Older Australians set to benefit from Scott Morrison’s coronavirus stimulus package say they would prefer to save the cash rather than splurge it, as the prime minister has urged them to do.
Mr Morrison announced a one-off $750 payment to 6.5 million pensioners on Thursday as part of a $17.6 billion package designed to inject cash into the economy as businesses hit by coronavirus disruptions begin to falter.
But some experts say the package targeted the wrong people and will not produce the desired result – to save Australia from recession.
Struggling pensioners say they will save the $750 stimulus money. Health experts say they want people to isolate. Economist Steve Keen says the focus should be on helping people pay their bills and mortgages while staying home during the pandemic so they aren’t ruined
The idea was that the pensioners would immediately spend the money on goods and services to stimulate the economy and keep businesses afloat.
Dee Friend, 87, a resident of RSL Anzac Village Narrabeen, on Sydney’s northern beaches, said the cash payout was too valuable to spend frivolously as many pensioners are struggling with the high cost of living.
Another resident, 82-year-old David Picknell, said he wouldn’t spend it either.
‘We’ve all been losing money for so long because the deeming rate has been above what we’ve been getting, so we’ll be able to replenish our accounts,’ he told The Australian.
Economics Professor Steve Keen of the University College of London said the cash injection was inadequate.
‘This is a complete failure to understand the scale of the problems,’ said Professor Keen on his Patreon blog.
‘(You need) something of the order of $10,000 where you can pay 2 to 3 months worth of rent, mortgage payments and food, and we have to give that to everybody.’
Professor Keen said on his blog that people needed to be protected from defaulting on their bills and mortgages for the time they may be in quarantine unable to earn a living.
Elderly pensioners along with those on Newstart and disability pensions will get the $750 payment but casual workers who don’t have sick leave will miss out
Australia has three million casual workers who do not have access to sick pay so if they are ill or have to take time off work to care for a loved one, their income stream stops.
They miss out on any cash payment under the stimulus package.
If they lose work due to coronavirus, they will instead qualify for a ‘sickness payment’.
The Prime Minister said on Thursday this was equivalent to the Newstart payment, which for a single person without children is just over $279 per week.
Professor Keen said the pandemic is the greatest physical threat to the economy since World War II.
‘Capitalism has to be suspended until we defeat the virus,’ he said.
‘A credit-driven, private sector monetary system is not capable of handling a systemic crisis like this,’ he wrote on his patreon blog.
Professor Keen has long been an advocate of a modern debt jubilee to iron out the distortions in the economy created by the 2008 financial crisis and the extremely high levels of debt.
Prime Minister Scott Morrison is facing the toughest test of his leadership since the bushfire crisis in trying to keep the economy solvent during the coronavirus pandemic
Professor Keen said the coronavirus crisis was the exact time this would help, and called on the government to give people a per capita payment so they can pay their bills and mortgages while isolated.
He said the Government could issue $200 billion worth of coronavirus bonds – even at zero per cent interest – to raise funds for emergency payments.
A flat rate of money for everyone, rich or poor, should give people enough for three months worth of effective lock-down, while not unfairly penalising anyone, and would keep the velocity of money high, he said.
Further measures could also help avoid a financial crisis in Australia such as suspending normal bankruptcy rules for companies and banks.
Italy has become the world’s first example of a developed western country with a substantial coronavirus outbreak.
Although the country of 64.5 million people only had just over 12,450 cases of the virus as of Thursday night, it’s health system is teetering on the brink of collapse.
Italy is now under quarantine.
All shops are closed in Italy except for food stores and pharmacies in Europe’s toughest lockdown, BBC news reported on Thursday, as businesses where shuttered and events cancelled to slow the spread of the virus.