A " Spending " Solution !

Australia will go from the prospect of a small surplus to a fourteen billion deficit as it injects money into the economy to ward off a threatened recession.  The cause is a pandemic that came roaring out of China and can not be fully contained.  It now seems inevitable that it will sweep through the world and be fatal for some people.  The good news is that the vast majority will experience something like influenza from which they will recover.

The first fiscal indications are frightening.  The world stock market took a beating as investors backed away and prices fell sharply.  The huge superannuation industry has its members funds invested wherever it can get the best return and this retreat will lower retirement expectations.  If industry is forced to shed workers because of this economic downturn many planned comfortable retirements are at risk.

The government has spread the impact of its relief funds widely.  The need to isolate to slow the spread of the virus will impact on most retail business and fifty million dollars will be allocated in grants from two thousand to twenty-five thousand dollars to keep the doors open and survive the downturn.  Up to 70,000 eligible employers will be able to claim help to retain apprentice and trainee positions with the government kicking in with wage support.

Importantly, people forced into isolation by the virus who can not fund their current income support obligations  will be offered a personal crisis intervention for fourteen days.  This will not require a medical certificate unless a further extension is required and help will be forthcoming under youth allowance, sickness allowance or the jobseeker payment system.

Another big initiative is a one off cash payment to welfare recipients.  The 6.5 million  Australians who receive the aged pension, family tax benefit, youth allowance, Newstart, Austudy, Disability support and carer payments will receive this payment of $750 on March 31.   It is imperative that this be spent and not locked away in a savings account.

By putting $750 into the hands of this vast array of people the flow-on to retail premises of individual purchases will help to restore confidence in the business sector.  It does not matter where - or how - the money is spent, just so long as it circulates swiftly to achieve the intended outcome.

That is a calculated gamble.  Each recipient finds $750 they did not expect to receive in their hands and the are being asked to shed their austerity budgets and spend it in the national interest.  It is hoped that most will comply and that amount of money coming into immediate circulation could well be the stimulus that keeps many small business operations from closing their doors.

How the Australian economy fares in the face of this pandemic is now squarely back in the hands of its people !