Australia Shines in the Midst of a Global Pandemic
Thursday, April 23, 2020 By: Dr. Ayman El Tarabishy and Ms. Vicki Stylianou
If everyone looks after their fellow human, then the world will be a better place. Let us make these words the centerfold of our behavior and decision-making during this uncertain time.
Following the history-breaking bushfires this year, Australia, along with much of the rest of the world, was pushed into confinement. However, being fortunate in its geographic isolation, the nation has had fewer than 7,000 cases and only 63 deaths, thanks to heavy testing throughout the country. In addition to the 371,000 tests administered, Australia closed its international borders, advocated for social distancing, limited social gatherings, restricted travel, and limited occasions to leave the house, including closing many schools. Aside from the precautions and necessary steps taken to promote citizens’ physical well-being, Australia has put forth many stimulus packages to protect its citizens’ financial well-being. As the country recently recovered from 12 years of debt, leftover from the 2008 global financial crisis, Australia’s Prime Minister, Scott Morrison, feels as though the nation is now in a good position going forward, in terms of the pandemic, meaning that they can offer full and adequate stimulus packages as well as to prepare health facilities to cope with the increased demands.
The federal government has already put forth three stimulus packages; therefore, coupled with the state and regional packages, Australians are adequately cared for during this crisis. The first federal stimulus package aimed to put cash and liquidity back into the markets by giving tax-free money directly to businesses. The next stimulus package contained a lot more money and specifically aimed at individuals and households. Through these cash payments, small businesses are being funded, which is vital as 97% of companies in Australia are SMEs. Then, the third stimulus package, which was announced on the 30th of March, introduced even more money into the market, 130 billion dollars exactly. This is aimed at households, individuals, and businesses, particularly those businesses in hard-hit domains, for example, hospitality and tourism. With this package, the government intends to spread the package throughout the economy. They work on a flat payment, meaning that some people will receive more than they usually make, while others’ employers will need to add to the flat payment to continue paying certain higher salaries. The current packages work with wage subsidies in the form of job keep-up and job seekers. Therefore, the job keep-up attempts to prevent employees from turning to the job seeker, or unemployment, program. The Australian government wants to support employers in keeping as many employees on their books so that they will be more equipped to bounce back following the reintegration post-corona. These subsidy plans are wholly inclusive. However, they leave out both people that have been working for less than 12 months as well as some visa holders.
“The stimulus packages provide timely support to workers’ households and businesses; while supporting those most severely affected. They are also designed to position the Australian economy to recover strongly once the health challenge has been overcome” (Stylianou, 2020).
In addition to these federal packages, the Reserve Bank of Australia created a $90 billion three-year facility to help banks continue lending to businesses. Rent relief policies have been created as well as relief from insolvency laws. As there were many packages introduced in response to the bushfires, the Australian government has made it possible for individuals and businesses to access both bushfires and corona relief packages. Additional money has been given to childcare facilities, and tax liabilities have been deferred for four months. These initiatives accumulate to $320 billion or 16.4% of the total GDP. This grand sum is reasoned by the idea that the bigger the package and the more support given will have a direct impact on the nation’s ability to “come out of this less scathed.”
In comparing these wage stimulus packages with other countries, it seems as though the UK, New Zealand, Canada, and the United States are all attempting to freeze their economies like Australia. The concept is borne from the idea that if we can put our economy into a state of hibernation, then maybe after it thaws out, it will return to where it was before the pandemic and subsequent economic turmoil. There are differences in opinions as to how and what specific measures are needed to return to normalcy. These differences also depend on the length of the pandemic, in addition to how deeply pushed the suffering appears. All-in-all, Australia is looking to protect people’s health while protecting the economy. The concurrence of this work is what creates such difficulty. However, by focusing on protecting the most vulnerable, while referring to the ILO’s four pillars of the policy response to COVID-19, we might just be able to resurface and create programs that will thrive in our nations and at the global level. There is a current discussion in Australia that the current COVID-19 unemployment program, which is almost double the typical program, demonstrates an inclusive policy that should be kept even after the consequences of the coronavirus have subsided.
Throughout the webinar, Vicki Stylianou, Advocacy & Technical Group Executive at the Institute of Public Accountants and ICSB SVP of Development, shares her view that in protecting the most vulnerable, the government is ensuring that they are building trust with their constituents. When asked about the role of academic research on COVID-19 policy, she states that this information will be most useful when we are recovering, meaning that the academic research on designing market policies will be even more sought out as we begin to envision our new normal. As markets around the world shrink, we need coordinated and committed global organizations to respond in a way that leverages for the benefit of all nations. Vicki finishes her presentation by provoking the audience to reflect deeply with her as she asks questions about funding, economic policies, temporary measures, unemployment, the universal basic wage, supply chain diversification, and other transformations that are coming to fruition as we look to work through this moment in history together.
We need to focus on quality, which means that by using the principles of frugal innovation, we will be able to limit the death and destruction of this pandemic. In her closing remarks, Vicki notes that “if everyone looks after their fellow human, then the world will be a better place.” Let us make these words the centerfold of our behavior and decision-making during this uncertain time.
Dr. Ayman El Tarabishy is the deputy chair and teaching professor of the Department of Management at the George Washington University School of Business.