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Australian tax payers will pay for COVID - 19

Posted by James Cagney on 4 May 2020

The huge debt the Australian Federal & State governments' have chalked up with their lock-down and business shut-down policies. The current business shut-down will cause significant contraction to our economy for years to come.The current economic output meltdown is estimated to decrease our GPD by 10%. This is the biggest drop in our economy since the great depression of  early1930's. 

These Coronavirus policies will add a minimum of another $400 billion to our current national deficit. Predictions are that our deficit could be $1 trillion by the end of the 2020. Unemployment is estimated to be over 10% of the workforce which is over 800,000 people. History shows that people who are unemployed for two years tend to be on the dole thereafter. Many business will take many years to recover and many will shut down and never re-open again because of lack of funds.

Latest reports are that 56% of Australians have lost their jobs or had their pay reduced in the next few months through the Jobkeeper and Jobseeker program. This will cause increased consumer debt down the track as we live on credit.  However the public sector and politicians have not had the same experience. Their income is secure now and in the future but the private sector is bleeding. Unfortunately, it the politicians and public sector that is driving the lock-down and shutdown policies.There is no sense of urgency to get the economy going again.  It stinks of "It's your problem. I'm OK Jack".

A problem is the Scott Morrison National Cabinet is not about "Unity" it is about "Consensus" and Premiers of certain states are out of touch with economic reality. For example the various State laws on what activities are allowed differ are so much it's ridiculous. The Health Ministers in each State have such diverse views how to contain the virus you wonder if they live in the same country. 

The RBA has bought $47 billion Australian Government Bonds in April 2020 to help float the government increasing debt. Will they have the capacity to buy more bonds, which is market driven, to buy more to be bale out the Federal Government out again.

The Victorian State debt has risen to $70 billion and many of the other States are also falling into unprecedented debt as well. Reports are that the Victorian Government has borrowed money  from China to assist with there debt repayments and has agreed to bring foreign Chinese workers to work on major road projects. This whilst hard pressed Australians are looking for jobs to help them live and pay the huge personal debt they have racked up?

Let's not forget the retirees who have invested in blue chip shares are now in trouble. Profitability of these large companies have declined and many retirees will not be paid dividends that they rely on to pay their bills. Westpac for example has estimated a drop of 70% in income for the first six months and say they will not be paying their shareholders a dividend in June 2020. The ASX 200 has declined by 22% and $500 billion in April 2020. So if the retirees want to sell there shares to fund their lifestyle they will sell at a huge loss. If their income falls the government is obliged to prop up their income. Once again where is this money going to come from?   

The evidence is the government acted quickly to curtail the Coronavirus which has been successful. Most economic experts predict that the current measures in place will smash our economy and if they do not change as quickly we will be in economic disaster.  Otherwise sifting through the economic wreckage of current policies is recovery is going to be hard yards. Australians are well educated and most are law abiding. We have been punished enough because of the Bondi Beach debacle. We now realize the importance of social distancing and disinfecting. Premiers please stop listening to doomsayers and public servants whose finances have not been effected by the business shutdown. We have enough evidence from Europe and Asia to base our back to business objectives. 

I know it is hard to lead during uncertain times and we trust that Scott Morrison will show true leadership and stop trying to appease the fear mongers who are making the Australian public nervous about lifting the current strict measures. Australians need to think logically and allow the economy to recover and help  Australians live self fulfilled lives by supporting their family without relying on Government hand-outs. 

At the end of the day it will be the Australian tax payer who will pay for the current financial debts. Our children's , children will have to bite the bullet of higher taxes to pay off the enormous debt the current Governments have raked up. What a legacy to leave for our children's children!

The Queensland tourism industry is in ruin and Annatasia Palaszczuk has announced that they will not open the borders until they have two incubation periods, which is four weeks. Most small business, which are the biggest employers in Queensland, will be never be able to start up again despite the stimulus packages. Palaszczuk like most State Premiers did not have an exit strategy when they introduced the lock down and business shutdown strategy. Read more about the Queensland economy in our BLOG "Queensland tourism industry is in ruin".  




Author: James Cagney
Tags: Australian tax payers will pay for decades for COVID-19 lockdown
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