Australia Going Broke
Channel: Daily Insight
Date: 15/12/2020

With rising house prices, you may be fooled into thinking that Australia’s economy is going gangbusters, but recent news headlines tend to tell a different story. “Two week’s until insolvency rule change could lead to economic disaster”; “Two weeks until Australia goes broke”; “China has formally banned Australian coal in a huge escalation of the trade war”; “Second AFL coach splits with wife”. I know, it’s unbelievable. It’s unbelievable that made the front page of the news. Putting that aside, is Australia’s economy in for a world of hurt? Struggling businesses have been propped up by government subsidies such as JobKeeper which essentially pays the wages of their staff in order for people to keep their jobs (in other words, to mask the actual unemployment rate). Over one million businesses are still getting $1,200 a fortnight per employee to help pay their wages, but that steps down in January to $1,000 per fortnight and then stops completely at the end of March 2021. Of course, with any free government money there will always be some folk who try to rort the system. Case in point, business executives! “'Enormous wastage': Audit looms for executive bonuses paid by firms on JobKeeper”. For most of 2020, company directors have not been personally liable if their business continues to operate while insolvent. That’s saved a heck of a lot of companies. But from January 1st 2021, the rules revert and company directors could again be legally responsible. To avoid breaking the law, their safest move may be to put their companies into administration. Consequently, with this rule change, as well as the paring off of the JobKeeper payment, we’ll probably see bankruptcy rates skyrocket in 2021. Fun times ahead.

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