House debates

Monday, 23 March 2020


Coronavirus Economic Response Package Omnibus Bill 2020, Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Bill 2020, Australian Business Growth Fund (Coronavirus Economic Response Package) Bill 2020, Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020, Structured Finance Support (Coronavirus Economic Response Package) Bill 2020, Appropriation (Coronavirus Economic Response Package) Bill (No. 1) 2019-2020, Appropriation (Coronavirus Economic Response Package) Bill (No. 2) 2019-2020, Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020; Second Reading

12:38 pm

Photo of Brendan O'ConnorBrendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Industry) Share this | Hansard source

I rise to speak to the second reading amendment. First and foremost I want to reiterate the comments made by the Leader of the Opposition and fellow colleagues that Labor is supportive of the government's economic response in the two major packages which are being legislated in the bills before the House. From the outset of this health and economic crisis Labor has sought to, and will continue to, work responsibly and constructively with the government, including the passage of this legislation before the parliament. Labor will facilitate the passage of the bills to implement the measures that require legislation. While there are some welcome provisions in this package, as we've made clear, Labor is concerned that this response lacks urgency, leaves gaps in support and does not go far enough to protect jobs.

A key concern for Labor is that there is no guarantee that the support announced by the government for small and medium enterprises will actually get to workers. No measure announced today guarantees that support will be used to keep workers on, as outlined earlier by the Manager of Opposition Business. We are also concerned that the measure to boost cash flow for employers does not offer a substantive incentive and is not sufficiently linked to retain workers. Everyone in this place knows how important maintaining the link between employers and employees is, particularly during this unprecedented crisis, so that when it is finally over work can continue and businesses can build back up. It is a connection that is vital for society and indeed for economic growth.

What we are seeing at the present moment is businesses being told to shut down by governments to rightly contain the outbreak, but I don't believe the flow-on impact of that closure instruction has been sufficiently thought through. Businesses that are being told to shut down will immediately lose cash flow. These businesses have no idea how long they will be ordered to shut down for. How can they possibly budget for the future when they don't know how long they will be affected for?

In contrast to Australia, comparable countries are maintaining the link between the incentive and indeed the retention of employees. As other speakers have already said, in the United Kingdom, the Prime Minister announced that wages would be subsidised up to 80 per cent of median wages and conditional on the business maintaining the employment of those workers. I also understand that the wage subsidy will apply to firms where employers have already laid off workers due to the coronavirus as long as they are brought back into the workforce instead of being granted a leave of absence.

In New Zealand, our near neighbour, the government is offering COVID-19 affected businesses a subsidy of $585.80 per week for full-time employees who have 20 hours or more, and $350 a week for part-time employees. Businesses receiving the grant must make their best effort to retain employees and pay them a minimum of 80 per cent of their normal income for the subsidised period. However, Australia's approach—the government's approach—appears to fall much shorter in many instances. Look at a basic example: if a small or medium enterprise is employing staff at roughly around the median employee income of $50,000—meaning each year that employer will withhold about $7,800 in income tax—that is about $1,950 a quarter, or per BAS statement per employee. But that withholding is only 15.5 per cent—well below the UK's 80 per cent subsidy—and, in many instances, especially with the type of SME hit by the crisis, such as hospitality and tourism, wages of casuals and part-time workers may be much lower and therefore have a much lower effective tax rate. The government is yet to clarify what incentive is in the measure to retain employees the day after the March quarter BAS statement is reported. I'm concerned that as early as 1 April some marginal businesses may receive a cashflow measure but, because the subsidy is so low, will retrench their staff.

Labor notes that the cashflow measure is based on lodging BAS statements and the information about pay-as-you-go withholding for employees. This will result in cashflow funds not getting paid mid- to late April—possibly a month or more after the initial measure proposed. Again, frankly: too little, too slow. In addition, we hold concerns that cashflow assistance to business will arrive too late and will not help otherwise viable businesses most at risk of collapse. We need this government to learn from the mistakes made in getting cash to businesses during the bushfires. The money for bushfire affected businesses is not getting out the door. When cash flow is king, the need for speed is critical.

One of our key concerns is that there's a lack of urgency in the rollout of these otherwise welcome measures. Businesses, workers, families and pensioners need support right now, not in a month's time or in four months time. Too many of these measures don't even kick in until the end of April. Some of them don't kick in until May and others, like the second support payment for pensioners, until July. Just two weeks ago, I was on Kangaroo Island for my second visit, talking to local businesses severely directly and indirectly affected by the fires, and what was abundantly clear was they were still struggling because the support, although promised, had not reached them. This cannot happen again. This cannot happen now and not on this scale across the nation. I'm also concerned about the package lacking more substantial support for sole traders and the self-employed to help them stay in business. Sole traders appear to be forced into seeking the jobseeker payment or seek an early release of superannuation. Those who are eligible to receive the coronavirus supplement or who have had their income or hours significantly reduced as a sole trader are eligible to withdraw from their superannuation $10,000 in this financial year and a further $10,000 in the next financial year. This risks undermining retirement incomes and compromising financial system stability and should have only been used as a last resort.

I am concerned about the lack of sufficient support and planning for essential and strategic industries. That includes but is not limited to the airline industry—as the member for Ballarat just talked about—the childcare sector, the arts and others. In fact, I think the government may need to consider planning in several areas that will support industry specific measures, and that might be something the government is considering. I'm talking to industry stakeholders about what their specific needs are and I'm very happy to talk to my counterparts in government—the minister for industry, the minister for employment and other ministers if need be—about those industry specific matters that may have to be considered in light of the huge challenge that confronts the nation.

I think over the coming weeks the government will need to consider buying equity as a form of crisis business support in key businesses and industries, with conditionality. It is something that should be on the table. It should be considered. The merits of it should be considered, but it should be something that the government is open to considering. Although Australians understand the severity of the crisis, in-kind transfers and cash bailouts are unlikely to be popular and are less likely to align the incentives of that firm and their shareholders with broader economic outcomes such as income support for workers. As such, I call on the government to consider equity in exchange for any bailouts for large and medium enterprises as something that should be part of the fiscal weaponry that the government considers, depending upon the nature of each industry and the need at the time. But it is something the government needs to remain open to.

I also think the government will need to detail how Crown use of patents may be invoked, particularly for use for repurposed manufacturing businesses, to address shortages of essential goods impacted by disrupted supply chains. This really is a very important matter. Chapter 17 of the Patents Act allows exploitation of patent for government services in a crisis. These provisions were recently strengthened in a bill that received bipartisan support. These provisions include compensation for patent holders and an ability to override compensation if necessitated by an emergency. I have written to the Minister for Industry, Science and Technology inquiring as to whether the government had explored using this provision, particularly for urgent manufacturing of suppliers, such as facial masks or goods in short supply due to disrupted supply chains. With a high degree of uncertainty about the supply of certain goods and a potentially drawn-out disruption to supply chains, Labor publicly wants to raise this issue as a matter that should be properly considered.

To meet the scale of this challenge, the government's response must be large enough, must be deployed more quickly than it has been to date and must be targeted enough to support livelihoods and prevent more job losses, business failures and a more serious economic downturn. Indeed, Labor are concerned that the federal government's latest response has not substantially addressed some gaps we identified in the original stimulus and has raised additional concerns which we will work through with the government, including dealing with these very important matters that I have just touched on. This unfolding economic crisis demands urgency, scale and coordination, but the government's initial—and subsequent—response has come too slowly and wasn't large enough.

As the Leader of the Opposition, the Labor leader, said at this dispatch box today: 'We will work closely with the government. We will not impede the passage of any legislation.' But the government, in turn, should work cooperatively with us and should consider the propositions that we are putting in this place to the government. They are put in good faith, and the government should consider them in that manner and should accept, in part or whole, some of those propositions, if they believe they are merit worthy—if they believe that they will add to and improve upon the package the government is considering.

These issues that go to strategic support for certain industries—really reconsidering the incentive to businesses to retain staff, because we believe that is a fundamental deficiency—are vital matters that the government would do well to consider in this debate and, hopefully, they will accept the amendments that we're moving today. It may well be the case they choose not to do that, but I'm afraid that if that is the case we may well be back here again quicker than we think.

As other speakers have said, as the Prime Minister and the opposition leader have said, we're in unprecedented times. I know every member in this place is dealing with the anxiety of their electorate, and I'm in no different a position to that. I want to thank, as others have done, the frontline staff in my electorate and, indeed, across the country: the remarkable health workers who go on and get to work each day to administer health for people who are at risk or, indeed, contagious. They are, of course, doing an heroic thing, and we should applaud them and, indeed, other workers, too: essential service workers; truck drivers, who are bringing wholesale goods to retailers; retail staff, who are sometimes dealing with angry and anxious shoppers, and having to do that and at the same time be worried about their own health; those who work in aged care—a very vulnerable cohort of people, as we know; and those teachers who look after our children. Again, I'd like to thank the teachers in my electorate in all of the schools. I'd like to personally thank Nicole Camilleri, who looks after my daughter when I come here to parliament in the evenings. She does that every week I'm in parliament, but I particularly want to thank her and her family for helping me personally.

These are difficult times and difficult measures. We ask the government to consider what we're putting sincerely. I think that if they do we'll have a better package that will protect the interests of this nation—its economic and health wellbeing.


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