Did ScoMo just stimulate mass virus spread?

Via The Australian:

Small and medium-sized businesses employing eight million workers will be given up to $25,000 in cash, and instant asset writeoffs will be extended to 3.5 million businesses, under a stimulus package worth almost $18bn.

Pensioners will also be the key beneficiaries of a household cash payment to be ­announced on Thursday, under Scott Morrison’s plan to keep employers afloat and ­save jobs during the coronavirus crisis.

The first instalment of the plan, which comes on top of a $2.4bn health package, will leave the door open to scaling up the stimulus ­beyond the budget, should the global health crisis deepen.

…The largest component will be a $6.7bn cash rollout to about 700,000 small to medium-sized businesses, worth up to $25,000 each. It will use the PAYG withholding tax system to assess the needs of struggling firms.

“Assess the needs of struggling firms”. That’s the key. Will it be a grant for whatever purposes? Or will the employee have to remain at work? If it is the former then unemployment spike anyway. If it is the latter it is a mass virus spreading stimulus.

It can’t, surely, be the latter can it? From Domain:

Prime Minister Scott Morrison will on Thursday unveil a stimulus package expected to reach $15 billion, aimed at keeping more than 700,000 small to medium business nationwide “humming” and more than 120,000 apprentices and trainees in work.

The multi-billion boost – the first since the Rudd government’s 2009 response to the global financial crisis – will also provide one-off cash bonuses to Australia’s 2.5 million pensioners and 680,000 Newstart recipients to stimulate consumption and tax breaks for small businesses to invest in new items such as tools, cars and kitchen equipment.

He said a $6.7 billion investment in 690,000 small and medium businesses would “supercharge” the employers of about 7.8 million Australians, with a cash flow boost to invest and protect jobs.

By “humming” does ScoMo mean the workers must be working for bosses to get the subsidy? It is a good idea as a form of holiday pay. But it is the worst idea imaginable if the largesse only arrives so long as people keep their social contact exposure up. It must be the former.

The investment write off won’t work given who will invest into zero demand and risk death by doing so?

Any Newstart bonus is good but should be permanent.

The pensioner bribe is stupid given it incentivises the most vulnerable get out and see what illnesses they can catch.

$18bn is not a bad number (around 1% of GDP) and it is good that it will rise. Recessionberg reckons he’ll roll most of it by June! But it will only work to mitigate economic fallout if employees see the dough without having to die for it.

Which means that it won’t work anyway given they’ll be at home.

Houses and Holes
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Comments

  1. What about tax relief (Stage 2/3 bring forward) for PAYG so those affected can take more leave. Lots may need to take some unpaid leave.

    Permanent Newstart increase and easier to obtain for citizens. People are going to need it.

    What about incentivising Coles etc investment in more delivery trucks/drivers to deliver groceries and incentivising that (extending instant asset write off to bigger cos like Coles/Woolies to cover fleet )

    Taxpayer asset write off to purchase laptops fpr work from home in case employers can’t turn asset purchases around quickly enough (our preferred supplier is taking months for laptop delivery on purchase order)

    Some sort of interest deductibility for OO P&I against tax (if it’s good enough for IPs…) for some period to free up cashflow at tax time. Renters also need some love.

    Lots could be done around primary and acute and non admitted inpatient too.

    * be gentle. Not an economist. Just flinging ideas out there

    • Those delivery drivers – do they get tested after each individual home visit? Or just if the recipient sneezes on them? If not, aren’t they just as likely to be the spreaders of mass infection? Maybe they leave parcels at the gate/front door (no contact), in which case the recipient better be quick uplifting their goods!

    • Everything done by this government since January has been about ‘managing’ the spread of the virus.  It hasn’t been about preventing the spread, preventing the arrival of the virus, protecting Australians.

      More pertinently it has been about ‘managing’ the perception of the ‘management’ of the virus outbreak.

      The small and medium business write offs are simply a tax giveaway.  A casual glance at the domestic demand equation since the first week of November last year points to recession.  Given the number of retail chains going under, the base case for many businesses must be that they will

      1.       take the tax write off,
      2.       close due to coronavirus, and
      3.       simply never open again.

      That should make for some small business owners, many of whom are essentially tax farming, to buy a  few more bits of kit as they head out the door.  A number of mainly casual, mainly low paid employees may find there is an underpayment/non payment of something in the ensuing washup.

      There is another issue here, also spreading the virus.  Almost all workplaces of more than 20 people in Australia are supposed to have coordinated workplace health and safety policies and procedures.  Given that large numbers of these will be casual, or temporary (but it will even apply in many full time and permanent circumstances), the question will certainly arise as to whether they have leave sufficient to enable them to stay at home for any duration without working.

      If those people are in doubt, then there is going to be direct motivation for them to go to work if they think their condition is low level (not serious), and particularly if they have not been tested and confirmed as having the coronavirus. 

      Given that current analysis suggest that the virus is transmissible by people not showing any symptoms, and that the virus can take up to 2 weeks to show any symptoms in affected people, there is already the certainty that people will be carrying this virus (knowingly or unknowingly) into workplaces.

      Where these people do exhibit symptoms in workplaces, then what scope does any given management have to say ‘you are sick or potentially carrying coronavirus, go and get tested and go home’.  If the affected person is wondering where their next rent payment is coming from then that person may quite plausibly state that they aren’t sick and want to continue working.

      Who has what rights at that point?

  2. The ridiculous argument that we need a Rudd style handout is completely wrong, that was all spent on big screen TVs which wont help at all. They need to be doing things like ensuring all assets are mobilised such as Qantas idled A380s are available for urgent freight etc.
    Rudds idea of another G20 talkfest also needs to smacked down hard. The last the thing world needs is all these politicians and attaches travelling!

    • There is no urgent freight, or very little. The worlds manufacturing is/has/will shut down for the next few months. What are you expecting to freight around. I expect there will be plenty of idle freight capacity without worrying about increasing it.

    • That is equivalent to spending millions on an ad at times square to come to Aus on the eve of travel restrictions.

    • Bollocks, Gerry Harvey started that rubbish before it got handed out because he wanted direct business stimulus and then after the fact he complained that people didnt spend it. Cant have both, There was no evidence that the Rudd stimulus, like the Howard era Baby Bonus was spent on anything like TV’s.

  3. If the virus takes hold in the indigenous community, can we put the government on trial for genocide?

    • Fishing72MEMBER

      Huh ?

      What’s the indigenous community got todo with anything ? There’s not a single person on Earth who has previous exposure and existing immunity to this disease irrespective of race.

      • High degree of pre existing illnesses like liver damage or diabetes coupled with poor access to intensive health care will result in an astronomical mortality rate.

        • Not in the Indigenous communities I have experienced, Some of the more remote ones may be but those closer to the rest of the population are almost as healthy as the rest of us. Ironically the remoteness factor that increases their risk is almost completly mitigated by the very reason for it. I.E. very little contact and support from the rest of the population…..

      • Locus of ControlMEMBER

        Many low socioeconomic groups share similarly poor health characteristics. It’s not just the Indigenous who are at risk.

  4. What about sole traders? Where can we read the fine details of this or is it just a press release now?

  5. happy valleyMEMBER

    Scotty from Marketing just confirming that he is indeed captaining HMAS Titanic?

  6. TheRedEconomistMEMBER

    I had interview yesterday … they’d only talk to me via Skype. I guess companies will use technology a lot more and working from home will be a major o push.

    • DelraiserMEMBER

      Too right

      BCP testing is in full swing at my work. No face-to-face meetings and if so, attendees must sign a declaration as to their travel whereabouts for the last 14 days. We are trialling full WFH days next week where no one apart from absolute essentials are in the office

      • Do you have to give travel declarations for the few thousand people you have come into contact with in the last 14 days? How many people do you encounter on a daily basis who have travelled in the last 2 weeks?

        These declarations are stupid, You dont have to have travelled to come into contact with someone who has travelled..

    • Had partner org suggest a face to face demo of technology app (I think from Syd).

      We’re in health area.

      I asked where this team was from given the escalating risk

      I’m sure that will raise some eyebrows

  7. This is going to be another repeat of last years tax cut and bushfire relief. They’re going to be too crafty with it, so it’ll end up being too late, wont be enough, get caught up in red tape, will get eaten up by middlemen, won’t get to the people who actually need it and wont do what it will be intended in the end. Big nothing burger.
    The govt should just stick to stimulating the housing market. That’s the kind of unproductive enterprise that they excel at.

  8. Reading into this, its a top down approach (trickle) stimulus which wont work.
    Needs to be bottom up. Just deposit cash into everyones account or cut tax.

    • TailorTrashMEMBER

      It’s alright he’s coming…..he’ll be here soon to put youse
      doomsters right …

    • Ahh yes, medium.com

      By the renowned epidemiologist and virologist @tomaspueyo

      Well that seals it then

  9. Arthur Schopenhauer

    Arthur’s Basic Save The Country 12 Month Stimulus Plan

    Shutdown the country for 4-6 weeks. No one in.

    Draconian quarantine on a local government ward basis. Deploy defense forces and police. Harsh penalties for breaking quarantine.

    Pump money into any enterprise that can make, protective clothing, respirators, ventilators (no matter how crude).

    Round up all cases and separate from healthy people.

    Suspend mortgage payments and rent for 4-6 weeks.

    Progressively open local gov wards as the virus clear. Open ward can do business with other open wards.

    Begin trade with countries clear of virus. China, Taiwan then Japan, Korea and so on. Expand industrial capacity from the basics (nails, glue, food, packaging etc) and progress to more complex areas over a number of years.

    Manage it all with a smart phone app.

    ( Hmmm, this might have been done successfully somewhere else.)

    That’s a 12 month stimulus plan. Simple plan. Hard to execute.

  10. It is arguable the most targeted stimulus that doesn’t risk vulnerable getting infected is $500 after you’ve recovered from the virus. It is that band of people (small now but will grow) who we need back to BAU ASAP and spending big.

    Of course the counter argument would be you are financially incentivosing catching it!

  11. Brainfart policy. The Morrison government failed with the bushfires and will fail again with the economic and health effects of the virus.

    25k cash grants to SMEs assessed through the PAYG system? Who comes up with this garbage?

    Most likely the door will be wide open for rorting too.

    I guess this is simply the outcome of a public service that is now underpinned by “diversity”, “inclusiveness”, “equity” rather than brains. Fearlessness, frankness and wisdom certainly doesn’t exist among the high ranks of the APS nowadays. Rather, fearfulness, insincerity, ineptness and guile.

    • Yeah well, when you cant use the wwords “you’re fvcked” anymore because PC.. you need to take the scenic route around the butth0le..

  12. I don’t get why there is a pension boost? They are already on the pension so their expenses should be covered?

    Surely the people who need a boost are wage earners who have lost their wage or have reduced hours and likely have dependents and/or paying a mortgage/rent out of that wage? And businesses paying wages who want to keep people on and need some help to get across the coronavirus valley?

    I am losing any remaining confidence that the government has any idea of what it’s doing.

    • Know IdeaMEMBER

      I suspect the government clearly knows what it is doing: working in the (sole?) interests of its funders with just enough window dressing to spin it to its constituents.

      But maybe I am just a myopic grumpy old man.

      • Arthur Schopenhauer

        No. If you ever have to deal with them you’ll realise they are just A-Grade selfish fools, who have spent an entire working life avoiding responsibility and shafting close associates. Their funders are similar in character.

        You give them too much credit.

        • Know IdeaMEMBER

          Oh right. It is a case of: don’t attribute to malice what can easily explained by incompetence?

  13. This straight out of the Morrison election playbook:
    – Give handouts to pensioners (i.e. your voter base) and offset it with some NewStart cash handouts, which is considerably fewer in number and can be made more difficult to obtain if you don’t qualify; pension in a certainty, Newstart not so much.
    – We can’t give money to big business directly, so we’ll give cash to SMEs in a way that benefits the owners over employees. Cut the meat off the bone, throw the bone to the labouring scum. Job done.
    – If we can’t have people buying shyte they don’t need, lets give SMEs money to do it instead. Endless MOAR pointless consumption is key to the Ponzi scheme, after all.
    – Make sure you mention all the key groups: pensioners, apprentices, small business, people looking work (Newstart). This makes you appear to care.
    – Don’t under any circumstances actually commit to directly support the populace without condition. That would be outside the Liberal ideology and aligns perfectly with Christian ideology of “Love for all people, but you’ll only get that love if you devote yourself to me completely and absolutely to me.”

    Where is the immediate and proactive support of our medical infrastructure and staff?
    Where is the protection of vital supply chains and logicstics to move food, fuel and medical supplies to places that need it?
    Where is the CENTRALLY COORDINATED CONTROL OF INTRA- AND INTERSTATE MOVEMENT OF PEOPLE TO PREVENT PEOPLE FUCKING DYING?!?!?

    This mob must be trying to topple the CCP as most abominable government ever. Anyone got a PPP that involves organ harvesting, ethnic cleansing or industrialised slave labour? I know someone who’d be keen to hear your plans.

    • “Where is the protection of vital supply chains and logicstics to move food, fuel and medical supplies to places that need it?”
      We outsourced all of that to china, and operate in a “just-in-time” environment to inprove profits.
      There won’t be anywhere with excess essential supplies to move around.

  14. DoctorDisgusting

    Other posters here have been saying it for a while but a chilling possibility has just crystallised for me. I just heard Scomo on the ABC ENCOURAGING people to attend the NRL and other sports fixtures this weekend. Same for Andrews letting the F1 go ahead.

    I thought “they can’t possibly be that stupid”. Then I realised perhaps they’re not stupid at all, maybe someone has done the maths and those in power are gambling that the economic calculus will be better for them if they let Coronavirus spread. Maybe the reason attempts at containment have been so feeble is because they dont actually want it contained.

    I’m willing to hear a better explanation for the circus so far.