The Prime Minister has flagged another round of stimulus measures ahead of September’s “fiscal cliff” as Victoria’s second wave threatens the recovery.
Prime Minister Scott Morrison and Treasury are now looking at extending a modified form of JobKeeper past its September finish date, as well as bringing forward tax cuts and the possible extension of insolvency protections.
“There will be a further phase of how we continue to provide support… in industries or in businesses or parts of the country that are more affected by COVID than others, then where there is the need, then there will continue to be support,” Mr Morrison told reporters. “And so this is about tailoring a national program to provide support where the support is needed.”
Further measures are likely to be extended to the tourism sector, as well as airlines, which have been roiled by massive job losses due to restrictions on both international and domestic travel. And while Victorian businesses have been ravaged by the extension of lockdown restrictions for another six weeks, Mr Morrison confirmed that new stimulus measures will not be limited exclusively to Victorians.
“We’re running a national programme of support,” Mr Morrison said. “That national programme of support will give people in the same areas of need the same support. It’s not a state-based programme or anything like that, in the same way it has operated up until now. It’s been something that has operated nationally and something that has been directed towards businesses that have had that fall-off in turnover and to their employees, and similarly JobSeeker is applied across the nation.”
Several leading economists have warned of the consequences of withdrawing stimulus too early, including Australia Institute chief economist Dr Richard Denniss.
“While government has rolled out significant stimulus to date, the fact that hidden unemployment is still substantial is in itself proof that the stimulus hasn’t been big enough to stop unemployment rising, and it’s concerning to hear talk about spending less in the second half of the year than in the first half,” Dr Denniss told the Senate select committee on COVID-19. “The only thing keeping the economy afloat is the increase in government spending, yet the government is promising to cut that in the second half of the year – the consequences of that are disastrous.”
Australia’s major banks have already extended their support measures, with businesses still experiencing disruption stemming from COVID-19 offered another four months of loan deferrals.
“Those who are able to repay their loans will resume doing so, which is in the best interests of those customers and allows support to be directed to those who need it,” said Australian Banking Association CEO Anna Bligh. “Encouragingly, many customers have already chosen to resume making repayments… This next phase of bank support will avoid a ‘cliff’ for customers in September and give them the breathing space they need to work with their bank and get back on their feet financially.”