Flat White

Crisis and stimulus: in their own words

19 March 2020

5:03 PM

19 March 2020

5:03 PM

Sixteen billion dollars announced today — and that’s only the tip of the iceberg. In the words of The Donald, the next stimulus announcement is going to be yuge.

With the nation — the world — at risk of drowning in a sea of red, the government and the Reserve Bank are talking about building a bridge to get us to dry land.

It’s best just to use their words. Here’s Reserve Bank Governor Philip Lowe:

What we are facing today is a very serious situation but it’s also something that’s temporary. As we deal with it as best we can, we also need to look to the other side when things do recover. When we do get to that other side, all those fundamentals that have made Australia such a successful and prosperous, and fantastic country will still be there. I think we need to remember that.

To help us get to the other side, though, we need a bridge. Without that bridge there will be damage, some of which will be permanent to the economy and to people’s lives. And building that bridge requires a concerted team effort with us all pulling together in the country’s interests.

Prime Minister Scott Morrison:

This notion of the bridge is what we discussed… It was described in these ways by the Reserve Bank Governor and is absolutely right because there is a [time in the future] to which we will to move.

That will be difficult and the best way to get there are the measures we are putting in place on a sustainable and staged basis so we can do them and scale them up as necessary to ensure we bring as many people with us as possible and minimise impact on lives…

We will be seeking also to cushion the impact along the journey. The Treasurer and I are making further announcements about that in the next few days and we have had another important day to work through some of those more specific things that the government will be able to do that will cushion the impact for as many as we possibly can as a result of the economic impacts of what we’re seeing with the coronavirus.

Treasurer Josh Frydenberg:

We continue to look at a range of measures. As the Prime Minister has said, our second package will be substantially different to the first package…

And so our second package is designed to support, in the words of the Prime Minister, to cushion the challenge being faced by many Australians through this. That includes backing small business.

Because, as Lowe continues, we’re in one hell of a mess:

I’m not able to provide you with an updated set of economic forecasts.

The situation is just too fluid.

But we are expecting a major hit to economic activity and incomes in Australia that will last for a number of months.

We’re also expecting significant job losses.

The scale of those losses will depend upon the ability of businesses to keep workers on during this challenging period.

We saw during the global financial crisis how flexibility in working arrangements limited job losses and this benefited the entire community.

And I hope the same is going to be true in the months ahead. It’s also important to repeat that we are expecting a recovery once the virus is contained.

The timing and strength of that recovery will depend upon how successful we are as a nation in building that bridge to the other side.

The RBA is taking unprecedented action with its interventions today. More Lowe:

We are seeking to play our full role in building that bridge to the time when the recovery does take place.

By doing all that we can to lower funding costs in Australia and support the supply of credit to business we will help our economy and our financial system get through this difficult period.

And let’s give the final word to the PM:

When we say we want to cushion the blow, we’re looking at those issues around income support.

We’re looking at the issues around people’s obligations. And working really constructively, whether it’s with the banks or whether it’s with businesses or others to ensure that we’re putting them in a stronger position to look after people and where they’re not in a position to be able to do that, then the government is stepping up where they can to try and cushion that impact as much as we responsibly can.

What’s it going to cost? Don’t ask. Just hang on — and hope that we’re better at building bridges than, say, submarines.

Because otherwise we’ll be going under.

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