Morrison offers small comfort for bushfire-battered retailers
Last week, Prime Minister Scott Morrison asked Australian businesses to band together, support workers and share the financial burden of the spreading COVID-19 virus in an act of “patriotism”.
Morrison also warned business leaders that whatever they had thought 2020 would be, to think again.
The speech came a few days before Morrison unveiled the government’s virus response plan – a $23 million package that aims to keep people employed through the uncharted months ahead while relieving the financial burden on small business.
However, there is little love for the retail industry in this plan.
Though Morrison has long grandstanded against the idea of a stimulus package being used to kick-start Australia’s flagging economy, the planned $750 one-off payments for lower-income Australians in many ways misses the mark.
Though they arguably deserve it the most, the payment going to these workers is almost guaranteed to go towards rent and groceries – two areas hardly in need of a lift in the current climate.
And even if the recipients decide not to stock up on toilet paper and hand sanitiser, they’ll likely put the money into savings since the next six months are impossible to predict – even for NAB economists, who slashed their view for the first half of 2020 because they have no idea what is going to happen.
Last year’s tax cut bill, which aimed to award middle-income earners an extra $1080, was poised as another “non-stimulus” method of injecting cash into the economy, but according to research from Money, only 5 per cent of survey respondents spent that money in retail.
Mostly, they used it to restore depleted savings or pay outstanding bills.
And though paying workers’ salaries is one of the largest expenses for any business, the government decided not to fund the two weeks of paid sick leave for casual workers recommended by the Australian Council of Trade Unions.
Instead, casual workers who are forced to self-isolate will need to call and claim a sickness payment with a waived waiting period from Centrelink – an organisation that famously missed 33 million calls during 2017 and 2018, and can reasonably be expected to be under immense stress after the impacts of last year’s floods and fires.
It’s fair to assume that with an influx of sick, homebound people, there will be a lot more calls to miss.
In response to this, several retailers have decided to take up the Prime Minister’s rallying cry to patriotically take one for the team.
Woolworths, Officeworks, Target and Kmart are among the national businesses committing to pay casual workers who are self-isolating for up to two weeks.
This is on top of near industry-wide delayed stock deliveries, uncertain trade situations and a decreased level of discretionary spend.
NAB chief economist Alan Oster said in the March Forward View report that such federal policy may not be enough to fix the problems of a struggling industry, but that it can help to mitigate the risk of a deeper downturn.
However, Oster also said that the longer a virus impacts economies, the more likely second-round impacts will occur – such as company failures, layoffs or unpaid leave leading to financial stress, and capital flight from vulnerable emerging markets – which will trigger a deeper and longer downturn.
It’s one thing to offer support for business, but when customers aren’t knocking on the door, no increase to the asset write-off is going to help.
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