The Meeting Place

How to take the hand brake off economic recovery

australian money with covid masks

CPA Australia has called on the government to shift its policy focus to supporting business recovery and reinvention, with the goals of achieving strong productivity, employment and GDP growth without compromising long-term environmental or economic sustainability.

“Economic policy decisions should take advantage of the currently low cost of debt and should not be driven by shorter-term budgetary considerations. With record low interest rates, we need to keep the cost of servicing debt in perspective. Government debt should not be a hand brake on economic recovery,” said executive general manager policy and advocacy at CPA Australia, Dr Gary Pflugrath.

CPA Australia says the government must provide certainty for businesses to recover and reimagine their operations for the post-pandemic environment and that JobKeeper should not be changed before the scheduled September 2020 end date.

“Existing COVID-19 measures should be withdrawn from September in an orderly tapered manner, balancing the need to support businesses that are viable in the longer-term against the limited benefit in sustaining businesses that have little or no chance of recovery,” said Dr Pflugrath.

“The opportunity exists for many businesses to reboot and permanently change the way they operate. We expect technology to be key to this. However, with our Asia Pacific Small Business Survey showing that the level of technology use and investment by Australia’s small businesses is significantly lower than small businesses in Asia, state and federal governments need to greatly expand the support they provide to SMEs to better back the sector’s digital transformation efforts.

“To support businesses to embrace the efficiencies and experience of using technology, moving to a paperless office and remote working, temporary relief measures should be permanently adopted, including virtual AGMs, acceptance of electronic signatures and electronic lodgement and storage of forms and data.

“An important lesson from 2020 is that governments need to develop pre-prepared economic and policy frameworks that can be activated when a disaster occurs. This ‘break glass in emergency’ response should be designed so that it can be scaled up or down quickly in response to the nature and magnitude of a disaster. This would minimise the need to make policy on the run and reduce the time between a disaster and the delivery of considered and appropriate levels of assistance to directly and indirectly-impacted businesses.

“Another important lesson is that consideration of climate change policy and meeting our commitments under the Paris Agreement must be core principles in post-COVID-19 economic recovery policy.”

Do you think the government should retain JobKeeper past September 2020? What other measures could improve our economic future?

2 comments

Do you think the government should retain JobKeeper past September 2020?

There is no right answer.

Everytime we read or hear about calls for new spending

we NEVER hear anything about how to pay for it,

or the consequences of massive additional expenditure.

Unless funding and consequences are also covered it's just time wasting activist/journalistic NOISE.

We will, or at least our decendants will, pay for it like government debt has always been paid, slowly. As time passes, and our GDP increases, the level of debt reduces as a % of GDP. For Australia the 2019 ratio of debt to GDP was about 42%. Compare this with USA where the pre-Covid-19 ratio of debt to GDP is around 110 %. The reality is that our capacity to pay is extremely good we could easily double our current committment to keep JobKeeper and JobSeeker for many more months without posing a threat to our economic recovery. 

Government debt is like taking a 40 year mortgage to buy a house, while the capital amount may seem overwhelming in year 1 by year 40 it seems rediculously small and, in the meantime, the value of your house has increased by between 5 to !0 times. After WW2 Australia's debt was about 120% of GDP. It took Britain until 2015 to repay her debts from World War One. 

Britian repaid WWII debt in December 2006.

 

                  

                      SECOND ECONOMIC SUPPORT PAYMENT

You may get the second Economic Support payment if you’re living in Australia and get 1 of the following on 10 July 2020:

Five million Australians will soon notice some extra cash in their bank account as part of the Federal Government's response to the economic crisis caused by COVID-19.

The payments will start being issued from today. The $750 Economic Support Payment aims to help Australians on lower incomes who are struggling financially due to COVID-19.

Earlier this year, a $750 payment was made to about 6.6 million people who were receiving some form of assistance from Centrelink. About 5 million people that received the first $750 payment are eligible for the second payment.

It includes those on the age pension, disability support pension, carer payment, bereavement allowance, veteran service pension and veteran income support supplement.

Anyone receiving Family Tax Benefit A and B will also receive the cash, as too will people who have a Commonwealth Seniors Health Card or a Pensioner Concession Card.

If a person gets support through more than one scheme (such as the age pension and the Commonwealth Seniors Health Card) they won't be paid $750 twice, even though they qualify multiple ways.

Those on Youth Allowance and JobSeeker were given the first $750 payment earlier this year, but they are not eligible for the second round of support.

https://www.abc.net.au/news/2020-07-13/coronavirus-economic-support-payment-round-two-explained/12447358

(See link for an easy to read chart).

The first payment cost the Commonwealth $5.6 billion while the second round is expected to cost $3.8 billion, bringing the total bill to $9.4 billion.

The handbrake is well and truly off.

 

Pity the poor burger who wins the next election, what a debt to begin with!

2 comments