DoleHider accumulates entitlements bomb

Via the AFR:

The Morrison government will revamp and extend the JobKeeper program beyond September but struggling business owners are being cautioned to think twice before signing up again because it might send them broke.

The small business lobby and the government are aware that workers who have been kept on the books using the $1500-per-fortnight wage subsidy have continued to accrue annual leave and other entitlements.

Should the business owner decide at some stage to let the workers go because the business will not bounce back, these entitlements will have to be paid out from cash reserves or from dwindling or non-existent profits.

COVID is structural change. Time to scrap DoleHider and get everyone onto a boosted dole so that we can deal with unemployment out in the open.

David Llewellyn-Smith

Comments

    • yep. something I did not think about.. and I’d say few business owners did not take in consideration. My call is there will be job losses regardless if Scumo extends JobKeeper or not.

  1. Scummo will keep it going until he can call an early election in 2021.
    March is my bet because they are extending mortgage deferrals and insolvent trading arangements until March 31.

    • We are going to extend and pretend, extend and pretend as Japan and everywhere else has done. Not for the sake of SMEs but because it protects most the big incumbents close to the political elites and first in line to benefit from Cantillon effects. Their would-be successors and next cohort of entrepreneurial wealthy elite do not have a voice as they are yet to have any wealth. They will continue to be supressed and their success delayed along with proper levels of broader economic growth.

      This group and their old business models need to be let fail. Jobseeker needs to be retained at least at current elevated (subsistence) levels and people moved onto that. Short of a vacine this going to be a long, long haul.

      Even better, put newly unemployed individuals on cyclical/rotating levels of even higher (wage-like) elevated benefits for periods of time. This would reduce the long term negative impacts of unemployment, reduce the costs to govt overall, keep their outlook more dynamic and potentially allow for some small scale capital build up during the “summer” periods for small scale productive investment or encouragement to improve personal financial management planning and skills for the “winter” periods. Or if this fails and they spend it all, well heck, the money will be more stimulatory for that short “summer” period than giving it to some asset rich rentier in the form of tax breaks.

      • The90kwbeastMEMBER

        “Jobseeker needs to be retained at least at current elevated (subsistence) levels and people moved onto that”

        And who will be paying for this Toby? What is the point in working (harder and harder, as every business is coming under stress) if I can sit at home and earn $750 instead a week paid from taxes and a debt burden shifted onto the still employed who will, the longer this keeps going, never pay it off.

        All for a $50-80p.w. permanent increase to Newstart, but $750pw is nuts.

        • Scab Quarantine Security

          The last 4 months have given rise to a new generation of entitled dole bludger.

        • DominicMEMBER

          And who will be paying for this Toby?

          I’m surprised you asked – bend over and drop ’em 😉

        • Jumping jack flash

          “And who will be paying for this Toby?”

          Its time the government stopped shafting their people and started taking on some debt.

          The government spun the huge lie in the late 90’s that debt was bad. It was so convincing and relatable that we believed it forever after. But at the same time they manipulated interest rates and set up central banks shortly after so their people could take on more debt than ever! More debt than any person should ever need to take on.

          The reason for this was simple, additional money was still required for economic growth, and if the government wouldn’t take on the debt, then their people would need to. And they did!

          The current economic state is the result of this failed policy.

          We the people now owe 2.4 trillion debt dollars to the banks, while the government owes just 0.5 trillion. The government expects their people to carry around 5 times more debt than them!

          There are no words.

          Taking on some debt and handing it out to their people to use to take on more debt is the least they can do.

        • I think you are confusing job seeker and job keeper? Job seeker is not 750-00/week

  2. ChristopherMEMBER

    Not just leave entitlements that people need to plan for but the cost of any redundancy payments as well, many businesses will not be able to afford those either.

  3. Scab Quarantine Security

    What a waste of money. People need to just learn to live on less, live with more humility in the ‘new normal’.

    All these business owners that like to say they’ve never been on dole or taken benefits in their life I bet they’re taking JobKeeper and the ATO $10k cashflow boost LOL.

    We don’t need zombie cafes and acai bars dotted all over the nation.

    • Exactly. most of these businesses shouldn’t even exist. The only way they do exist is by stealing the wealth of the nations children and unborn. Its disgraceful.

      • Strange EconomicsMEMBER

        No actually the small cafes are working people trying to get some money by 4 $ coffees out the the rich rentier pockets, where those of banks and finance and others who have taken it direct from the govt subsidised corporates. and now planning to pay even less tax. They need a proper jobseeker rate, and remove some of the endless list of high wealth tax dodges.

    • Jumping jack flash

      “People need to just learn to live on less..”

      Impossible!
      Gargantuan quantities of debt that everyone has puts a hard floor under the amount of money people need to use to live.
      Essential living expenses aren’t just food and energy any more, in the New Economy they are for food, energy AND debt.
      Debt is now absolutely essential, and not just any debt, the biggest and baddest pile of debt you’ll ever meet. And it is no accident that debt is so essential.

      Consider the effects of this new normal though: The insatiable need for gargantuan quantities of debt puts a hard floor under the amount of wages people can accept for their labour.

      The insatiable need and absolute necessity for economy-crushingly huge piles of debt also means that some jobs are simply not able to be performed because they will never pay enough to obtain the debt that is required, and we see this in such vital areas of society as cleaning and labouring and packing and many of those mundane and often dangerous tasks that nobody seems to want to do, so we have to get foreigners to do them.

      The insatiable need and absolute necessity for stonkingly enormous piles of nonproductive mortgage debt, piles of debt that no human should ever need to be responsible for, also is responsible for most of the blatant gouging of living expenses. Prices set wages, inelastic demand, and all of that mumbo jumbo means we have some of the highest utility prices on the planet, as well as some of the highest amounts of private debt – and that’s no coincidence.

      • DominicMEMBER

        Quite right, JJF – in divorce courts here a woman can claim that she ought to be kept in the lifestyle to which she’s been accustomed during the marriage. Lo and behold, the judge agrees and bends the poor fellow over good and proper.

        Same principle applies to citizens who’ve become accustomed to living in a house they can’t afford and driving a vehicle they should really only have dreamt of. Their status needs to be maintained – it’ s the job of Gubmint to ensure it!

        • Jumping jack flash

          Government really has no choice. The alternative is total collapse.

          The debt hasn’t been growing fast enough. There’s about a 600 billion dollar shortfall in the amount of debt we have, and the amount of debt we need, if we maintained the same debt growth rates leading up to 2006, the golden age of debt, over the entire period up to now.

          Consider how we got here, we systematically lowered interest rates to allow people to become eligible for greater amounts of debt at the same set of economic circumstances. We are now at zero interest rates.

          We could continue to lower interest rates past zero to hopefully drop mortgage rates further and allow the people to take on more debt, but the effectiveness of doing that is questionable. The equivalent alternative is to use a UBI or wage subsidy, and then systematically raise that over time as it reaches the point of inadequacy, exactly as interest rates were lowered over the past couple of decades as each lower level became inadequate to grow the debt.

          • DominicMEMBER

            They can do what they like and, frankly, the sooner the better – that way we’ll get this over with sooner rather than later.

            I’m ready.

        • Scab Quarantine Security

          If a business owner is getting around in a late model X5 or Range Rover, they should have to sell it before sucking on the government teet through JobKeeper.

          If the car has been purchased by the business and is non-essential (not a tradie’s ute for instance), then it should be seized by the government before the business owner gets a handout from the government.

          I’d also implement ‘work for your JobKeeper’ where business owners need to put 8 hours aside on a Sunday to do community work such as picking up rubbish. No work, no JobKeeper.

          • DominicMEMBER

            I’m a business owner and I don’t qualify for Jobkeeper. Employees do, Directors don’t.

            But I take your point.

  4. frag outMEMBER

    Not sure if the cost/benefit is there, but I wonder if round 2 will be more specific/aligned to people’s pre-Covid incomes?

  5. Yep, get rid of Jobkeeper and increase the Jobseeker payment by at least $100 a week … at the same time work rights for international students must be revoked.

    • That 2nd point is the most important. no work rights for international students. I don’t use deliveroo or ubereats for that very reason – I refuse to subsidise the theft of jobs from young Australians.

      I pick up takeaway from my local restaurants – the proprietors know me and so know that in addition to being regulars there in normal times I am continuing providing them custom by being a regular takeaway customer. Any place where they know you are a regular you will get looked after better.

      • Mining BoganMEMBER

        Same, and I also find that those owners are always slipping little extras in because we’re worth a lot more to them because those delivery thieves aren’t taking a massive cut.

  6. SamscoutMEMBER

    Why is Covid a structural change and Swine flu wasn’t – 38,000 people were infected and 191 died. Nicola Roxen ignored the medical advice to panic and life went on as normal. Media engendered hysteria needs to stop.

    • I don’t know…maybe because swine flu was orders of magnitude less fatal than CV-19?

      Or maybe, Roxen (sic) considered that, since it disproportionately impacted younger age groups, she should just let it rip?

      • Jumping jack flash

        Swine flu petered out after a while. Covid still going strong.

        That said, these days everyone seems to be sitting around waiting for the end of the world and jumping at shadows. Next thing you know they’ll claim sightings of Nibiru or something.

        It is a reflection of our inflated self worth, and our self loathing alike, that the world could possibly end with us at this time.

        We are but a blip of little consequence. We need to keep it in perspective.