The Coalition, who for years have told us there was “no magic money tree”, now appear to have found one. A big one! Managing editor Dave Donovan analyses the stimulus package.
IN AUSTRALIAN POLITICS, there is nothing new under the sun. Like a virulent disease, what goes around comes around.
THE MAGIC BUSINESS
The Coalition, who for years have told us there was “no magic money tree”, now appear to have found one. A big one! A $200 billion money tree, to provide welfare to business and the unemployed (but mostly business), while the current coronavirus lockdown(ish) situation persists. That’s about a third of total government debt before the crisis. What a tree!
It’s lucky the Government found this tree because without it, we would certainly be facing that “debt and deficit disaster” they say Labor put Australia in between 2007 and 2010, during the Global Financial Crisis.
If you get the chance, grab hold of a Liberal Party politician ‒ hold tight, they are usually very oily and slippery ‒ and as he (they are almost always a he) flops around squirming, hold him up against a wall and ask him what has changed between the GFC and now? Why was Labor’s debt vile and wasteful, but the Coalition’s virtuous and vital?
After much gibbering, such as “I’m not going to engage in partisan politics during a time of national emergency”, or some such tripe, eventually, the slimy Tory might blurt out: “Because the two situations are completely different!”
“How so?” you may then ask, to which his struggling will likely increase — so do make sure you grip him even harder.
And then, as his face turns from pink to purple, eventually he might squeak: “Because China saved us from the GFC! Not Labor’s wasteful stimulus. Insulating houses, building school halls and giving money to people in need. Outrageous unfunded empathy!”
After dropping him to the ground in disgust and watching him scuttle away on all fours, like a greasy Gollum in a grey suit, public hygiene suggests you should carefully wash and scrub off each and all of his oleaginous secretions from your person. After that, you might reflect that what goes around does indeed come around. Like, what is it with capitalism that it requires socialism to come around and rescue it every ten years or so?
Although this time, under the Coalition, there are some fairly large differences.
In this case, while the Coalition might say, “China can’t save us, because they started the crisis”. In fact, with China now virtually free of the pandemic and with them again gearing up their vast industrial capability, they may be exactly what does save us. Not only through buying our steel and coal, but also through supplying vital PPE and virus testing equipment — essentials in which this nation appears to be in regrettably short supply.
And while Labor went hard and went early, the Morrison Government dithered and did nothing, then did a bit, then a bit more, until the full scale of the disaster eventually crashed through their brittle wall of denial.
And the Rudd Government didn’t do what the government of every other advanced nation did — watch its nation slide into recession. The Morrison Government, on the other hand, looks set to see Australia sink into its worst downturn since the Depression. The IMF predicts Australia to be one of the worst-hit economies globally and the worst in the Asian region, with the economy forecast to shrink by 6.7% this year and unemployment to double to more than 10%.
So much for this year’s surplus — the one they crowed about last May.
And as for the stimulus itself, perhaps it might save some employees’ jobs and some businesses from going under. But here at Independent Australia, we have significant doubts. In typical Coalition fashion, the money is coming slowly or not yet at all, and the application process and guidelines are highly opaque, arduous and difficult to understand. They are also, in many instances, not yet even circulated.
Let’s go past the most recent Centrelink fiasco, where people were lining up around the block to claim their boosted welfare payments, putting themselves at risk of infection, because the switchboard melted down. Let’s forget the relevant minister Stuart Robert blaming the communications snafu on hackers, before admitting he lied, making the touching apology, “My bad”.
Let’s ignore all that and look at the business stimulus package — the bulk of the business party’s response. Starting from 30 March, the Jobkeeper package of $1,500 a fortnight to be paid to every affected employee until 27 September, looks, on the face of it, to be a promising scheme. But a closer examination of the detail suggests some significant issues.
Firstly, a business needs to prove a 30% fall in turnover to the comparable BAS period the previous year. But if the business reports quarterly and had a reasonable January and February, but a very slow March, it wouldn’t qualify. It would need to wait until after 30 June to apply. Even if the business did qualify, payments don’t start until the first week in May, meaning many low cashflow businesses could already have gone under.
Also, with the payments going to businesses, not to the employees, it will be tempting for many businesses to not pass on the full amount, creating a vast compliance issue for the ATO. Overall, with the complicated application process and the swingeing penalties prescribed for non-compliance, it seems unlikely the payments will reach anywhere near the six million eligible workers as claimed by the Government. Perhaps this is exactly what Scotty from Marketing wants?
The big question is, now we know there is a magical money tree growing at the bottom of the garden, what will happen once the economy bounces back?
Will the Government go back to neoliberal economics and enforced austerity? The Darwinian, neo-laissez-faire approach of cutting taxes and spending in the vain hope a little trickle of prosperity will somehow dribble down to the poor? Will they fall back into line with the likes of the IPA, who have this week been pushing for more old and sick people to die rather than see capital suffer a scintilla of loss?
Or will they remember that a nation is not like a house – it can’t be repossessed by banks – and governments have the power to create more money to build a better society?
I think we know which way they will side. If only the magical money tree could make them all disappear as fast as the money they promise will soon come around.
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