Businesses will be given wage subsidies of up to $1500 a fortnight to keep workers on during the coronavirus crisis as part of an unprecedented $130 billion package.
Prime Minister Scott Morrison unveiled the federal government’s third and biggest round of economic stimulus on Monday.
“We want to keep the engine of our economy running through this crisis,” Mr Morrison told reporters in Canberra.
Flinders University Professor John Spoehr said that without wage support the number of unemployed people in Australia would surpass the two million mark.
“It could reach 15 per cent or possibly higher if the health crisis is not brought under control in the next six months,” the Director of Flinders University’s Australian Industrial Transformation Institute said.
“Australians need to be reassured that they will not be plunged into poverty and despair – a formula for hopelessness and depression.
“We know from extensive research that deep economic crises have their own incredibly negative impacts on health and wellbeing.”
Speaking on ABC radio this morning, Frydenberg flagged legal obligations for bosses to pass on the subsidies to workers.
“It’s critically important we maintain the connection between employers and employees because there is going to be the other side to the coronavirus,” he said.
“We’ll have an Australian solution to what is an Australian challenge.”
Labor’s industrial relations spokesman Tony Burke is concerned the package may only help full-time workers, leaving swathes of employees behind.
“We want to make sure that this reaches all workers,” he told the ABC.
“That has to include people in insecure work, people in the gig economy, and we’ve got to find a way of helping sole traders as well.”
Hundreds of thousands of Australians have already lost their jobs, with vast numbers expected to follow as the expected recession bites.
“It’s heartbreaking to see the queues outside Centrelink,” Frydenberg said.
“This is the harsh reality of what is a global pandemic like we’ve never seen before.”
Federal and state governments have agreed to a six-month freeze on residential and commercial evictions.
Frydenberg said Australia was facing health and economic crises.
“We’re dealing with a war on two fronts,” he said.
Keeping people in jobs, stopping businesses from going bust while also stabilising debt, credit and equity markets was the focus, he said.
The government did not follow the UK model of the government paying 80 per cent of wages.
But Spoehr argued the wage subsidy scheme should be similar to those adopted in other nations such as UK, Denmark, New Zealand, the Netherlands, South Korea, and Ireland.
“This involves government directly paying employers (for a limited period of time) a majority portion of wages – between 70 and 90 per cent – to cover the wages of workers who would otherwise be stood down from their positions,” he said.
“The measure should also apply to contractors and self-employed people.”
The third stimulus package is also expected to ease restrictions on claiming welfare benefits.
Meanwhile, Foreign bids for Australian businesses will face beefed up investment rules designed to guard against predators swooping during the coronavirus crisis.
Frydenberg will be able to block any overseas takeovers, after the threshold to intervene was temporarily slashed from $1.2 billion to zero.
It comes amid concerns cashed-up foreign predators could target Australian businesses following major losses on the share market.
Frydenberg said national security, competition issues, tax concerns and the investors’ character would shape any decision to block foreign investment.
He denied the move was aimed at Chinese state-owned enterprises, pointing to US investment in Australia far outstripping the Asian superpower.
Chinese firms invested $13 billion in Australia last year, while US companies made investments worth $58 billion.
“We want to stop any predatory behaviour that is not in the national interest,” he said on Monday.
But Liberal backbenchers have raised concerns Australian companies could be exposed after company values suffered after stock exchange carnage.
Chinese companies bought Australian medical supplies in recent weeks with the virus sparking a surge in demand.
Australian banks have also announced they will extend the six-month deferral of loans to 30,000 more businesses to help them cope with the COVID-19 pandemic.
The additional measure, announced this morning by the Australian Banking Association, will see the repayment deferrals expanded to businesses with loans up to $10 million, up from $3 million previously.
During the six-month period, banks have also agreed to not enforce terms for non-financial breaches of the loan contract, such as changes in valuations.
The new measures, which are on an opt-in basis, will be applicable to customers who advise that their business is affected by COVID-19.
– with AAP
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