Episode 245 – COVID-19 revives the idea of the common good
Massive Changes in Society are coming because … we now know there is such a thing as society. The common good is important.
Left-wing socialist ideas are suddenly in vogue.
I previously said Australia won’t change till it feels some pain. Well, we will experience plenty of pain over the next 2 years.
What is possible? A 6-month hold on rents and interest? Universal Basic Income? A Wealth tax? We may quickly develop a new respect for tax and government infrastructure.
Maybe Government Spending is not such a bad idea
For decades, Australians have been sold an imagined poverty. We have been told we need to “rein in” government spending – that if we want to spend more on health or education, we will need to spend less on the age pension or childcare. …
But the reality is that if we had a bigger public sector today, we would be better prepared to weather the health and economic crises triggered by the coronavirus. Hopefully, by the time we come through this, we will have learnt that lesson once and for all. Because nobody thinks “the market” is best placed to tackle the coronavirus. Nobody thinks governments should step back and let the private sector step in. One of the first casualties of Covid-19 in Australia is the neoliberal rhetoric about government spending being a “cost” to the economy.
… Just as the bushfires changed Australians’ views on climate change and the importance of investing in emergency services, Covid-19 will change Australians’ attitudes towards spending on the public health system and, almost inevitably, public spending in general.
From Macquarie Wealth Management in The Australian
Macquarie Wealth Management, the stockbroking arm of the beating heart of Australian capitalism, Macquarie Group, has warned that “conventional capitalism is dying” and the world is headed for “something that will be closer to a version of communism” .
… We have been arguing that conventional capitalism is dying, or at least mutating into something that will be closer to a version of communism,” Macquarie analysts wrote. “This transition will be marked by cross-currents and external shocks. Ultimately, a fusion of monetary and fiscal levers will lead to MMT-style policies , effective nationalisation of capital, universal income guarantees and deep changes in work practice.
From Alan Kohler in The Australian
Capitalism needs a rest and the state must step up
… An economic depression seems guaranteed no matter what monetary or fiscal stimulus is applied, and governments everywhere will be forced to supply unlimited cash to stop people from dying of starvation or a lack of their usual medicines and therapies.
Capitalist, small-government economies like Australia’s will be replaced for a while by a socialist one, in which the state owns the means of production … of money, that is.
… But all bets are off now — something new has come along. Capitalism has to close for a while and the state has to step up.
What Next? School Closures and a Lockdown?
It’s not true that whatever we do we must do for 6 months.
Bondi Beach and School Closures
From the SMH
The National Cabinet was advised by medical officers that more than 70 countries had put in place school closures in response to COVID-19 but ‘‘ the majority of these have not been successful in controlling the outbreak’ ’ and some were reconsidering the approach.
In the United States, tens of thousands of schools have closed across the country, affecting 30 million students. California governor Gavin Newsom has said schools in his state are unlikely to reopen by the end of their school year in mid-2020 .
Most schools will close in Britain from March 20, along with nurseries and colleges, until further notice, although some will be asked to stay open to support the children of essential workers such as health care employees.
Dr Norman Swan
In wartime the opposition tries to be bipartisan.
Dr Norman Swan is the necessary Devil’s advocate.
Morrison’s Stimulus Package
Instant write-offs and accelerated depreciation
This was announced in the first package and said to be worth $3.9bn. This will be completely ineffective.
QE by Reserve bank
More cheap money is not required. That just benefits the banks.
From the New Daily
The government tried to fiddle the figures to make the stimulus look bigger than it is.
This time it included the Reserve Bank’s potential bank funding to beat up a $189 billion headline.
“A total of $189 billion is being injected into the economy by all arms of government,” claims the Treasurer.
Well, not really, as various economists quickly pointed out.
Funds being available for banks to lend doesn’t mean the money will be loaned out – and they are loans that are supposed to be repaid.
Loans to small and medium businesses with no repayments for 6 months. What small business would borrow atm?
Early release of Superannuation
They say it will cost the budget $1.2b. How ? It’s a bad idea anyway. Maybe companies should be forced to create a super fund to resort to in hard times?
Free money to businesses
The latest package ramps up a previous wage subsidy to small business which will be increased from a $25,000 cash refund to a maximum payment of $100,000.
The payment is open to businesses with a turnover less than $50m and also for not-for-profit charities.
In round one, the measure was worth $6.7bn. Increasing the payment to $100,000 adds an extra $25.2bn in support, bringing the total to $31.9bn.
How does it work?
The tax-free payment is worth 100% of the tax that small and medium-sized businesses withhold from their employees’ salary and wages up to a maximum amount of $100,000.
The amount will be paid automatically by the Australian Taxation Office based on the business’s monthly or quarterly business activity statements.
This means it will be directly linked to keeping someone employed as the tax is calculated and withheld based on a worker’s wage.
Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.
If you include part time workers the Australian median wage is $1019 per week. Compulsory superannuation is another $96.80. Tax would be $168. So the government is offering the employer a bonus $168 per week if the employer keeps paying $1115.80 per week. That is a subsidy of 15%.
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
So, the average business targeted by this employs an average of 10.8 people.
So the average business will get 10.8 x $168 = $1814.40 per week if it keeps paying wages of $12,050.64 per week.
Let’s cross check the figures. 720,000 employees x $168 per week x 26 weeks = $34.07b. The government says it will cost $31.9b so pretty close.
Who would do that if their business has crashed or been forced to close.
Also, the government is basing the payments on the March 2020 BAS statement. It doesn’t matter what changes (ie sackings) happen after that BAS statement.
There is no incentive to retain employees. Employers will potentially get bonus money in September based on employee tax withheld in March.
Meanwhile, in the UK, the government has offered to pay 80% of employee wages provided they are retained in employment.
Christian Porter on casuals
Play clip from Mad as Hell “porter on casuals”
No Church services but they played football
That shows Australia’s true priorities.
Bailouts should insist on taking equity.
Checkout their tax paying record.
$715m for Aviation industry.
Qantas stands down 20,000 workers.
20,000 x 2,000 = $40m per week
Writing in the Sydney Morning Herald last October, Steve Purvinas, Federal Secretary of the Australian Licensed Aircraft Engineers Association pointed out the double standards being espoused by Qantas management:
“After Qantas announced a $2.8 billion loss in 2014, staff were all called on to freeze their wage levels for 18 months, a call that my union was first to heed in order to help the struggling airline. Assuming the alternative possibility of CPI-based wage increases, employees now forgo $60 million each year as a result of the ongoing wage freeze. At the same time executive and senior management remuneration packages have increased by – you guessed it – $60 million each year. Not one cent forgone by employees to help the airline has gone into reinvestment or new aircraft”.
Indeed, while executive salaries rose at a clip, the average age of the Qantas fleet, which is older than peer airlines, went from 8.3 years in 2012 to 12.8 years since last year. Alan Joyce has taken out around $100 million in executive pay since he took the reins at the airline in 2009.
It is little wonder the reputation of big business and government has taken a battering; the former for greed and the latter for poor stewardship. It is a crisis in leadership which undermines the credibility of government and therefore the ability of politicians to legislate effectively, to reform. It would be a mistake to let this crisis pass without real reform. It is unlikely the public will swallow the line for much longer that “free markets” should prevail in the good times only to be quickly dismissed in favour of corporate welfare when things go awry.
QE and Low Interest Loans will not help small business
A whole generation of young people, and many not so young, are struggling to pay the rent and survive the coronavirus. But what does the Government do?
- It gives control of its money-printing program (QE) to the banks and hopes the money trickles down.
- It announces a $90 billion loan package aimed at small business but with a large “IF”. It can also be accessed by big business.
- It ramps up its asset-buying program which allows banks to raise money from their mortgages.
This Government really does have trouble actually governing. Lest it be accused of spending too much, its routine accusation against arch-rival Labor, and although it has already more than doubled the nation’s debt, the Government has decided to outsource its spending decisions to the banks. Ironically, the banks have today emerged to say the $90 billion loan package announced this week won’t work.
Commonwealth Bank chief, Matt Cormyn, has just stated the obvious, small businesses don’t need a loan as much as direct assistance. Even if they did need a loan it would take a month to organise the $90 billion program and by then, we suspect, it might be too late anyway. Small businesses needed “direct” assistance, Cormyn told the ABC.
Hoarders have been named
Morrison on Wednesday
His speech on Wednesday morning. Calm and authoritative. Quite impressive.
But, by the end of the week … Vic and nsw set the agenda and run the show by deciding to shut down before the national cabinet
Not stimulus but rather survival
Morrison torn between economy and health
The Latest Numbers
How many compared to last week?
Was about 500 now above 2000.
Some Scary Numbers
Left and Right Wing Shock Doctrine
Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Rep. Tulsi Gabbard (D-Hawaii) are calling for universal basic income (UBI) in response to the growing COVID-19 coronavirus pandemic.
Gabbard introduced legislation Friday that would provide a UBI payment of $1,000 per month to every American adult until the Department of Health and Human Services declares the outbreak is over.
By Peter Gleeson in The Courier Mail
DESPERATE times call for desperate measures and we are indeed in uncharted waters as the coronavirus kills people and ruins the global economy.
…. There are hundreds of projects in Australia right now that are caught up in the green and red tape of bureaucracy . They are mired in red and green bureaucracy, either to keep some fat cat in a job or for political reasons.
We don’t have the luxury right now to be playing politics on development . We can’t be refusing cashed-up developers the opportunity to create jobs and sustainable long-term prosperity because some Greens or Labor hack are anti-development .
For example, why should a development company like the Walker Corporation be stopped from spending $2 billion on a massive project on Brisbane’s bayside because a group of local greenies don’t want it in their backyard? That project has been on the Redlands council books since 2007.
If we don’t approve major developments right now in this country, in six months time the developers may not be there to fund projects. Local, state and federal Government should form a taskforce with the explicit aim of going through every medium to large project to streamline the process to get them approved. Some have battled environmental and planning road blocks for years, frustrating cashed-up developers ready to proceed.
That doesn’t mean giving developers the green light to ride roughshod over conservation and environmental protocols. If they break the law during construction, whack them with multimillion dollar fines. But we need to trust them to get on with the job. The game has changed.
Let’s approve these projects now and get the ball rolling. Most developers want to do the right thing by the environment because it adds value to their project. Doing it the way we have always done it – forcing developers to go through an antiquated, protracted and costly Environmental Impact Assessment – is not the way to go forward in the New Coronavirus World.
by Robert Gottliebsen in The Australian
Australia is quite rightly being hammered by overseas investors as they dump our currency, our bonds and our shares.
Part of the sell-off is caused by a race to the “safety” of the American dollar but another is that suddenly the world realises that we are not only on the front line in the commodity fall but our “award” wage structure will destroy vast swathes of the small business employment sector.
That will send unemployment into double figures, where it will stay for a long time because countless small enterprises are set for inevitable destruction. The PAYG tax relief helps but needs to be much greater and there are so many businesses that trying to save them via grants is simply not feasible.
We desperately need a deeper understanding in Canberra of what is required to stabilise our economy in the first instance. Then we can establish a sense of vision for the longer term.
I think my radical plan can help but I will let readers judge.
Simple grants and bank loans might help in some areas but are not the answer. First we must tackle the awards and then, once we have stabilised the virus situation , we must be ready to implement ways of running our economy while minimising the danger of the virus.
Our problem is compounded because other countries have greater flexible contract labour which they can shed so the business can survive. We employ people under awards which mean employees are entitled to money even if the business has no income . There are huge severance payments. That will destroy SMEs because they don’t have capital backing. The effect on the nation will be devastating. The award system was never designed to cater for a health scare of this magnitude.
Employees may get token sums of money but in the process they have lost their employer forever because the business is destroyed . This a contributor to Australia being given the thumbsdown by the world.
Anzac Day coming up.
25 April. Anyone for a secular live broadcast?
What’s wrong with America
America, you are about to unravel and have no-one to blame but yourselves.
Trump’s usual tactics are not working against Covid 19
Mexico Asks Trump To Hurry Up And Build The Fucking Wall
From The Shovel
Mexico says it wants the wall on the US-Mexico border completed by the end of the week.
With the wall now three years overdue, many Mexicans were becoming increasingly anxious about having such a chaotic nation on their doorstep, with no physical border.
In a strongly-worded statement, the Mexican President Andres Manual Lopez Obrador said he had had enough.
“It’s mayhem over there – totally out of control. What we can’t have is thousands of Americans fleeing here without any consequences. We don’t want to become a dumping ground for the US’s problems. We need a proper border, and we need it now.
“Let’s get it built. We’ll pay for it,” he said.
You must keep paying your tithe. Play clip “tithing must be paid”
We are raising revivalists not pansies. Play clip “revivalists”
Paula White on 16 March asks for seed money. Play clip. Maybe you’d like to sow a $91 seed, and that’s just putting your faith with Psalm 91. Or maybe $9. Or whatever God tells you to do. If you want to be a blessing to Paula White Ministry or City of Destiny, you can go to the website at PaulaWhite.org.
Bill Gates warned of a pandemic
Gerry Hervey on 60 Minutes
The man is nuts. Please boycott.
Noam Chomsky on Tax