We've stockpiled more than $200 billion of extra savings

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The federal government says the economy won’t “fall off a cliff” when it scraps COVID-19 income support measures because Australian homes and businesses have stockpiled more than $200 billion of extra savings.

The $90 billion JobKeeper program, JobSeeker rate increases, and Coronavirus Supplement payments finish at the end of March.

The Financial Review reported that household banking deposits jumped by almost $113 billion or 11.4 per cent from the start of January last year to the end of November. Non-financial business deposits increased by almost $104 billion or 17.6 per cent.

Savings were boosted by government stimulus measures, much of which is yet to be spent by recipients.

However, business groups concerned about the upcoming drop off in support are lobbying the government for “industry specific” financial assistance.

“The tourism industry and hospitality sector, in particular, are finding it tough to contemplate a future without open borders and lowered government assistance,” The Age reports.

Small business ombudsman Kate Carnell is lobbying the government to start handing out HECS-style loans for small businesses to help them avoid financial ruin after JobKeeper ends.

She will present the proposal in a pre-budget submission to Treasury, seeking ultra-low or zero-interest loans for struggling small companies. The loans would be repaid only when the firms reach a certain level of revenue.

“There’s about 30 per cent (of businesses) doing well, another 40 per cent that are okay and getting back, and then there’s 30 per cent in all sorts of trouble,” Ms Carnell said.

“The reality is now, with JobKeeper being reduced, and the associated benefits like commercial tenancies and rent (relief) being removed … they desperately need ongoing support until their part of the economy can operate again,” she said.

“What are we doing as JobKeeper finishes for businesses that are still struggling?”

Ms Carnell said there is “a widening gap between the businesses that did well during COVID and have recovered as restrictions have been lifted and those businesses that are still really struggling”.

The Council of Small Business Organisations Australia is backing the submission.

Treasury modelling shows economic activity will be 5 per cent higher in 2020-2021 and 4.5 per cent higher in 2021-2022 than it would have been without stimulus spending from the federal government. There was $251 billion worth of economic support planned, of which $142.6 billion has so far been paid.

9News says likely reasons for the savings boost include the inability to go on family holidays during COVID-19 restrictions, concerns over job security leading to ‘rainy day’ savings and reduced spending opportunities after shops were forced to close their doors.

Australia dipped into recession last year after recording two consecutive quarters in which the nation’s Gross Domestic Product (GDP) dropped. In December, a substantial GDP recovery ended the recession. Despite this, federal Treasurer Josh Frydenberg said the pandemic would continue to have an economic impact.

“Technically the recession is over, but the recovery is not,” Mr Frydenberg said at the time.

“We know that a lot of Australian families are in a pretty tough financial situation and a number of Australians are still out of work.”

Economist Chris Richardson, from Deloitte Access Economics, is positive about 2021.

He predicts:

  • flying will resume, bringing students and tourists
  • unemployment will improve slightly and slowly
  • manufacturing will grow slowly
  • interest rates won’t change – but government budgets will have to
  • the recovery will be big.

“There’s a rapidly growing possibility that this recession – as deep as it’s been – will see a more V-shaped recovery than our current forecasts allow for,” he said. He added that while recessions are terrible, it’s important to remember a downturn means there are, “unemployed people who can be employed again, empty shops and offices that can be filled, and businesses that can start to work to their full capacity again”.

“The bigger the downturn, the bigger the recovery. That’s an equation we all need to keep front of mind.”

Should government support continue past March? Should government pandemic assistance become more focused?

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Written by Will Brodie


Total Comments: 13
  1. 1

    i guess Now the jobseekers have now helped to keep Businesses running by spending the money they are now redundent and returned to the scrap heap.

    The Morrison government must bee rubbing its hands with trying to work out how they can pas $200billion onto their business matso that the businesses can then continue paying thEO’s and the like more big bonuses that ot from the Jobkeeper program.

    but we must congratutatw those businesses that when they made a profit during the pandemic paid back the jobkeeper money recieved.

    We are waiting for you Harvey Norman and others.

  2. 1

    So the early re-lease on super was not required ,just another slow mow blunder.

    • 5

      Right on cue, floss, take the opportunity to blame the government. Your Labor masters will be proud of you. As a matter of interest, most of the super withdrawals have been shown to be used to pay rent/mortgages, put food on the table and pay utilities. Not everybody was eligible for JobKeeper or JobSeeker.

  3. 4

    And so it continues with the rich getting richer and the poor getting poorer. Leaders are short sighted and corruption increases.

  4. 2

    Wonderful! Is not this Prime Minister of ours able to to see that some people have managed to save a bit a) because they were unable to get out for a meal or a weekend break b) because they deliberately started cutting back in case of future bad times or c) they were some of the lucky ones who got jobkeeper payouts and budgeted carefully.

    What about the ones who did not qualify for govt. help or the ones who have many mouths to feed?

    We don’t all fit into neat little boxes with government labels. Do you really want to know that many children go to bed and to school hungry?

    • 2

      Sad as it may be, chidren went hungry BEFORE COVID and will do so after it is all over. Make your plea for assistance for these kids, but don’t conflate it with COVID handouts that were alway made clear were temporary solutions. Emotional blackmail won’t work!

  5. 2

    This government doesn’t have a clue how the economy works. Most of the people that have received any form of a stimulus whether it be welfare recipients, pensioners, newly unemployed etc have put that money back into the local economy. In a lot of cases giving back to the government 10% in GST from purchases. The extra stimulus money has had a trickle down affect which has also kept some small businesses operating. Forget what this government will tell you that giving more money to the rich will have a trickle down affect as this is rubbish all it does is make the rich richer & build a great divide between the rich & poor. The report doesn’t give enough information to determine who actually saved & who spent more because the had a little extra to spend to give them a better quality of life for a short period.
    This government is shameful, has no empathy & only has their rich friends & contributors at the forefront in policy making.

  6. 2

    Given more than 80% of businesses that were on Jobkeeper are now back at work. That leaves 20% of the original businesses that may be still struggling. At least some of those are zombie businesses that were struggling before COVID and have only survived because of the financial support. Those businesses need to take a good hard look at themselves and make the difficult decision to walk away and do something else.

    I agree there are some sectors in great difficulty – tourism comes to mind and agriculture. However, do not be persuaded that all the travel businesses in trouble now were doing very nicely before COVID – they weren’t. Flight Centre for one was on the cusp of bankruptcy. Their UK division was already closing shopfronts and the Australian division was doing the same.

    I agree with withdrawing Jobkeeper/Jobseeker handouts at the end of March. These were ALWAYS temporary solutions and should not be allowed to continue unabated. Once people get used to receiving extra payments suddenly a temporary handout becomes viewed as some sort of ‘ right’ not to be given up.

    Having said that, there are some sectors that have been hit harder than others and their situation is not helped by game-playing, point-scoring, electioneering state Premieres who can’t decide whether borders are open or not, slam them shut at the drop of a hat and then move like sloths to reopen them. Businesses across state lines cannot be held to ransom in this way. There are 25 million people in Australia who would be more willing to holiday within Australia IF they could be guaranteed to be able to return home at the end of it. For this I have much sympathy with the tourism sector as a whole. Farmers unable to gather crops from lack of workers are another group that deserve special consideration particularly coming off the back of severe drought and fires with this year being the first time in years for many to actually have a descent crop.

    Therefore, I do agree jobkeeper/jobseeker payments must stop, BUT some support for specific and targeted sectors should be considered.

  7. 0

    The covid-19 payments have been largely for political gain. There is no doubt that assistance was required by many when everything closed down. The scale of the assistance might be viewed as higher than necessary for some but many who were in receipt of Jobseeker before the pandemic might have needed more even then. The political gains achieved by the government will be for nought if everything implodes after the supplement payments are withdrawn.
    Who would want to be in parliament for that implosion?

  8. 1

    Maggie hit it right on. The Prime Minister is unable to see past passing on more money to his business mates. Some people have savings because medical procedures were delayed due to COVID and those of us who pay for our own, have the money still sitting in the bank (but will have to pay it when we get the procedures.

    Others have managed to save a bit because they’ve been unable to get out for a meal or a weekend break and some have become reliant on shopping support and so are spending less than they normally would, which is resulting in a reduced lifestyle.

    Still others have been able to save a bit because they have deferred maintenance activities due to lack of service people or a desire to stay safe and some have deliberately cut back to build a reserve against future bad times.

    Now these people are being punished along with the few ‘lucky’ ones who lost their jobs or got reduced hours and got Jobkeeper payouts, but who budgeted carefully. Many others did not qualify for govt. help and got nothing, so are really struggling.

    So our government has decided people are through the worst of it and don’t need help. The politicians went through the whole crisis on full pay and even got a pay rise. Most of them got opportunities to win along the way and had no problems feeding their families. But these same politicians have decided we are all doing well and are about to claw back their generosity. Be interesting to see if their mates in businesses pay back anything, especially those who have declared good profits. They are certainly pushing for those of us who have put some reserves aside to be forced to spend it. Give more to the wealthy.

    The government sticks labels on us, but doesn’t have a clue about the reality within these labels. We are considered to have a modest retirement lifestyle, because our savings allow us to live better then we could on just the Age Pension, but we can still only afford basic activities. We certainly don’t fit the category of a comfortable retirement lifestyle. We can’t afford leisure and recreational activities and can’t afford new household goods, private health insurance, a new car, regular purchases of clothes, updated electronic equipment, or when it was possible, domestic or international holiday travel. Lucky at our age we are not supporting children and are dieting, so happy to eat less.

  9. 1

    The economy may not fall off a cliff, but many individuals will. There’s more to a community of people than an economy.

  10. 0

    For those still waiting for international tourism to come back, jobkeeper should continue – or else open up our borders!



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