Cashflow Boost: $34b corporate welfare nobody talks about

Advertisement

Back in March I published an article entitled “The $34b corporate welfare payment nobody talks about”, which examined the Morrison Government’s $34 billion Cashflow Boost – a gigantic corporate welfare scheme launched at the beginning of the Coronavirus pandemic that has received little scrutiny or media attention:

To date there has rightfully been lots of rumblings about the $90 billion JobKeeper wage subsidy, which has been abused by employers to boost their profits. However, JobKeeper at least had a turnover test that had to be met, even if it was regularly manipulated.

The same cannot be said for the Cashflow Boost, which did not require any eligibility to be met, other than being a small or medium-sized enterprise with employees.

Australia's booming business profits

The $90b ProfitKeeper wage subsidy and the $34 billion Cashflow Boost drove a massive corporate profits boom.

A $34.3 billion subsidy to 806,000 businesses, many of whom have had boom years, should be controversial. It is one of the biggest corporate welfare programs Australia has ever seen and, alongside JobKeeper, a major reason why corporate profits soared last year.

The question is: why aren’t more commentators and the mainstream media talking about it?

Finally, economist Jason Murphy has cottoned onto the rort posting the following via Crikey:

Ever heard of the cashflow boost for business? No? You’re not alone. Nobody has. We should have — it was a convoy of gigantic dump trucks full of money stretching as far as the eye can see…

This was a $35.5 billion program, the third biggest expenditure in the history of the Australian government… It cost about twice as much as the much doubling of JobSeeker, and got about 0.0000002% as much attention…

[The Cashflow Boost] is far more questionable than JobKeeper — and we failed to question it. Scratch that. We failed to freaking notice it. Labor has whipped up a frenzy over JobKeeper, but this policy sank without a trace. We gave business $35 billion with no strings attached and no scrutiny and … does nobody care?..

It’s peculiar and concerning that such a large spending program can go on with so little public attention…

The fact the government can give $35 billion to business with so little scrutiny or attention is a concern for the future.

Advertisement

We noticed Jason, which is why MB reported on it in March. But your criticism is valid.

These funds instead could have given every resident of Australia over $1,300 in cash, or around $5,300 for a family of four.

The fact that it passed under the radar with only a few ‘fringe’ commentators noticing, is an indictment on the mainstream media and the policy process in Australia.

Advertisement
About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.