Australia needs to link coronavirus app to government jobless aid

People queue outside a Centrelink office following the sweeping job cuts due to the coronavirus outbreak. Picture: AAP

Global markets believe that medical research is on the brink of finding a cure for COVID-19 and that global economies will therefore recover quickly.

If medical research does not deliver in the way the markets are forecasting then there will, of course, be a major decline in share prices.

But it will also mean that the business and community clamps that have been so effective in Australia will only be slowly eased—exactly what our political leaders are saying, led by Prime Minister Scott Morrison.

If the political leaders are right and the markets wrong, then we need to look much more carefully at how we stop the current severe economic downturn from becoming much worse.

When JobKeeper was announced at the end of March the government, not unreasonably, thought it would be able to keep jobs in place so we could quickly snap back to prosperity.

As I documented in the Weekend Australian those two weeks to March 31 saw the sharpest fall in the economy since federation.

While JobKeeper was farsighted and a rapid response (and Treasurer Josh Frydenberg should be praised), the money does not flow until mid-May and by that time the situation may be worse.

There is grave danger that if JobKeeper ends on September 30 wide areas of the business community will face “cold turkey”, with large numbers of former JobKeeper people joining the dole queues because the businesses that have been employing them have become zombies.

To illustrate the danger, when JobKeeper cash is actually received in mid-May almost two months of the six months will have passed, so it really only covers four months of operations.

And by mid-May, the 30 per cent falls in turnover registered in March and April will have become worse for many enterprises.

Four months is a short time and there is little chance for enterprises to adapt unless medical research allows the clamps to be eliminated much more quickly.

What is required is an extension for another three months at, say, half the current rate. That gives time for adaptation and will curb what JobKeeper aimed to do--- avoid a massive swing to the dole queues. ABS employment figures are so far behind as to be useless and Morgan Research says unemployment is around 15 per cent.

The Small Business Ombudsman Kate Carnell has discovered a recent surge in larger businesses (obviously including some Business Council of Australia members) pushing out payment times and sometimes suspending payments to their small business suppliers. In other words, they are pulling the rug out from Josh Frydenberg’s JobKeeper.

Given members of the Business Council misled both the Prime Minister and Treasurer on this front in the prosperous times this is no surprise.

Carnell has called for federal legislation requiring small businesses to be paid in 30 days.

Let’s hope Morrison and Frydenberg don’t allow themselves to be misled again. Banning government contracts to those who don’t pay on time will be a huge boost to small business and employment.

As I pointed out last week small enterprises can gain quick payment for 30-day invoices at a discount rate of 0.3 per cent a month — an annual interest rate of 3.6 per cent via the Earlytrade marketplace and it allows a third party to monitor who is a small business. But it requires large enterprises to register

Combine the Small Business Ombudsman’s recommendations with an extension of JobKeeper and we are well on the way to keeping a large chunk of the employment-generating part of the community ready to recover.

In the absence of a medical research breakthrough we will also need another measure--- the ability to trace the contacts infected people make. We currently attempt to do this via telephoning and we have had some success, but only because of the clamps.

Once we start releasing the clamps we will not be able to cope. Singapore and Australia were working on the TraceTogether software and Singapore introduced it on a voluntary basis before it was properly developed. There was only a small take-up and Singapore is now suffering the consequences – much higher infection rates. Because this software is linked to easing clamps and restoring employment it is vital it is widely taken up in Australia.

Correctly a lot of work has been done on TraceTogether privacy for Australians but currently Google, Facebook and other international corporations have more knowledge about Australians’ private affairs than will ever be discovered by TraceTogether. Given we allow Google and Facebook to share our privacy with little protection why should we not share a small amount via highly protected government software to save lives?

But a number of Australian politicians clearly don’t use Google or Facebook and want to start a privacy rollback with this measure.

Just as we need tying government contracts to 30-day payment, so we need to link government aid programs like JobKeeper and JobSeeker to taking up TraceTogether.

Assuming the market is wrong about imminent big medical breakthroughs, TraceTogether is vital. So while we might start with the voluntary program, we must link it to government money.

We can learn from Singapore’s mistakes.