Since it became clear to the Morrison government that the coronavirus outbreak could lead to a potential depression for Australia, it has continued to introduce greater and greater stimulus measures in an attempt to protect the economy.
As the global economy continues to fall apart around us, it’s becoming increasingly clear by the day that the coronavirus economic crisis will not be over any time soon.
So far, the Morrison government’s unprecedented economic rescue measures to protect the economy have a six-month time limit. Given the explosion in government debt that is going to be required to fund these policies, it’s a prudent decision to have a clear limit in order for Australia to maintain its creditworthiness and its coveted AAA credit rating.
However, when this six-month economic hibernation period ends, the events the government’s interventions have postponed are going to explode onto the scene all at once, as the Morrison government’s unintended economic timebomb detonates.
As the hundreds of billions of dollars of economic scaffolding supporting business and households is removed, in just days businesses will begin to close and in weeks over a million people could potentially lose their jobs.
As of 5.00 pm on Tuesday more than 287,000 businesses had already signed up to the government’s ‘Job Keeper’ program, potentially signing up over a million workers to receive the payment within just 36 hours of applications opening.
When the day comes and this unprecedented level of support is finally removed, all the economic pain and suffering the Morrison government’s rescue package postponed will come all at once, hitting the economy like a freight train.
With such an enormous hit of bad news all condensed into such a short period of time, the enormous hit to the economy and the hit to consumer confidence may cause a worse recession or even depression, than would have otherwise resulted if stimulus measures were directed elsewhere.
In fairness to the Prime Minister, there are no easy answers and we truly are in uncharted waters. But one thing is certain, the economic timebomb is ticking and the Morrison government cannot keep spending tens of billions of dollars a month to stop it from detonating forever.
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