Government to pay wages as Aussie firms prepare to sleep through coronavirus

wages

Australian Prime Minister Scott Morrison updates the nation on the latest coronavirus measures, from Canberra.

The Morrison government is preparing to unveil $1,500 fortnightly wage subsidies to help businesses keep full-time workers on their payroll through the COVID-19 pandemic.

Treasurer Josh Frydenberg is expected to announce the so-called ‘JobKeeper’ scheme today, amid ongoing efforts to protect the economy from the fallout of the coronavirus crisis.

The payments will offer $1,500 per fortnight for each full-time worker and will likely last six months, The Australian reported over the weekend.

While the delivery mechanism for the scheme has not been revealed, Treasurer Josh Frydenberg indicated existing tax and welfare systems could be leveraged to distribute money to employers, who would be under a legal obligation to pass that it on to workers.

“It’s imperative we maintain the connection between employers and employees,” Frydenberg told ABC Radio.

Frydenberg indicated the subsidies will be available to businesses that remain open over the next six months, and also to those forced to shut down as a result of the pandemic.

“We’ll have an Australian solution to what is namely an Australian challenge,” he said.

“We want to lower the cost for business for continuing to keep their doors open where it’s possible.”

Frydenberg said there would be a legislative element to the wage subsidies, with foreshadows negotiations with the opposition. Labor has been calling for wage subsidies and is likely to co-operate.

The subsidies will be delivered on top of the piecemeal wage support already announced by the federal government.

National cabinet prepares to put Aussie firms to sleep

The government also seems to be gearing up to enable business “hibernation”.

The hibernation policy was unveiled with little to no detail last Friday afternoon, and while the nature of such a program and the practical mechanism for how it would work are still largely unknown, national cabinet has been busy setting the stage over the weekend.

The essential idea is that businesses will be able to shut down for a temporary period while accessing financial support for rent, repayments and other bills, on top of wage subsidies to keep full-time workers employed.

The details are still being ironed out, with national cabinet due to meet again today.

But Morrison said over the weekend the onus remains on businesses, landlords and other creditors to negotiate themselves.

“We want people bespoke, customised to their own circumstances to sit down and work these things out,” Morrison told a press conference on Sunday.

“We are in uncharted territory, but the goal should be shared. And that is a business that can reopen on the other side, not weighed down by excessive debts because of rental arrears.”

Padlocking ban to last six months

A forthcoming rental relief package also remains on national cabinet’s agenda, after more than a week of negotiations with landlords and banks.

On Sunday, Morrison announced a moratorium on evictions for commercial tenants amid widespread calls to assist small businesses that are unable to pay their rent.

The padlocking ban will likely last for six months and will apply to businesses unable to meet their commitments due to financial stress as a result of the coronavirus crisis.

National cabinet has also agreed to a set of rent principles, including beefed-up mediation and termination powers for tenants, and a possible cost-sharing or loss deferral system that would be supported by government.

Measures to provide additional rent relief to businesses — including those pursuing hibernation — are expected in the coming days, within the Morrison government’s third tranche of taxpayer support for the economy.

“Where Australia can ensure we can bounce back better on the other side and more strongly is by following these strategies, which enable businesses to re-emerge very, very quickly, with their employers, with their capital, with their equipment, with their shops, with all of the things which they can switch on again and get moving again,” Morrison said on Sunday.

“That is in the long-term interests of Australia.”

Landlords and banks come to the table

There is evidence banks are coming to the table, with industry lobbyists the Australian Banking Association (ABA) announcing support for commercial tenants on Monday.

Businesses with loan facilities up to $10 million will be able to defer loan repayments for six months, ABA chief executive Anna Bligh said.

Landlords will also be asked to “provide an undertaking to the bank” that they will not terminate leases or evict current tenants for unpaid bills as a result of COVID-19.

“Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them,” Bligh said in a statement.

It comes after the Shopping Centre Council of Australia (SCCA) last week advised its members would not evict tenants for rental arrears as a result of COVID-19.

Energy fees waived for slumbering SMEs

Energy companies have also been asked to play ball with small business hibernations. Frydenberg and Minister for Energy and Emissions Reductions Angus Taylor said “reasonable expectations” have been set.

“While several energy companies have taken some steps to assist their customers in financial stress, during these difficult times we expect more action,” Taylor said in a statement circulated on Friday afternoon.

“We expect them to do more to help small businesses who have gone into hibernation to avoid any energy costs.”

The Australian Energy Regulator published a set of principles on Friday for energy retailers, including necessitating hardship arrangements for small businesses, and a moratorium on disconnections.

Disconnection, re-connection, contract break fees and daily supply charges will also be waived for businesses that go into hibernation until at least July 31.

What’s the go with those shutdowns?

National cabinet limited gatherings from 10 to two people yesterday.

Victorian Premier Daniel Andrews followed up this morning, announcing a move to “stage three” restrictions in the state.

But these measures still allow shopping centres to remain open, meaning general retail operations face no requirement to close.

Business trading restrictions remain as they were, with a few additions.

This includes an additional requirement for outdoor boot camp services to shut down operations.

Morrison provided some additional clarity about what’s classified as an essential service over the weekend.

“Our kids are at home now, as are most kids, and Jenny went out yesterday and bought them a whole bunch of jigsaw puzzles. I can assure you over the next few months, we’re going to consider those jigsaw puzzles absolutely essential,” he said.

“It’s important that parents and families and households can get the things that they need to completely change the way they’re going to live for the next six months at least … People are buying sporting equipment at the moment, gym mats and things like that so they can exercise at home.

“These are things they’re going to need. Now, I don’t think it’s practical when we say for essentials and things that you really need that high-end fashion and these types of things … That’s why you’ve already seen a lot of those types of retail businesses already closed because people aren’t doing that,” Morrison continued.

It appears the Morrison government, reluctant to pursue a forced shutdown of retail firms even in the face of industry calls for a trading ban, is looking to discourage non-essential shopping without implementing an enforceable prohibition on such behaviour.

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