Virgin Australia/Qantas update

Last week we reported that Virgin Australia would go into administration, and that a last ditch bid for a rescue package would be rejected by the Morrison government. We were right on both counts. We also suggested Alan Joice’s Qantas would benefit from this news. In the short term we were wrong about that, QAN shares fell on the news. Much will depend on whether aviable buyer can be found for Virgin Atlantic, We think it unlikely, and that Qantas will end up with a profitable monopoly.

Sovereign wealth funds revisit the spirit of Australia

by Colin Chapman

Ramp up and kill off Covid-19. Or relax, and get Australians back to work when the current restrictions run out in mid-May?

It’s a simple question now being asked, but there is no simple answer.

Two young female prime ministers recently acclaimed for their handling of the virus, Mette Frederiksen of Denmark and Jacinda Ardern of New Zealand, have different strategies. Ms Frederiksen has relaxed many restrictions and reopened primary schools while Ms Ahern will ratchet them up, tightening non-essential movement. We think she will be proved right.

Australia’s PM Scott Morrison is wise to extend Australia’s federal restrictions for another month – and states should follow suit. But he also needs to plan now for the next stage of this horrible epidemic. There are two parts to the next stage: providing Australian medical, scientific and financial assistance to poor countries in the Indian-Pacific region who are struggling to cope with despair and destitution; and confronting the financial reckoning needed at home. Both are urgent tasks, but the gravity of the first is only now emerging. 

It’s not that the domestic reckoning will be without pain. The generous schemes introduced to support furloughed employees and the self-employed will have to be paid for, along with big increases in social security, especially if unemployment were to rise the 10 per cent predicted by some economists.  The International Monetary Fund (IMF) forecasts that GDP could shrink by 6.7 per cent this year.  It could be worse, boosted by the possible collapse of significant companies whose business has been wrecked. Virgin Australia, some regional and local newspapers, travel and holiday companies, some pubs and restaurants, and rationalisation in the health funds sector come to mind. The government can’t and won’t bail them all out. Treasurer Josh Frydenberg would be well advised to start withdrawing some schemes right away, like the instant write off on purchases of capital goods up to $150,000, a giant leap from $300,000 and extended beyond small companies  Modelling indicates that this measure will mostly benefit imported goods like cars, computers, air conditioners and the like; it won’t help the real economy. Buying a new executive car fleet of BMWs will only help the Bavarians, not the folk of Balgowlah or Bendigo.

Some aspects of Australian life may change for ever. I said ‘may’, because old habits die hard and we may revert to type. But as the Dutch educational philosopher Christien Bok told the newspaper Volkskrant, “we’ve gone from 2020 to 2030 in one weekend”. Here are some likely changes:

Carry on Cruising? Going on holiday in a 16+ storey ungainly floating ‘resort’ that requires tugboats to navigate in and out of Australian docks may lose its appeal. These unwieldy vessels have proved to be death traps and havens of infection in the past three months, with Carnival Cruises’ Ruby Princess being the most high profile example. Who would want to board one of these toxic high emitters in the near future?  Not until their owners fit aircraft-style ait conditioning, I’d suggest. My travel agent tells me that rather than demand money back for this winter’s cruises, many people have chosen to roll over bookings to 2021. 

Working from home appears to be the success story of the last month. Many sectors, not least in the professions, have found what many thought impossible to be not only workable but desirable. One benefit has been a significant reduction in overcrowded public transport and congested roads, particularly in Sydney and Melbourne. Home working has saved time and money for commuters and employers alike, taking advantage of the convenience of iPads, mobile phones and cheap video conferencing. There have also been obvious benefits to the environment from much lower carbon emissions and cleaner air. Many companies and professional firms are likely to seize on home working as a way of reducing property and other overheads. It is likely we shall see an increase in it, with provisions for employees who work in teams to get together on a monthly or more frequent basis.

Better hygiene. Australia has long had a higher standard of hygiene than in many other countries. Nevertheless, we can expect to see the benefits of being drilled to wash hands frequently, given that many infectious diseases including the common cold and gastric illnesses are spread through touching door handles, stair rails, bus, train and ferry seats, and other common areas. 

Business closures.  Unless the Coalition comes up with hard cash for severely damaged businesses there will be closures, leading to higher unemployment. Many of these will be small or medium size businesses, especially in the services sector, but the pain will be felt in big companies also. The mining sector will likely see exports to China fall, as the world’s second largest economy tumbles by as much as 50 per cent, with one leading Chinese bank suggesting growth could fall to 2.5 per cent. Tourism to Australia dropped sharply after most airlines cut flights in February and is unlikely to recover previous levels next summer. We face the prospect of only one significant domestic airline, giving Qantas a monopoly which will likely lead to higher fares. Virgin Australia was looking weak even before Covid-19 struck and it is hard to see this overseas-owned corporation securing sufficient finance to survive. Qantas, effectively mothballed by the canny Alan Joyce before the virus really hit Australia, may well be the best strategic buy for investors looking for long-term gain, though Josh Frydenberg may demand a stake for the government in return for any cash he pushes its way.

It does look as if Morrison now has his strategy right. He no longer falls for the tom foolery of Donald Trump, declining to echo the latter’s ridiculous policies such as ending financial support for the World Health Organisation or, even worse, rejecting the IMF Special Drawing Rights proposal previously endorsed by G-20. Morrison has listened to good advice from wise counsel in the Reserve Bank and Treasury, appears to be ready to reshape economic policy towards infrastructure and sound business investment, and, not before time, taking the whip to some of the employment and regulatory practices thar stifle productivity. 

It will be a long haul, but it is no surprise to learn that the ten biggest sovereign wealth funds, led by those in the Gulf, China, Singapore and Norway are opening their eyes again to opportunities that beckon in Australia.

Ramp up and kill off Covid-19. Or relax, and get Australians back to work when the current restrictions run out in mid-May?

It’s a simple question now being asked, but there is no simple answer.

Two young female prime ministers recently acclaimed for their handling of the virus, Mette Frederiksen of Denmark and Jacinda Ardern of New Zealand, have different strategies. Ms Frederiksen has relaxed many restrictions and reopened primary schools while Ms Ahern will ratchet them up, tightening non-essential movement. We think she will be proved right.

Australia’s PM Scott Morrison is wise to extend Australia’s federal restrictions for another month – and states should follow suit. But he also needs to plan now for the next stage of this horrible epidemic. There are two parts to the next stage: providing Australian medical, scientific and financial assistance to poor countries in the Indian-Pacific region who are struggling to cope with despair and destitution; and confronting the financial reckoning needed at home. Both are urgent tasks, but the gravity of the first is only now emerging. 

It’s not that the domestic reckoning will be without pain. The generous schemes introduced to support furloughed employees and the self-employed will have to be paid for, along with big increases in social security, especially if unemployment were to rise the 10 per cent predicted by some economists.  The International Monetary Fund (IMF) forecasts that GDP could shrink by 6.7 per cent this year.  It could be worse, boosted by the possible collapse of significant companies whose business has been wrecked. Virgin Australia, some regional and local newspapers, travel and holiday companies, some pubs and restaurants, and rationalisation in the health funds sector come to mind. The government can’t and won’t bail them all out. Treasurer Josh Frydenberg would be well advised to start withdrawing some schemes right away, like the instant write off on purchases of capital goods up to $150,000, a giant leap from $300,000 and extended beyond small companies  Modelling indicates that this measure will mostly benefit imported goods like cars, computers, air conditioners and the like; it won’t help the real economy. Buying a new executive car fleet of BMWs will only help the Bavarians, not the folk of Balgowlah or Bendigo.

Some aspects of Australian life may change for ever. I said ‘may’, because old habits die hard and we may revert to type. But as the Dutch educational philosopher Christien Bok told the newspaper Volkskrant, “we’ve gone from 2020 to 2030 in one weekend”. Here are some likely changes:

Carry on Cruising? Going on holiday in a 16+ storey ungainly floating ‘resort’ that requires tugboats to navigate in and out of Australian docks may lose its appeal. These unwieldy vessels have proved to be death traps and havens of infection in the past three months, with Carnival Cruises’ Ruby Princess being the most high profile example. Who would want to board one of these toxic high emitters in the near future?  Not until their owners fit aircraft-style ait conditioning, I’d suggest. My travel agent tells me that rather than demand money back for this winter’s cruises, many people have chosen to roll over bookings to 2021. 

Working from home appears to be the success story of the last month. Many sectors, not least in the professions, have found what many thought impossible to be not only workable but desirable. One benefit has been a significant reduction in overcrowded public transport and congested roads, particularly in Sydney and Melbourne. Home working has saved time and money for commuters and employers alike, taking advantage of the convenience of iPads, mobile phones and cheap video conferencing. There have also been obvious benefits to the environment from much lower carbon emissions and cleaner air. Many companies and professional firms are likely to seize on home working as a way of reducing property and other overheads. It is likely we shall see an increase in it, with provisions for employees who work in teams to get together on a monthly or more frequent basis.

Better hygiene. Australia has long had a higher standard of hygiene than in many other countries. Nevertheless, we can expect to see the benefits of being drilled to wash hands frequently, given that many infectious diseases including the common cold and gastric illnesses are spread through touching door handles, stair rails, bus, train and ferry seats, and other common areas. 

Business closures.  Unless the Coalition comes up with hard cash for severely damaged businesses there will be closures, leading to higher unemployment. Many of these will be small or medium size businesses, especially in the services sector, but the pain will be felt in big companies also. The mining sector will likely see exports to China fall, as the world’s second largest economy tumbles by as much as 50 per cent, with one leading Chinese bank suggesting growth could fall to 2.5 per cent. Tourism to Australia dropped sharply after most airlines cut flights in February and is unlikely to recover previous levels next summer. We face the prospect of only one significant domestic airline, giving Qantas a monopoly which will likely lead to higher fares. Virgin Australia was looking weak even before Covid-19 struck and it is hard to see this overseas-owned corporation securing sufficient finance to survive. Qantas, effectively mothballed by the canny Alan Joyce before the virus really hit Australia, may well be the best strategic buy for investors looking for long-term gain, though Josh Frydenberg may demand a stake for the government in return for any cash he pushes its way.

It does look as if Morrison now has his strategy right. He no longer falls for the tom foolery of Donald Trump, declining to echo the latter’s ridiculous policies such as ending financial support for the World Health Organisation or, even worse, rejecting the IMF Special Drawing Rights proposal previously endorsed by G-20. Morrison has listened to good advice from wise counsel in the Reserve Bank and Treasury, appears to be ready to reshape economic policy towards infrastructure and sound business investment, and, not before time, taking the whip to some of the employment and regulatory practices thar stifle productivity. 

It will be a long haul, but it is no surprise to learn that the ten biggest sovereign wealth funds, led by those in the Gulf, China, Singapore and Norway are opening their eyes again to opportunities that beckon in Australia.

Ramp up and kill off Covid-19. Or relax, and get Australians back to work when the current restrictions run out in mid-May?

It’s a simple question now being asked, but there is no simple answer.

Two young female prime ministers recently acclaimed for their handling of the virus, Mette Frederiksen of Denmark and Jacinda Ardern of New Zealand, have different strategies. Ms Frederiksen has relaxed many restrictions and reopened primary schools while Ms Ahern will ratchet them up, tightening non-essential movement. We think she will be proved right.

Australia’s PM Scott Morrison is wise to extend Australia’s federal restrictions for another month – and states should follow suit. But he also needs to plan now for the next stage of this horrible epidemic. There are two parts to the next stage: providing Australian medical, scientific and financial assistance to poor countries in the Indian-Pacific region who are struggling to cope with despair and destitution; and confronting the financial reckoning needed at home. Both are urgent tasks, but the gravity of the first is only now emerging. 

It’s not that the domestic reckoning will be without pain. The generous schemes introduced to support furloughed employees and the self-employed will have to be paid for, along with big increases in social security, especially if unemployment were to rise the 10 per cent predicted by some economists.  The International Monetary Fund (IMF) forecasts that GDP could shrink by 6.7 per cent this year.  It could be worse, boosted by the possible collapse of significant companies whose business has been wrecked. Virgin Australia, some regional and local newspapers, travel and holiday companies, some pubs and restaurants, and rationalisation in the health funds sector come to mind. The government can’t and won’t bail them all out. Treasurer Josh Frydenberg would be well advised to start withdrawing some schemes right away, like the instant write off on purchases of capital goods up to $150,000, a giant leap from $300,000 and extended beyond small companies  Modelling indicates that this measure will mostly benefit imported goods like cars, computers, air conditioners and the like; it won’t help the real economy. Buying a new executive car fleet of BMWs will only help the Bavarians, not the folk of Balgowlah or Bendigo.

Some aspects of Australian life may change for ever. I said ‘may’, because old habits die hard and we may revert to type. But as the Dutch educational philosopher Christien Bok told the newspaper Volkskrant, “we’ve gone from 2020 to 2030 in one weekend”. Here are some likely changes:

Carry on Cruising? Going on holiday in a 16+ storey ungainly floating ‘resort’ that requires tugboats to navigate in and out of Australian docks may lose its appeal. These unwieldy vessels have proved to be death traps and havens of infection in the past three months, with Carnival Cruises’ Ruby Princess being the most high profile example. Who would want to board one of these toxic high emitters in the near future?  Not until their owners fit aircraft-style ait conditioning, I’d suggest. My travel agent tells me that rather than demand money back for this winter’s cruises, many people have chosen to roll over bookings to 2021. 

Working from home appears to be the success story of the last month. Many sectors, not least in the professions, have found what many thought impossible to be not only workable but desirable. One benefit has been a significant reduction in overcrowded public transport and congested roads, particularly in Sydney and Melbourne. Home working has saved time and money for commuters and employers alike, taking advantage of the convenience of iPads, mobile phones and cheap video conferencing. There have also been obvious benefits to the environment from much lower carbon emissions and cleaner air. Many companies and professional firms are likely to seize on home working as a way of reducing property and other overheads. It is likely we shall see an increase in it, with provisions for employees who work in teams to get together on a monthly or more frequent basis.

Better hygiene. Australia has long had a higher standard of hygiene than in many other countries. Nevertheless, we can expect to see the benefits of being drilled to wash hands frequently, given that many infectious diseases including the common cold and gastric illnesses are spread through touching door handles, stair rails, bus, train and ferry seats, and other common areas. 

Business closures.  Unless the Coalition comes up with hard cash for severely damaged businesses there will be closures, leading to higher unemployment. Many of these will be small or medium size businesses, especially in the services sector, but the pain will be felt in big companies also. The mining sector will likely see exports to China fall, as the world’s second largest economy tumbles by as much as 50 per cent, with one leading Chinese bank suggesting growth could fall to 2.5 per cent. Tourism to Australia dropped sharply after most airlines cut flights in February and is unlikely to recover previous levels next summer. We face the prospect of only one significant domestic airline, giving Qantas a monopoly which will likely lead to higher fares. Virgin Australia was looking weak even before Covid-19 struck and it is hard to see this overseas-owned corporation securing sufficient finance to survive. Qantas, effectively mothballed by the canny Alan Joyce before the virus really hit Australia, may well be the best strategic buy for investors looking for long-term gain, though Josh Frydenberg may demand a stake for the government in return for any cash he pushes its way.

It does look as if Morrison now has his strategy right. He no longer falls for the tom foolery of Donald Trump, declining to echo the latter’s ridiculous policies such as ending financial support for the World Health Organisation or, even worse, rejecting the IMF Special Drawing Rights proposal previously endorsed by G-20. Morrison has listened to good advice from wise counsel in the Reserve Bank and Treasury, appears to be ready to reshape economic policy towards infrastructure and sound business investment, and, not before time, taking the whip to some of the employment and regulatory practices thar stifle productivity. 

It will be a long haul, but it is no surprise to learn that the ten biggest sovereign wealth funds, led by those in the Gulf, China, Singapore and Norway are opening their eyes again to opportunities that beckon in Australia.

Ramp up and kill off Covid-19. Or relax, and get Australians back to work when the current restrictions run out in mid-May?

It’s a simple question now being asked, but there is no simple answer.

Two young female prime ministers recently acclaimed for their handling of the virus, Mette Frederiksen of Denmark and Jacinda Ardern of New Zealand, have different strategies. Ms Frederiksen has relaxed many restrictions and reopened primary schools while Ms Ahern will ratchet them up, tightening non-essential movement. We think she will be proved right.

Australia’s PM Scott Morrison is wise to extend Australia’s federal restrictions for another month – and states should follow suit. But he also needs to plan now for the next stage of this horrible epidemic. There are two parts to the next stage: providing Australian medical, scientific and financial assistance to poor countries in the Indian-Pacific region who are struggling to cope with despair and destitution; and confronting the financial reckoning needed at home. Both are urgent tasks, but the gravity of the first is only now emerging. 

It’s not that the domestic reckoning will be without pain. The generous schemes introduced to support furloughed employees and the self-employed will have to be paid for, along with big increases in social security, especially if unemployment were to rise the 10 per cent predicted by some economists.  The International Monetary Fund (IMF) forecasts that GDP could shrink by 6.7 per cent this year.  It could be worse, boosted by the possible collapse of significant companies whose business has been wrecked. Virgin Australia, some regional and local newspapers, travel and holiday companies, some pubs and restaurants, and rationalisation in the health funds sector come to mind. The government can’t and won’t bail them all out. Treasurer Josh Frydenberg would be well advised to start withdrawing some schemes right away, like the instant write off on purchases of capital goods up to $150,000, a giant leap from $300,000 and extended beyond small companies  Modelling indicates that this measure will mostly benefit imported goods like cars, computers, air conditioners and the like; it won’t help the real economy. Buying a new executive car fleet of BMWs will only help the Bavarians, not the folk of Balgowlah or Bendigo.

Some aspects of Australian life may change for ever. I said ‘may’, because old habits die hard and we may revert to type. But as the Dutch educational philosopher Christien Bok told the newspaper Volkskrant, “we’ve gone from 2020 to 2030 in one weekend”. Here are some likely changes:

Carry on Cruising? Going on holiday in a 16+ storey ungainly floating ‘resort’ that requires tugboats to navigate in and out of Australian docks may lose its appeal. These unwieldy vessels have proved to be death traps and havens of infection in the past three months, with Carnival Cruises’ Ruby Princess being the most high profile example. Who would want to board one of these toxic high emitters in the near future?  Not until their owners fit aircraft-style ait conditioning, I’d suggest. My travel agent tells me that rather than demand money back for this winter’s cruises, many people have chosen to roll over bookings to 2021. 

Working from home appears to be the success story of the last month. Many sectors, not least in the professions, have found what many thought impossible to be not only workable but desirable. One benefit has been a significant reduction in overcrowded public transport and congested roads, particularly in Sydney and Melbourne. Home working has saved time and money for commuters and employers alike, taking advantage of the convenience of iPads, mobile phones and cheap video conferencing. There have also been obvious benefits to the environment from much lower carbon emissions and cleaner air. Many companies and professional firms are likely to seize on home working as a way of reducing property and other overheads. It is likely we shall see an increase in it, with provisions for employees who work in teams to get together on a monthly or more frequent basis.

Better hygiene. Australia has long had a higher standard of hygiene than in many other countries. Nevertheless, we can expect to see the benefits of being drilled to wash hands frequently, given that many infectious diseases including the common cold and gastric illnesses are spread through touching door handles, stair rails, bus, train and ferry seats, and other common areas. 

Business closures.  Unless the Coalition comes up with hard cash for severely damaged businesses there will be closures, leading to higher unemployment. Many of these will be small or medium size businesses, especially in the services sector, but the pain will be felt in big companies also. The mining sector will likely see exports to China fall, as the world’s second largest economy tumbles by as much as 50 per cent, with one leading Chinese bank suggesting growth could fall to 2.5 per cent. Tourism to Australia dropped sharply after most airlines cut flights in February and is unlikely to recover previous levels next summer. We face the prospect of only one significant domestic airline, giving Qantas a monopoly which will likely lead to higher fares. Virgin Australia was looking weak even before Covid-19 struck and it is hard to see this overseas-owned corporation securing sufficient finance to survive. Qantas, effectively mothballed by the canny Alan Joyce before the virus really hit Australia, may well be the best strategic buy for investors looking for long-term gain, though Josh Frydenberg may demand a stake for the government in return for any cash he pushes its way.

It does look as if Morrison now has his strategy right. He no longer falls for the tom foolery of Donald Trump, declining to echo the latter’s ridiculous policies such as ending financial support for the World Health Organisation or, even worse, rejecting the IMF Special Drawing Rights proposal previously endorsed by G-20. Morrison has listened to good advice from wise counsel in the Reserve Bank and Treasury, appears to be ready to reshape economic policy towards infrastructure and sound business investment, and, not before time, taking the whip to some of the employment and regulatory practices thar stifle productivity. 

It will be a long haul, but it is no surprise to learn that the ten biggest sovereign wealth funds, led by those in the Gulf, China, Singapore and Norway are opening their eyes again to opportunities that beckon in Australia.

© Australian Strategies 2002. All rights reserved.

Australia catching up with the corona virus

by Colin Chapman

Australia has come from behind with a strategy to defeat the deadly coronavirus. 

As might be expected there are mixed messages, and still much to do. It is easy to criticise Scott Morrison and his government. After a late return to Canberra, ministers were still reeling from the nationwide, and deserved, criticism of its handling of the wildfires and so they paid little attention to developments in Wuhan, China. 

The Coalition was not the only government to be caught out by the scale and speed of the spreading pandemic. Most of Europe and the United States, now the epicentres of Covid 19, were slow to act and ignored World Health Organisation advice and the consequences are all too depressing.(WHO)

It’s not that Morrison and his ministers and advisers believed the ridiculous claim of Donald Trump that the coronavirus was a hoax dreamed up by ‘fake’ media to damage his chances of re- election (although some media hacks peddled that view). It was simply that the government had to balance the need to protect the health of the Australian people against the damage to the economy that would result from the shut down of business and services.  At the time of writing the Morrison government was still pondering whether or not to close all non-essential businesses, declining to follow the British example, let alone the draconian policy in France which requires all citizens to fill in a form if they wish to leave home, stating their purpose and destination, with severe penalties for non compliance.

It was always clear that a recession was inevitable but the government wanted to avoid a 1930s style depression. So, like the British, Canberra chose a step-by-step strategy which has now been labelled as ‘too little too late’.  There have been half measures, often different state by state, a ban on foreigners coming to the country, but an ongoing muddle over lockdowns and and freedom of movement. There have been some bizarre actions, like the decision of the NSW Berejiklian government to allow pubs and bottle shops to deliver to customers’ houses and apartments.

In comparison with other countries, however, Australia’s performance has been above average according to statistics for the morning of March 26 (AEST) sourced from Worldometer and provided by the WHO;  the numbers have kept on growing since then. 

The yardstick I have used in the Australian Strategies table are shown yin order of the number of cases per million of population. Those with fewer per head than Australia are listed in order above the line for Australia and those with more cases per million – which are suffering more, are listed below.  

The countries listed are either G20 or OECD nations, with a few others included because of their similarity to Australia either by size of population, or balance of the economy. Readers will immediately note that two of the most populous countries, India and Indonesia, are not included because I suspect their numbers are unreliable, perhaps in part because the epidemic in those countries is at an earlier stage of development, as well as the fact that many cases have not been reported. This logic may also apply to South American countries which are apparently doing well, though it must be said Latin America generally was quick to see what was happening in Italy and Spain, and cracked down much more quickly than  Australia. 

Still, Australia has performed more than 12 times better than the countries at the epicentre of the pandemic: Italy, Switzerland and Spain. While the pictures of coffins stacked up in a Madrid ice rink awaiting cremation are gruesome, the numbers for the health-conscious Swiss are surprisingly high, although the government claims it has carried out the most tests, perhaps enabled by the pharmaceutical corporations tethered there. Switzerland has only 191 deaths, compared with Italy’s 8,215, now more than twice the number of the most populous nation, China. Indeed on a cases per million basis, China has done better than average, better than Australia and much better than Europe and the United States. In the U.S. Trump makes the story up as he goes along, and talks recklessly of having the churches packed full by Easter.(Some deluded Americans appear to believe him, but not the frightened residents of New York and Boston, where the hospitals are overrun). 

In the United Kingdom, where both prime minister Boris Johnson and health secretary Matt Hancock and Prince Charles, Australia’s next monarch, have all tested positive. Britain and Germany remain under pressure. 

CountryNumberDeathsCases per 1mDeaths per 1m
populationpopulation
 
Mexico475640.05
Argentina5028110.02
Japan1,39947110.04
Brazil2,61163120.3
Thailand1,0454150.06
South Africa9270160
Turkey2,43359290.7
Saudi Arabia1,0123290.09
Poland1,16314310.4
China81,2853,287562
Hong Kong4534600.5
Malaysia2,03123630.7
Greece89226862
Canada3,57936951
Australia2,806131100.5
Switzerland11,7121911,35322
Italy80,5398,2151,332138
Spain56,1974,1451,20289
Germany43,5462395213
France25,2331,33138720
US75,6651,1002293
South Korea9,2411311803
UK9,8494771457

Scott Morrison has made some smart moves, like the establishment of a Covid-19 Coordination Commission to anticipate and mitigate the economic and social impacts of the coronavirus. It will be interesting to see how successful this will be.

The issue that will require further analysis is whether the various measures introduced by the Coalition will benefit the Australian people, many of whom face unemployment or serious loss of income. We will have to see, but I suspect that treasurer Josh Frydenberg will be found wanting. One of his plans is to increase immediate tax relief for eligible companies from $30,000 to $150,000, this was later extended to companies with annual turnover of less than $500,000. This, surely, is mindless, and unlikely to create jobs for a government that boasted during last year’s election campaign that it would create “jobs, jobs, jobs”.

Leaving aside the question of how few companies now want to incur debt and make substantial capital investments, it’s hard to think of anything they might buy that would benefit the Australian economy. Certainly not new BMWs for board directors, new air conditioners from Korea, giant American refrigerators, desktop or laptop computers assembled in Asia, or, as mentioned in one of Frydenberg’s press releases, solar panels –  inevitably from China and in short supply.  Utter madness, though perhaps not as daft as president Trump’s attempt to buy votes by mailing a cheque for $1200 to all Americans, whether they need the money or not.

The UK’s new chancellor Rishi Sunak has led the world by introducing a job retention scheme for all employees who have been temporarily laid off because of the coronavirus. They will get paid up to 80 per cent of their pay, to a maximum of £2500 a month. He followed this up this week with a similar package for the country’s five million self employed, enabling those unable to earn because of the restrictions to pay for living essentials for at least three months. Depending on how long the epidemic lasts, his innovative move will enable the economy to sustain itself, though adding billions to the British deficit which will ultimately have to be paid for through taxation. But this move has unified a population deeply divided by Brexit in a way that seemed unimaginable just three months ago.”We will do whatever it takes”, says Sunak.

Will Morrison do what it takes? For a start, I suggest he and Frydenberg spend the weekend reading an essay by former European Central Bank chairman, Mario Draghi. In an article published by the Financial Times, he argues cogently that we face a war against the virus for which we must mobilise on a global scale, an idea also embraced by G20 leaders, including Morrison, on March 26.

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Breaking up is hard to do

Colin Chapman, founder and editor of Australian Strategies has written an analysis for the Australian Institute of International Affairs on what will happen with British attempts in coming weeks to get free trade deals with Australia, the United States, China, Japan and the 27 remaining European Union countries, now that it has left the bloc. Read it here.