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March 23, 2020

GLEN BARTHOLOMEW, HOST: Brendan O'Connor is the spokesman and he has been asking questions about this matter in Parliament today. He joins us from Canberra. Good afternoon.


BARTHOLOMEW: Does the Government's package go far enough in its attempts to compensate those who have lost or will lose income?

O'CONNOR: I don't think so. We welcome the package. We voted for it, but we have raised significant matters that go to the lack of support for workers. Namely there is no conditions or guarantee in terms of providing support to businesses that they need to keep their workforce employed.

By way of comparison Glen, if I could, the United Kingdom has provided up to 80 per cent of income for median wages. The equivalent here, if people were to withhold - in terms of the current provision that is there for businesses - the equivalent of the Government’s package if you like, is that it would be up to, at best, 20 per cent of a wage subsidy.

Now that's a very big difference between that here and that of the United Kingdom. And our concern is this - that small businesses under enormous pressure do need support, of course they do, but they might use that money to pay, for example, rent or energy bills. Is it sufficient for them to maintain the employment of their staff in many circumstances? That is not the case. And, of course, this is in the situation where governments, at two levels at least, are of course instructing businesses to close. So we're closing them down, but I'm not sure, Labor is not sure, whether we in fact are providing sufficient support so that they maintain their employment.

BARTHOLOMEW: Because there's lack of any direct mechanism to guarantee to the funds will flow to staff. You ask the Prime Minister that question about the UK's direct subsidy model. He came back and said 'listen, that would have required a fundamental reconstructing of the way they administered that fund, they considered it and thought it wasn’t an option here. What did you make of this response?

O’CONNNOR: Well firstly he focussed mainly on the payments provided to those workers who lose their jobs and frankly of course we support the increase to the Newstart. The effective temporary doubling of Newstart is a good idea to provide support for workers losing their jobs, and of course there will be people losing their jobs even if we do more to provide support for small businesses and have a condition that that support is predicated on keeping their staff employed.

My concern is the government likes to say the best form of welfare is a job but their focus here has not been on maintaining employment, it has been on what happens if you don’t. Now our concern is, when we start to recover, that loss of connection between the employer and employee is a real problem. The second problem is of course, morale to the nation if we see a massive spike in unemployment, which is possible because we don’t see the comparable type of support to maintain employment in this package when we look at other packages of comparable countries.

BARTHOLOMEW: The National Tertiary Education Union suggested the Morrison government is simply putting further pressure on an already under resourced social welfare safety net but even with that measure to say, listen, there is an increased payment now available for you, won’t the usual asset tests exist? So someone who owns a home or has savings or investments won’t necessarily qualify for such welfare payments?

O’CONNOR: Well they have removed some of the tests and they have waived delays, not all of them. They haven’t waived income tests and they should examine that and they are also not providing an extra payment for those people that are on Youth Allowance, who by the way could be 20, 21 years old who might be working or looking for work but they don’t get Newstart because of their age. They don't get extra support either.

BARTHOLOMEW: Alright. Now, the Government says businesses do have some incentive that the more staff they have the more money they claim, but what's that based on?

O'CONNOR: Well that's obviously the modelling of Treasury, but it’s providing
up to $100,000 to all SMEs with a turn over less than $50 million.

BARTHOLOMEW: My point is it's based on the number of staff they have in the first quarter of the year, and not necessarily how many they keep on.

O'CONNOR: In fact it has nothing to do with who they keep on, it's only to do with who they had. So they could keep that withholding tax as a benefit from the Government, but then they could immediately make the decision to retrench their staff. They could retrench their staff with that money - they could use it to pay rent and then lay off all their staff. There is no condition on the money, other than you obviously need to keep them for the previous quarter in order to get that support. But going forward, there's no need to maintain employment to have received that.

BARTHOLOMEW: Before I let you go what about this move to let people access some of their superannuation early if they need to? Slater and Gordon suggest these measures may mean some people who take advantage it would see them fall below the $6000 mark in their fund and that would cause their default insurance to be cancelled.

O'CONNOR: Well we do have concerns, again. Firstly, super is taking a hit in the share market, and at the bottom end of the share market. Your super is effectively falling so it's a bad time to be accessing your super in that manner if you can avoid it. We understand these are emergency measures. There already were existing emergency measures, but we don't like the idea of going there as a first resort when people need, when we get through this, people need a decent retirement saving.

So we are concerned that people will just start to access super. It also will have an impact on the super industry, which also may have an impact on the performance of superannuation generally. So we are concerned. We've raised those concerns with the Government saying to them that should be the last resort and we didn't support that particular proposition. There was already that ability in certain circumstances in a limited way.

BARTHOLOMEW: Extreme times and extreme measures. Brendan O'Connor thanks for your time today.

O'CONNOR: Thanks Glen