Andrew Dickens: Should we continue the wage subsidy?

Author
Andrew Dickens,
Publish Date
Mon, 3 Aug 2020, 12:26PM
(Photo / File)

Andrew Dickens: Should we continue the wage subsidy?

Author
Andrew Dickens,
Publish Date
Mon, 3 Aug 2020, 12:26PM

Well here we are in August already.  Six weeks after the solstice and so apparently we are in the deepest depths of winter 

We’ve also just past the four month mark in the battle against the great contagion of our time. 

It is worth re-iterating that.  The battle is still in it’s infancy. It’s only just started. 

At the beginning we were told it would be two years at least before a return to some sort of normal might happen.  We’re less than a sixth of the way to that point. 

But the ferocity of the debates and the dominance of Covid in the news has made us all seem as though it has been a lot longer.  That things and time has passed and changed and we can move on.  

It’s completely understandable as we’re keen to get out of this slow suffocating hell.  But we do seem to be in an unseemly hurry.  The call to open borders started only 8 weeks after we closed them.  What on earth were people thinking back then? 

But outside our borders, things have been getting worse and worse and worse.  Victoria is facing a wildfire of fatalities.  Our Prime Minister confirming that a trans-Tasman bubble is now months away. The UK are heading back towards lockdowns. Mexico has joined the leaders board of infection.  And on it goes. The battle has only just begun 

So the battle against the virus and the economic carnage it is wreaking now reach an interesting stage. 

Having completed the short term, we are now into the beginning of the medium term.  It is now just four weeks away from the end of the wage subsidy on September 1st 

The $11.9 billion scheme has been in place since March and has helped insulate 1.7 million workers and their employers from some of the economic effects of the coronavirus pandemic. 

In announcing the end the Prime Minister said they’ve clearly signalled that a wage subsidy is not something that can continue on in the never-never.  She also said it would delay the critical work that businesses may need to do to pivot in the new Covid environment, and businesses themselves have said that they think that continuing for too long, could run the risk of being harmful to the long term resilience of some of those businesses. 

I wonder if businesses still feel that way. 

An international report over the weekend said that governments should continue subsidising businesses or else the money spent so far would be all for nothing.  Australia meanwhile is continuing its corporate welfarism they call Jobkeeper until March 2021 

But critics of this Labour-led Government are constantly criticising them for throwing money at Covid problems we just don’t have.  The support for user pays to quarantine was in reaction to its half-billion-dollar cost to taxpayers. 

And so we face a real dilemma.  

This government is acting like hard arsed capitalists saying the subsidy ends in a month and if businesses haven’t found a way to survive over the past four months, that’s just tough.  If you’re true to the belief that the government can’t keep borrowing to plug the holes in a sinking ship then there shouldn’t be any extension. 

But if you don’t want the baby thrown out with the bathwater should we go the socialist path and throw money at businesses that we just don’t have?

What would you do?