Business backlash over ‘hibernation’
Prime Minister Scott Morrison has announced a plan to "hibernate Australian business" during the coronavirus crisis, highlighting there is a "burden to share" on all Australians as the economy suffers.
Speaking at a press conference this afternoon, Mr Morrison said he had been given an "extensive understanding of the impacts that we're potentially dealing with" by Treasury Secretary Dr Steven Kennedy.
The Prime Minister noted landlords, banks and councils in particular will take a hit.
"The thing about an economy is your society does depend on it and so do governments," he said.
"You can't run a country without an economy. We are doing everything we can to ensure we maintain as much of that economy as we can through this crisis, to support all of the essential services that are so necessary at a time like this."
Mr Morrison said part of that plan was for Australian business to "hibernate" during what he said would be "the many difficult months that are ahead".
The exact details of the hibernation plan haven't been fleshed out, but it's expected to include rental issues that have been bubbling away in the background of the crisis.
Mr Morrison described it as a "very innovative approach in the circumstances we find ourselves in".
"We will have more to say about this, but I discussed it with the premiers and chief ministers today," he said.
In the same conference, Chief Medical Officer Professor Brendan Murphy gave a grim time frame for Australians regarding the importance of social distancing.
"That's why they have to be for the long haul. For several months," he said.
Seriously, all issues aside, this is grossly inept.— Stephen Koukoulas (@TheKouk) March 27, 2020
Australia's economic policy response to the coronavirus is the slowest, stingiest, meanest, most vindictive in the industrialised world.
I am not aware of any govt in a developed country that has been so utterly incompetent.
WHAT DOES IT MEAN?
Mr Morrison said he wanted businesses to effectively go into a "hibernation", saying he expected that "on the other side, the employees come back, the opportunities come back, the economy comes back".
"The idea is simple - there are businesses which will have to close their doors. They will have to keep them closed either because we have made it necessary for them to do so, or simply there is just not the business to keep their doors open," Mr Morrison said.
Mr Morrison said he wanted those businesses "to start again" and he does not "not want over the course of the next six months or as long as it takes, for those businesses to be so saddled by debt, so saddled by rental payments, so saddled by other liabilities that they will not be able to start again on the other side".
"This will underpin our strategy as we go to the third tranche of our economic plan, and that will include support by states and territories on managing the very difficult issue of commercial tenancies and also dealing ultimately with residential tenancies as well," he said.
The Prime Minister said he and Treasurer Josh Frydenberg would have more to say on the hibernation plan "in the next few days".
"We will make announcements on the details. I today wanted to speak about what the objective was," Mr Morrison said.
LANDLORDS, BANKS, COUNCILS TO TAKE A HIT
In terms of residential and commercial rentals, Mr Morrison said everyone involved will have to take a hit, as well as banks and landlords.
"There will be landlords who will suffer. The banks will be having to make arrangements with them. Whether councils are involved in providing waivers on rates, things of that nature that, will be something states work through," he said.
"Whether land tax will be relieved for those who have tenants in a distressed situation - all of these are what we are working through. It isn't simple.
"The intent is as far as possible to ensure that a business that through no fault of its own, just like if there's any Australian who has lost a job through no fault of their own, we are simply trying to preserve and support them in the best way we possibly can for the simple reason that, A, they are Australian, and that is what we should do, and, benefit.
"B, on the other side we want them to surge. We want Australia to rise again on the other side of this and to go forward strongly.
"We have to keep doing it. We have to keep sticking together. We have to keep supporting each other. We've got to keep sharing the right information with each other. And we have to stick together and support each other through what I know is becoming day by day a much tougher job for all of us. We can do it.
"The next few weeks will be particularly vital and so we're getting this together at a time when it is most necessary and your response this week has been simply awesome."
Stephen Koukoulas, an economist and MD of Market Economics, criticised the Australian government for their "tardiness" in the government's response.
Speaking to ABC News Radio, Mr Koukoulas said one of the things that had been frustrating is "seeing the tardiness of the government's response to the economy".
"I'm disappoined we didn't see any thing today," he said.
Yet he credited the government over the idea of "hibernation", saying: "It is a good idea to their credit, I think the concept of hibernation is a good one, I'll be watching with a huge amount of interest in how they frame that."
Business will be "damaged but not completely decimated by this," he said.
"It's a difficult thing (to restart), even when we beat this virus..it'll take, gosh, several months for us to be confident enough to have a holiday and go about our business as it were a few months ago."
Mr Koukoulas said it was hard to predict how bad the Australian economy could plunge, but said the bulk of forecasts are seeing the unemployment rate breaking 10 per cent, even as high as 13 per cent over the next six to nine months.
"Some of that pain can be avoided if the government pumps cash into the economy," he said.
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Originally published as Business backlash over 'hibernation'
Business people are in tears.— Stephen Koukoulas (@TheKouk) March 27, 2020
Workers are unemployed or doing no hours, with hearts aching.
Australia has dole queues.
And the response is... we'll announce in a few days.
From hopeless to incompetent.