Economists have criticised the federal government for responding too slowly to the financial distress caused by the outbreak of coronavirus.
Treasurer Josh Frydenberg announced on Thursday that the government would provide $15 billion to smaller lenders to enable them to provide low-cost loans to consumers and businesses.
The investment is on top of the $17.6 billion announced last week.
But commentators had expected the Treasurer to announce additional income support for workers who have recently lost their jobs – measures economists say are urgently needed.
Although the Prime Minister Scott Morrison has said he will soon announce more measures to “cushion the impact” of redundancies, Centre for Future Work director Dr Jim Stanford said the government had wasted precious time by delaying additional policies aimed at struggling households.
Speaking after Qantas stood down 20,000 workers until the end of May, Dr Stanford told The New Daily the Australian government was playing catch up to “events that are developing frighteningly fast”.
“Australia’s government has been very slow, compared to other industrial countries, in recognising the need for immediate help to flow directly to households, businesses and workers,” he said.
“Last week’s stimulus was out of date two days after it was released. And today’s stimulus is equally underwhelming.
“It won’t make a dent in the recession that we’re already in.”
Dr Stanford said the government had so far failed to recognise that today’s labour market is very different to the one that faced the last recession.
The rise of insecure and casual work means the government must take a different approach to turning the ship around – one that goes beyond low-interest loans for struggling businesses, he said.
“Less than half of employed Australians hold a full-time permanent job with normal entitlements. That’s completely different from 1992 – and our income support system is way behind the times,” Dr Stanford said.
“So the government’s top priority right now has to be closing that [gap in entitlements] and ensuring that all Australians – whether you’re a Qantas worker or an Uber driver – can get some support at this dire moment.”
Dr Stanford said the lesson from other countries is that what’s most important is to “go big and go fast and not worry too much about the fine” policy details.
“We need direct measures to try and keep people in work. So giving support to businesses so they don’t collapse is a good idea. But it has to be conditional on them keeping their staff on,” he said, referring to the recent Qantas announcement.
Even Trump has been more ambitious and intelligent in designing his package, which is certainly much, much bigger.’’
Lessons from overseas
As part of his administration’s $US1 trillion ($1.74 trillion) economic rescue plan, US President Donald Trump has proposed mailing out cheques worth at least $US1000 ($1744) to every American adult.
And other countries have also thrown the kitchen sink at the problem.
New Zealand has committed itself to a stimulus package worth 4 per cent of GDP.
And the UK government has already pledged £330 billion ($666 billion) in state-backed loans to all British businesses – a whopping 15 per cent of GDP.
The Australian government’s $15 billion worth of loans and $17.6 billion worth of stimulus, on the other hand, has so far amounted to no more than 1.6 per cent of GDP.
Reserve Bank offers a helping hand
The central bank said it would also increase its repo operations and set up a funding facility for banks to supply $90 billion worth of cheap credit to small and medium-sized businesses (SMEs).
Indeed APAC economist Callam Pickering said the funding facility for SME lending would help struggling businesses “keep the lights on” over the next few months.
But he told The New Daily the government must urgently announce more measures to help workers pay the bills and keep their jobs.
“Certainly, time’s been wasted. There was all that time spent creating the first stimulus package, which felt inadequate within a couple of days of being announced. And now they’re sort of taking their time to put together the next measure,” Mr Pickering said.
“This is a really tough situation to get right, but timeliness is certainly of of the essence, because the economy can get really bad really quickly.
“And I think we’re beginning to see the first signs of that with what’s happened with Qantas [on Thursday].”