And if people are too scared to order their Friday night fish and chips, this fridge and cooker is simply not going to be used.
How about using the government’s investment allowance that enables firms to deduct 50 per cent of the cost of an asset or installation? Same problem as the instant asset write-off.
The idea of giving firms between $20,000 and $100,000 so they can cover day-to-day costs makes absolute sense and should help those affected businesses. But, again, if people are being told not to travel to another suburb let alone another state, how many customers are going to walk through the door of the dentist or the mechanic or the physio?
Pull apart the announcements of the Reserve Bank ($90 billion for banks to on-lend to small and medium-sized businesses) and the various lines of credits offered by the federal government ($125 billion), then the full fiscal stimulus so far being offered is around $64 billion.
Two-thirds of help is effectively business debt. And of the $64 billion, much is predicated on the view that businesses and their customers will act like they would in an “ordinary” recession.
But as the government recognises, there’s nothing ordinary about an economic shutdown being caused by governments as they stop the spread of a virus.
Supply and demand are being clear-felled.
Morrison conceded as much in the press conference announcing the government’s latest package.
“This will not be the Treasurer and my last visit to these podiums to make announcements on these measures. There will be more packages and more support,” he said.
Ten days after a $17.6 billion splurge, four days after the Reserve Bank took interest rates to a record low while announcing its own $90 billion assistance package, the Prime Minister is saying even more is going to be needed.
We could see another package within a fortnight. More lines of credit to businesses simply can’t be part of that package, especially if, as the Prime Minister says, he wants the economy to bounce into a post-virus future. They won’t bounce if they are holding huge amounts of debt.
The government’s efforts to hold up the economy are going to have to change.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.