Scott Morrison’s fast-track cash to beat coronavirus

Cash payments will be used to help funnel money back into the economy under a multi-billion-dollar coronavirus response.

Economists backed Scott Morrison’s decision for the government to use the payment system to deliver quick stimulus into the economy. Picture: AAP

Pensioners, Newstart recipients and small business owners are ­expected to be considered for one-off cash payments to help funnel money back into the economy and protect jobs under the Morrison government’s multi-billion-dollar response to the coronavirus.

Scott Morrison will on Tuesday also call on big business to take on some heavy lifting in an act of “patriotism” by fast-tracking the payment of bills to small business suppliers who are facing a cash-flow crunch.

Josh Frydenberg confirmed that the stimulus package, expected to be signed off by the cabinet expenditure review committee on Tuesday, would be substantial, with expectations it could be close to $10bn.

The Prime Minister has guaranteed that the package will be targeted and neither a “waste of taxpayers’ money” nor an indiscriminate cash splash like the global financial crisis response. It will use the existing payment system to speed up the rollout.

“Whatever you thought 2020 was going to be about, think again,” the Prime Minister will say in a speech to a business summit on ­Tuesday, a day after the biggest drop in the sharemarket since the GFC.

“We now have one goal in 2020: to protect the health, wellbeing and livelihoods of Australians through this global crisis, and to ensure that when the recovery comes, and it will, we are well positioned to bounce back strongly on the other side.

“When the economy bounces back, our budget will also bounce back. The stronger the recovery, the stronger the economy, the stronger the budget. Last year the budget was restored to balance. And now here we are. This is what I was talking about.”

The Treasurer said the economic impact of the coronavirus was “very significant”, but that “facts, not fear, must determine policy”. He flagged an announcement on the support package “sooner rather than later”.

Economists backed Mr Morrison’s decision for the government to use the payment system to deliver quick stimulus into the economy. They said the fastest way to refuel the economy was through pensioners and the unemployed who were more likely to spend any cash payments immediately.

Deloitte Access Economics partner Chris Richardson said the government should “err on the side of bigger” with its stimulus package, but warned that bipartisan support and speed were essential in restoring confidence. He said the best way to provide assistance to households would be through one-off payments to the 2.5 million Australians on the pension and part-pension, as well as the unemployed.

“If you are looking for the politically simplest way into the cash splash, there’s an obvious opening … An extra $400 for every ­pension and part-pensioner in Australia costs $1bn,” he said.

Mr Richardson warned that the budget was in a good position to accommodate a large stimulus.

“A healthy budget is a means to an end and right now we want to take that baby for a spin,” he said.

Mr Morrison will use his speech to argue the government is in a strong position to provide stimulus, having balanced the budget for the first time in more than a decade. But he will say the government will not repeat the mistakes of the Rudd government’s ­response to the GFC by inventing new programs. “We must use ­existing delivery mechanisms wherever possible,” he will say. “We saw the mistakes of trying to rush a range of new programs in the response to the global financial crisis. The measures must be temporary and ­accompanied by a fiscal exit strategy. They cannot be baked into the bottom line for years to come, keeping the budget under water … We must not waste taxpayers’ ­resources.”

NAB chief economist Alan Oster said a package worth less than $10bn would not be enough. “What I’d like the ­government to do is give cash help to businesses and households,” he said.

He pointed to measures such as delaying quarterly business ­activity tax statements or GST payments, and introducing investment allowances. “I’d like them to do a second round of tax cuts and increase the dole,” he added.

Mr Morrison will single out big business as having a crucial role to play in keeping people in jobs and buttressing the economy.

“We need you to support your workers, by keeping them employed,” he will say. “Hold onto your people, you will need them on the other side. Wherever possible, support them — whether full-time, part-time or casual — including with paid leave if they need to take time off due to the virus. We need you to support your small business suppliers by paying them promptly. Pay your suppliers not just in time, but ahead of time, especially now.

“How you support your customers, suppliers and employees during the next six months will say more about your company, your corporate values and the integrity of your brand than anything else you could possibly do.”

Opposition Treasury spokesman Jim Chalmers said the big concern in the business community was that the government’s support package would prove too cautious. “We don’t want to look back on this period and see that the government has done too little, too late,” Mr Chalmers said.

He said there was concern that the Prime Minister and Treasurer would be “hemmed in” by past rhetoric on the Rudd stimulus package during the GFC, elements of which, such as $900 handouts to households, the government has dismissed as wasteful.

ADDITIONAL REPORTING:
JOE KELLY