Hundreds of thousands of workers have been stood down after the economy was crippled by social distancing measures introduced to control the spread of the deadly pandemic.
But Treasury is constructing a payment to subsidise the cashflow shock for those earning up to a middle income, according to the Australian Financial Review, believed to be similar to schemes introduced in the United Kingdom, Canada and Denmark which cover about 80 per cent of an employee’s wage.
Finance Minister Mathias Cormann confirmed to Insiders host David Speers this morning a package would be announced in the next few days but was sketchy on the details.
“On this wage subsidy idea, two days ago you said, ‘We will not look at a UK-style system because in an Australian context, that just wouldn’t work.’ Is that still your view?” Speers asked.
In response, Mr Cormann said: “Well I mean, that’s right. As I understand it, the UK have made certain announcements. I’m not sure that they’ve actually been able to roll it out.”
He confirmed the government was looking to “significantly expand” its already announced income support for Australians.
“But we are going to do it in an Australian way. We’re going to do it in a way that is actually going to be able to be delivered, using our existing systems and our existing architecture,” he said.
“Just making a broad promise, without giving ourselves the capacity to deliver, would not be a responsible thing to do.”
Speers followed up, seeking to clarify the details.
“Does that mean subsidising employees’ wages if a business keeps them on their staff?” he asked.
“Well what it means is providing significantly enhanced income support through business. What form that will take will be announced once all of those decisions have been made,” said Mr Cormann.
“But with a requirement to keep staff employed?” Speers pressed.
“That would be the intention of what we’re currently working on,” the Minister replied.
He declined to give any more significant details, but said the government was working “as fast as we can” to get the new package done.
Previously announced packages involve tax relief being gifted at the end of the financial year but many have questioned how the suddenly unemployed will be able to afford basic essentials in the immediate short term.
RELATED: Big name shops closing their doors
Long lines snaking outside Centrelink sites during the week filled with Australians seeking income support was reminiscent of the desperate images captured during the Great Depression and illustrated the shock being inflicted on the economy.
RM Williams is the latest to be added to a long list of retailers to stand down staff while Qantas, Virgin Australia and Flight Centre have shed thousands of employees after planes were essentially grounded by state leaders closing borders.
But the blows are expected to continue with many tipping the unemployment rate to rocket from just over 5 per cent to nearly 15 per cent, leaving more than a million without pay and struggling to pay for rent and food.
The country’s GDP is forecast to collapse to -10 per cent in the second quarter of the year, according to UBS chief economist George Tharenou, triggering an economic depression.
He told reporters on Friday a wage subsidy package was vital.
“We think it is critical to underpin confidence right now,” Mr Tharenou said.
The near $200 billion in fiscal support already announced will do little to help those laid off to pay bills due next week, Professor Gary Mortimer from QUT’s Business School told news.com.au.
“While a tax relief package might be helpful when they do their tax returns in July-August, I think they're really looking for an immediate financial solution,” he said.
"An immediate cash injection of $1000 which they did as a stimulus many years ago (during the Global Financial Crisis) straight into your bank would certainly relieve some level of stress.”
Meanwhile, Aussie retail giant Myer announced yesterday that it will close doors around the country and stand down 10,000 staff without pay from Sunday afternoon.
The iconic company says the measures will last at least four weeks, until April 27, in a statement to the ASX.
Online shopping will still be available, the company said, and it will reduce the threshold for free delivery to $49. The returns policy will also be relaxed.
Executives and the board will also work without pay, but a small group of “business critical” roles will be retained and paid at 80 per cent of their normal wage, CEO John King said.
Mr King said his thoughts are with staff and it was one of the company's toughest decisions in 120 years of operation.
Kathmandu joined the Retail Food Group — the owners of popular chains Gloria Jean’s Coffees, Brumby’s Bakeries, Donut King, and Michel’s Patisserie — to stand down or cut the hours of its workforce.
From Sunday, furniture retailer Adairs will temporarily close its 160 Australian stores and stand down its retail and customer support staff.
Elsewhere in the industry, on Thursday, Premier Investments Limited – which owns the Just Group, whose brands include Smiggle, Peter Alexander, Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti – announced it was closing all stores “until further notice”, with online shops also affected.
You can see the full list of retail companies impacted by coronavirus here.