'Accepting the tough love to save jobs' Ticky Fullerton, The Australian
In Britain, my 90-year-old father, still living on his own, is defiant. “Don’t worry about me, I’ve been self-isolating for years,” he quips.
Catch him between 8 and 9 of a morning and he is out of breath, from his self-imposed free weights workout. Stiff upper lip. Our nanny is back from her badly timed six months in Milan starting in January and is now into day four of self-isolation at home.
David McCredie, CEO of the Australia British Chamber of Commerce, on whose board I sit, is also on day five of his self-isolation, having flown in from London, a trip he had long planned so as to work on Brexit (what was that again?).
McCredie is holed up in a small apartment away from his young family and sticking rigidly to the new rules, not venturing out for any reason.
All this talk has little to do with the economy. The billion-dollar question for the government now is will Australia’s small businesses, the great employers, use the packages they have been offered? Will they borrow more, will they wait for the government funding of up to $100,000 that is on its way but not here yet, or will they buckle and lay off workers in droves? Because the government has ruled out a wages guarantee.
Perhaps this is because a wages guarantee is one step away from the Left’s idea of a universal basic income, but the risk is that there will not be a backbone of small businesses to rebuild and re-employ on the other side of this bridge.
For Scott Morrison and the government, this is not pins in strawberries. It is a fiendish balance of what the public will accept without protest or panic and what systems can cope with. Yet every shutdown, every ratcheting up of restrictions to fight COVID-19, hits jobs. Calls from the medical profession implore the government to move faster.
In America, congress is close to passing its $US2 trillion ($3.3 trillion) package and on Tuesday the Dow leapt 9.5 per cent, its biggest jump since 1933. On Monday, Fed chairman Jerome Powell made it clear that the US central bank would do whatever it takes to keep the economy afloat. Who else is doing whatever it takes?
On Wednesday, Qantas announced it had managed to raise $1bn from a consortium of 10 banks in a 10-year financing at 2.75 per cent. The money is to keep paying Qantas workers. On the same day, Virgin Australia laid off 8000 employees. When the airline would have been able to access the debt markets like Qantas is unclear. Its major shareholders are all airlines. But this is the dilemma for every small business — are they willing to borrow to keep staff on?
The government is banking on the idea that it is doing enough for small businesses to keep workers on the books. If you believe this is indeed a bridge of a few weeks, that may be credible; if you are more Hanrahan, the pain will subside only with a vaccine, perhaps 18 months away. That is a long time for many in small business to take such financial risk.
On Tuesday, Westpac chief economist Bill Evans forecast employment at 11 per cent in the June quarter. Ask yourself what impact this would have on the property market, which only recently had soared back to record levels. The quick action of the big banks to offer support packages to businesses large and small is to be applauded. That said, the last thing banks want is a property collapse.
Given all of this, it is interesting that this week the government, advised it says by Treasury, has ruled out guaranteeing wages for people if the landscape deteriorates. In Britain, the Johnson government has done just that, offering workers 80 per cent of their current wages during the crisis. The British measures exclude the self-employed, as the Morrison government is quick to point out. It is clear, though, that for now at least the government seems reluctant to do “whatever it takes”.
The pandemic response by world political leaders has been dramatically different, both in how draconian the measures are and in the pace of implementation. Partly this is explained by how authoritarian the state is, but even in the West the approach by governments vary widely.
When we eventually look back at this horrible experiment we are all living through, we may well question the advice of the chief medical officers to whom premiers and the PM constantly defer; that leaders were too soft on COVID-19 and too soft on society; that the doctors and those in the hospitals were right in their calls for lockdowns.
Is the reason that more retail businesses were not shut down on Sunday due to the very real risk that Centrelink would not cope? It clearly seized up with just the first wave of layoffs.
Now we have a situation where the PM is advising people not to go shopping at Myer, but Myer is still open, keeping folk in jobs.
In Britain, the COVID crisis is deepening. For those interested in flattening the infection curve, the NHS ICU capacity line sits well below the flattest of upside scenarios. Yet we hear now, with weird abandon, that Britain is “a couple of weeks further down the track than we are”. It’s no surprise that the word Brexit has evaporated from the headlines, replaced by corona. Like Brexit, the attitude to corona has split households, and particularly by generation.
In Australia, we have our own Cat’s in the Cradle moment: during the fires two months ago we had a frustrated young climate change generation appalled at the selfishness of baby boomers killing off the planet, only to see tables turned with this same young generation accused of the same selfishness towards the elderly by ignoring the menace of COVID-19.
Ticky Fullerton is the Sky News business editor and hosts Business Weekend at 11am Sunday on Sky News.
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