Australian workers are facing serious economic shocks as a result of the Coronavirus health crisis. Millions now face the prospect of having their working hours cut, losing jobs and being unable to afford secure housing.
After years of saying that economic stimulus measures were a waste of money, the Morrison government moved to introduce a $17.6 billion stimulus package last week. They hope that this will soften the economic impact of the pandemic, and help Australia avoid the first technical recession in almost 30 years.
Unfortunately, this package is the equivalent of a drop in the ocean. Already a number of state governments have had to supplement the measures with their own stimulus, and speculation is rife that the federal government will be forced to announce major additions to the package in the coming days.
About three-quarters of the package is going to shore up the cash flow of businesses. Coupled with record low interest rates, the government are begging the bosses to use the money to invest and keep the wheels of capitalism turning.
Only about a quarter of the package will go directly into the pockets of ordinary people. 6.5 million welfare recipients will receive a meagre one-off $750 payment. The government hopes that these people, most of whom live on the breadline, will rush out and spend the money on basic necessities, thereby giving the retail sector a boost.
While no doubt welfare recipients will welcome the extra $750 it will do little to calm people’s nerves. This money may help tide people over for a couple of weeks but this crisis is expected to go on for many months.
Some commentators have compared Morrison’s move with what the Labor Party did under Kevin Rudd in 2008 during the global financial crisis but there are some important differences. Morrison’s package is on a much more limited scale, despite the fact that even he has described the situation as worse now.
Back in 2008 the Australian economy was helped by Rudd’s stimulus but also by China, which enacted its own huge spending measures. This kept the Chinese economy powering along and drove demand for Australia’s mining products.
Today, huge parts of the Chinese economy are shut down and the economy is experiencing its lowest growth rates for decades. Far from helping Australia this time around its likely China will act as a drag.
Even before the Coronavirus pandemic hit Australia the economy was already struggling. Consumer spending has been lacklustre for months and then we had the impacts of the bushfires and drought. For a long time now, Australians have been worried about the future and have decided to close their wallets.
The situation is made worse by the fact that Australian households have world record levels of debt. This hampers their ability to spend out of this crisis and has a huge impact on people’s confidence and outlook. Given all this, it’s actually likely that some people will use any extra cash they get from stimulus measures to pay down debt rather than splurge at the shops.
But the vast bulk of Morrison’s stimulus package is not designed to help ordinary people, it’s a targeted attempt to shore up his corporate base. Morrison hopes that extra cash in business bank accounts will help to avoid lay-offs but this is unlikely.
There are very few strings attached to the business payments so there are no guarantees that bosses won’t just take the subsidy and then sack workers anyway. This was the experience of the huge corporate subsidies that were dished out to the car manufacturers for example.
At the end of the day employers are in the business of making profits, concern about wider society is at best secondary, and at worst non-existent.
Socialists are in favour of stimulus but argue that it should be done in a very different way. Rather than a pro-corporate package we need stimulus targeted directly at ordinary people, and to areas like healthcare that need extra assistance during the pandemic.
This is a crisis that was made worse by a system that’s driven by profits. Working people did not create it and we should not have to shoulder the burden. Those who have been making record profits for years at our expense should cover the costs.
Giving profiteers public money, and the power to make decisions about our lives, has not and will not work. We need to fight for a program of spending that is designed to protect our living standards, really save jobs, and make sure that the vulnerable are not pushed further behind as a result of these tough times.
– Pump billions extra into public healthcare and other public services. Use public funds to create jobs, and for the public good.
– All non-essential workplaces should close and workers, including casuals, should be guaranteed their full pay or a living wage subsidy.
– Those businesses that say they can’t afford to pay wages should have to open their books. Let us see where the profits of recent years have gone.
– Increase all welfare payments by an extra $250 per week to ensure they are at a liveable level. Scrap draconian ‘mutual obligation’ requirements and waiting times.
– For a public health response under the democratic control of ordinary people, not big business interests. For full public oversight of all uses of emergency powers and restrictions.
– Reverse the privatisation of key sectors in the economy. Bring the biggest corporations into public hands starting with private healthcare, big pharma and medical supplies.
– Fight for a socialist alternative to profit-driven capitalist madness. Demand a system that caters for people and the planet.
By Triet Tran