Prime Minister Scott Morrison has rejected bringing in a UK-style wages subsidy scheme in response to the coronavirus crisis, saying it would be slow to build and difficult to pull off.
Unions are calling for the Australian government to pay the wages of workers as thousands are laid off due to the pandemic.
The UK government will pay 80 per cent of the salary for staff kept on by their employer during the crisis, up to £2500 per month. Canada is offering a 10 per cent subsidy, to a maximum of $25,000 per company, while New Zealand will pay $585.80 per week for full time staff or $350 for part-time employees, as a lump sum to cover a 12-week period.
Unions ACT secretary Alex White said such a scheme was vital to prevent workers staring down the barrel of unemployment from "poverty levels of income and long delays on Newstart".
"Evidence shows that it is vital to keep workers in jobs now to avoid a long and protracted economic recession," Mr White said.
But Mr Morrison said it would be more effective to get money out to people through existing mechanisms.
"One of the weaknesses of the system that you're advocating for is that it has to build an entirely new payments system for that to be achieved which is never done quickly, and never done well, and that put at great risk the sort of resources we're trying to get to people," Mr Morrison said.
"The best way to get help to people is through the existing payment channels, through the existing tax system arrangements. That was the lesson from the GFC. Of all the money that went out in the GFC -and I'm not making a partisan point here - the key lesson was you must use existing channels for getting money to people, because that is the most effective way for that to occur. To dream up other schemes can be very dangerous."
Instead, businesses could get relief through their Business Activity Statement (BAS), Mr Morrison said.
Employers who pay up to $6.5 million in wages can get two months of payroll tax refunded, a payroll tax holiday of three months or defer paying payroll tax for the rest of the year.
But Labor's small business spokesman Brendan O'Connor said it was not enough to keep small businesses afloat.
"If a [small to medium-sized business] is employing staff that are roughly around median employee income of $50,000, each year that employer will withhold about $7,800 in income tax. That is about $1,950 a quarter, or per BAS statement, per employee," Mr O'Connor said.
"The withholding is only about 20 per cent of the workers wage, well below the UK's 80 per cent subsidy and won't hit pockets until late April, and by then there will be thousands of Australians already out of work."
The package also had no incentive to protect jobs as the support received by businesses "is not nearly enough and is not conditional on keeping workers employed", Mr O'Connor said.
Mr White said,"The prime minister used to say that 'the best form of welfare is a job' but now he seems to think the best form of welfare is welfare".
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