Yahoo Finance Think crooks won’t take advantage of coronavirus? Think again
Let’s be honest, many aspects of life right now are pretty hard and challenging.
Who would have thought that just weeks ago most of us would be holed up in our homes waiting for the coronavirus pandemic to pass?
Many Australians are feeling a full range of emotions like fear, anxiety, anger, frustration, and even some excitement.
Another emotion many of us may have tapped into though is one of connectedness. The saying, ‘we’re all in this together’ captures this quite well.
Of course many of our elderly and those distant from family and friends are feeling quite isolated and lonely, but the government is trying to reassure those on the fringes as best it can.
One aspect of this crisis that has surprised me – and really it shouldn’t have – is the crooked element of it. That is, people trying to financially gain from it in an unethical way.
This is the emotion or desire of greed.
More from Dave Taylor: How long will the stock market take to bounce back after coronavirus?
More from Dave Taylor: How to cope with fear, panic during coronavirus pandemic
More from Dave Taylor: What could be worse than a recession? We could be about to find out
JobKeeper payment example
Here’s an example.
The government has decided that workers who have been stood down or still on their business’s payroll should have access to taxpayer money.
It means that if you work for a company with a turnover of $1 billion or less, and income has fallen 30 per cent or more since the crisis began, you can have $1,500 a fortnight.
That may not be what you were earning before, but, for some, it’ll actually be a little pay rise.
This is good. It fends off folks having to stand in Centrelink queues and means that, assuming they can negotiate new terms with the landlord or bank, they may just be able to make it through to the other side of this crisis.
That’d be a relief for many workers.
Gaming the system
So, you can imagine my surprise when a leading economist told me mid-way through an interview that some “bankers” have been saying “great, this means businesses can pocket the [JobKeeper payment].”
I really did respond by saying, “sorry??”.
However, the economist confirmed to me that bankers, whose clients are businesses, know acutely how much their clients are struggling at the moment and thought they would OK if they didn’t pass on the JobKeeper payment to their staff.
You can see the logic: if it’s going to save the business, and a line of credit, the business and the bank manager come out ok, right?
Beware the snakes
The problem is of course that this behaviour is highly unethical.
It’s also dumb. The reason it’s dumb is because the ATO figured this might happen so it’s making sure it can track exactly what happens to the payments once they go into the business’s bank account.
The entire economy, including businesses, ultimately suffer more than is necessary if the welfare benefits don’t reach everyone, so it’s crucial the aim of each policy is met.
April remains a ‘dangerous’ month
It’s most crucial though that employees get paid this month, more than any other.
You see JobKeeper payments don’t actually arrive in business bank accounts until May. That means bosses will have to find ways of paying their staff over the next four weeks, even if business has dropped off markedly.
Some bosses I’ve spoken to are going into debt to pay their staff. They’re doing this out of goodwill.
They don’t want their staff to experience financial pain, and they want to make sure the staff they have stick around (because their clients will expect that), and they’re assuming that the money from the government will indeed be forthcoming on the 1st of May.
The National Australia Bank points out why this is so crucial.
The bank runs a national survey asking households what would happen if they needed to raise another $1,000?
"The answer is they can't," revealed Mr Oster.
"There are a lot of people, particularly at present, living on essentially nothing — they don't have a lot of savings.
"It's a bit dangerous," he said.
The bottom line: without bosses going ‘over and above’ for the their staff, many workers will simply run out of money in April.
And research from the Grattan Institute drives this home.
"More than half of all working households have less than six weeks of income in the bank," the Grattan Institute's Budget Policy and Institutional Reform Program Director Danielle Wood said.
"If we look at the bottom 40 per cent of households, they have three weeks or less of income in the bank.
"You know, potentially many hundreds of thousands that won't have that bridging income.
It’s a crisis, so treat it that way
A crisis is painful because it forces rapid change and evokes feelings of anxiety.
A crisis resolved though, through effective, well-executed policy, can be both relieving and create a new and better world.
That’s what we need to achieve here.
@DaveTaylorNews
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.
Follow Yahoo Finance Australia on Facebook, Twitter, Instagram and LinkedIn.
