Terry McCrann: Government’s package for business is woefully inadequate
New Zealand is paying businesses to keep their workers employed — and ultimately protecting its economy from disaster. Australia’s own effort won’t save anyone, writes Terry McCrann.
Terry McCrann
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New Zealand has just shown exactly what Scott Morrison and Josh Frydenberg should have done on Sunday and what they must now do today — not next Sunday, not even tomorrow, but today.
NZ will now pay all businesses and all employers — no matter how small and no matter how big — a cash subsidy for every single one of their workers they keep on staff if they have been hit by the virus and the policy decisions taken to fight it, and pay it on an unlimited basis for 12 weeks.
The single metric is if a business can show that in any month through this June half its revenue has fallen by at least 30 per cent compared with the same month of 2019.
Show that and you will get $NZ586 ($563) a week for every full-time employee you keep on staff and $NZ350 ($336) for every part-timer.
That’s with no ifs, no buts, no minimums and certainly no maximum business sizes like the ludicrous $50 million — sorry $49.99 million — turnover cap set in Sunday’s ludicrously inadequate exercise.
Not that the ludicrous cap made all that much difference, frankly, given the ludicrous sums to be paid under the Morrison-Frydenberg package — a maximum $50,000 in four weeks and a further maximum $50,000 at the end of July.
Now the Australian figure would need to be set a little higher, now that the dole has been (temporarily) lifted to $550 a week. Australian wages are a little higher than NZ ones.
But let me use the NZ figure to show how embarrassingly and pointlessly inadequate the Australian wage subsidy version is.
Take my example yesterday of a business that has — correction, had — a $750,000 weekly revenue and a $500,000-a-week wages bill. At an average wage of $1440 a week ($75,000 a year), that’s 345 employees.
The NZ package would pay that company $194,000 a week, every week, until we get across to the other side of “the bridge” that our PM keeps talking about.
Our government offers to pay that company $50,000 at the end of April and another $50,000 at the end of July. As I wrote yesterday, only somebody living — mentally — inside the Canberra bubble could come up with something so utterly hopeless. And so utterly pointless.
Now, that $194,000 a week might not keep the company alive when and if its revenue has fallen all the way to zero.
But if its revenue has only halved, say, then it’s got a fighting chance. That would leave it with $569,000 ($375,000 revenue plus $194,000 government subsidy) if it kept all its workers and their $500,000 wages bill.
It would certainly guarantee that it would be able to keep some, maybe even a lot of them.
The very bleak alternative was shown by Helloworld Travel. It’s sacked 275 of its staff and “stood down” — temporarily sacked — a further 1300.
Because it’s revenue is — again, was — greater than $50 million, it couldn’t get even the ludicrous $100,000. Not that that would have made the slightest difference anyway. In NZ they had started with a similarly silly cap of $NZ150,000 total payment to any employer when they first unveiled it last week. But they’ve now made it unlimited. As I said, the only metric is the at least 30 per cent revenue fall.
Our government needs to do exactly the same thing. Remover the very silly $49.99 million revenue cap and make a weekly payment for every worker retained at some chosen figure — say $600 a week — for the next 12 weeks.
Oh dear, that might cost money; the Budget deficit will be bigger.
Are you kidding me? Paying $600 to keep people employed is a lot smarter and ultimately cheaper for the Budget than paying them $550 on the dole. You might actually keep other people in jobs and businesses alive, to get across the “PM’s bridge”.
The PM seems to now understand that you gotta go early and you gotta go big with the virus itself.
It is exactly the same the economy: you gotta save as many businesses and jobs as you can now.
The Treasurer has managed to flip 180 degrees from bragging about the Budget surplus that never actually arrived, to claiming a world record anti-virus stimulus package now adding to, he claims, $189 billion.
Yes, but only if you include the $90 billion that is money the RBA is essentially printing out of thin air. The government itself is spending “only” $99 billion and just $66 billion of that was in Sunday’s package.
I wrote that the Sunday package had to start at the very least at $100 billion.
One way or another, the smart — NZ — way or the unfortunately, well, let’s just say “inadequate” Canberra way, we are going to get that sort of spending and Budget deficits like we’ve never had before and could never even have imagined before.
NZ literally wakes up before us every day. How long is it going to take the people in Canberra to “wake up”?