minister, Greg Hunt, and his Victorian counterpart, Jenny Mikakos, fielded urgent questions this afternoon about the possible cancellation of the Melbourne Grand Prix – not necessary yet – amid fears it will turn into a “Petri dish”. In Sydney, chief medical officer Kerry Chant predicted that 20 per cent, or about 1.5 million people, in NSW would be infected by the coronavirus, and hospitals had been told to double the capacity of their intensive care units and ventilator beds. “We’re nowhere near the peak,” she said.
The $17.6 billion stimulus package announced by the PM and the treasurer today includes six measures:
• $700 million to increase the instant asset write-off threshold from $30,000 to $150,000 for businesses with turnover of less than $500 million (up from $50 million) until June 30, 2020. (Those are big businesses.)
• $3.2 billion for a 15 month investment incentive so businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
• $6.7 billion to boost cashflow by up to $25,000 for employers – calculated at 50 per cent of their BAS or IAS – with a minimum payment of $2000 for eligible small- and medium-sized businesses. The payments will be tax free and benefit around 690,000 businesses employing around 7.8 million people.
• $1.3 billion to eligible employers of apprentices, who can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to nine months from January 1, 2020
• $4.8 billion to provide a one-off $750 stimulus payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
• $1 billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. (We better keep a close watch on this one.)
It is the $750 payments to income support recipients that will be most effective because they will spend it, according to the Australia Institute’s Grudnoff, who warns that the measures to stimulate business may not work. “Common sense and recent history tell us that businesses don’t spend when their sales are falling. The best way to help Australian businesses right now is to get cash through the cash registers. Businesses with plenty of customers don’t lay off staff. The instant asset write-off and accelerated depreciation initiatives are likely to be under-subscribed. Business will be reluctant to spend as their sales fall.”
The Australian Financial Review reports [$] that Treasury estimates the package will be big enough that Australia should avoid a recession, forecasting a 1.5 percentage point boost to the economy in the June quarter. Opposition Leader Anthony Albanese welcomed the announcement this afternoon. “We will be as responsible and as constructive as possible and will work with the government to expedite legislation through the parliament where required.” Labor has a list of criticisms, but will not let them get in the way of the program. Today the government took a step in the right direction, but if it has struck the wrong balance – giving too much assistance to businesses and not enough to households – the stimulus will not be effective, and we will be having the same conversation again in the not-too-distant future.
“If a not-for-profit community college wants to come and teach on a campus and we have vacancy on that campus, I will consider that proposal and recommendations from TAFE where it’s appropriate. We want to get the best use out of taxpayers’ assets.”
NSW Minister for Skills and Tertiary Education Geoff Lee rejects suggestions that the NSW government is privatising TAFE by stealth by proposing to allow other vocational education and training providers the use of its campuses.
White terror, part three: The itch at your back
A year on from the Christchurch terrorist
attack, Muslims in Australia are still wrestling with a new level of fear. Some have been drawn back to faith, while others are questioning the way the media and politics have stoked division. This is part three in a three-part series.
The mooted investment in coal-fired power plants that may become stranded, according to fresh analysis by the Carbon Tracker Initiative, which finds wind and solar will soon be cheaper than coal in all big markets around world.
“[NBN Co] has ongoing programs to maintain all access technologies including the HFC network and, wherever possible, seeks to undertake and cluster upgrade works within planned outage windows, which are communicated in advance to Retail Service Providers.”
“Use No Hooks clearly grasped that the looping structures of dance music – whether that be funk, disco or otherwise – were ideally suited to evoking the repetitions of contemporary life. The grind of work, the boredom of habit, the fact that the same smug pricks keep running the show: all of this could be summoned, satirised and then spurned within the songs’ simple yet potentially infinite grooves. The music retains its power because time’s ticked on but circumstances appear static.”
“The strange truth is that if Cornelia Rau had been picked up in north Queensland on suspicion of a serious criminal offence, rather than as a suspected unlawful non-citizen, she would have been afforded far greater protection … As a suspected non-citizen, Cornelia was, by contrast, almost a non-juridical being, with virtually no legal protections or legal rights.”
“It is getting harder by the week to believe a word uttered by the prime minister of Australia. And no one has done more to undermine Scott Morrison’s credibility than the man himself. This harsh judgement is shared not only by his political opponents in the Labor Party but also by all but one of the six crossbenchers in the house of representatives.”
Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Body Count: How Climate Change Is Killing Us, Inside the Greens and Born To Rule: The Unauthorised Biography of Malcolm Turnbull.
Hopefully the Morrison government’s $17 billion stimulus package is substantial enough that it might buttress investor confidence over the coming weeks, even as share markets plunge today at the official declaration of the COVID-19 pandemic, and borders begin to close around the world. Only last week, Treasurer Josh Frydenberg was cheerfully assuring us that the package would have “a ‘B’ in front of it”. That seems like an age ago. However, the key measures unveiled by the treasurer today appeared skewed towards businesses – the Australia Institute pointed out this afternoon that companies receive $3 of every $4 – and that’s disconcerting. The investment and wage growth that was promised from the company tax cuts never eventuated – instead, shareholders took increased dividends....
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