Coronavirus and the emperor's new clothes
As you undoubtedly would have heard already, the federal government has announced a new $66 billion stimulus package, intended to increase the ‘safety net’ for businesses affected by the coronavirus pandemic.
It is a general stimulus, not specifically aimed at any particular industry. There are no specific provisions for manufacturing industries as such. And while there are many large manufacturers that may well be very busy at this time given the supermarket stampedes we have seen, the small-to-medium sector of the industry may well be in a very different boat.
While businesses deemed ‘non-essential’ are set to close, manufacturing and other industrial companies are currently continuing operations. Cash payments for all small and medium businesses will now range from $20,000 up to $100,000, marking a significant increase from the $2,000 to $25,000 proposed in the first stimulus package.
The payments are designed to help companies keep workers paid and employed, and also as part of the stimulus, the government will introduce a coronavirus small and medium enterprise (SME) guarantee scheme to push lenders in providing credit to SMEs.
Up to $20 billion out of $40 billion in SME loans will be guaranteed by the government under the scheme, and workers facing hardship can also withdraw $10,000 of their superannuation this financial year.
The amount injected into the economy during the coronavirus pandemic so far amounts to about 9.7% of the total Australian economy. Much of the package ($20–40 billion) is not a direct cash injection, but guarantees — with the cash elements accessed by businesses if they are still in business. Whether that is helpful or not will depend on your business.
There has recently also been much press about government support after the bushfire crisis, and the associated delays in access.
The ongoing debate over the health response, along with the weeks of seemingly contradictory messages coming out of state and federal governments, are leading many people to ask whether Australia is following Italy’s example to a terrible outcome. The difference in response between so-called ‘western’ economies and Asian countries could not be more apparent.
It looks like the emperor is still showing off his new clothes.
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