How does Australia’s coronavirus welfare response compare to the rest of the world?

People wear face masks at the Sydney Opera House in Sydney, Monday, March 9, 2020. Three people have now died from coronavirus in Australia, while about 75 have tested positive. (AAP Image/Steven Saphore) NO ARCHIVING
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With entire economies grinding to a halt, the worldwide coronavirus crisis has sparked what is expected to be the worst downturn since the Great Depression. 

According to the International Monetary Fund’s policy tracker, which summarises the key economic responses governments have taken to limit the impacts of the pandemic, Australia’s fiscal response ranks among the highest in the developed world.

As a proportion of its GDP, Australia’s domestic coronavirus aid sits well above that of countries in western Europe and China, but is lower than that of the United States, Canada and Japan.

Experts said Australia’s response represents the fact that, in terms of our coronavirus cases, we were less affected by the virus than many other developed nations.

But they also said it was a “mistake” not to include some vulnerable groups in our welfare scheme.

Grattan Institute chief executive Danielle Cook said Australia’s ranking halfway down the list represented our health crisis being less serious than other countries. 

She told SBS News that while Australia’s welfare responses to COVID-19 were “well-designed”, there were “mistakes” in that they excluded some vulnerable communities.

For example, temporary visa holders and short-term casual workers were not eligible for the payments – in stark contrast to some other developed countries.

“To compare it to New Zealand, for example, those groups were included,” Ms Cook said.

“They had a bigger hit to business output, in their lockdown … but they actually had a smaller hit to jobs and employment.

“Studies have found that one of the reasons for this is they had a wage subsidy scheme that was broader, and included those other groups in the net. It was a mistake at the time (for Australia) not to include those groups.”

But Ms Cook noted there were positive aspects to our scheme – namely that it acted as a wage subsidy while people were still employed, rather than until they found employment. She also praised the flat rate payment scheme.

University of Queensland economics professor John Quiggin told SBS News that while the government got its “initial response” right, there were exceptions.

“In some cases they had problems trying to work out how to deal with people with casual employment, which reflected the underlying problems with the casualisation of the workforce.”

Professor Quiggin also criticised the timing of the JobSeeker cuts, which came into effect on 25 September.

“It’s obvious we need more fiscal stimulus, the rationale that unemployed people are not taking jobs isn’t really very relevant. It doesn’t appear that there’s any employer having any difficulty filling jobs,” he said.

“What we need before we start with cuts is for the government to come up with a long-term strategy, which ideally will be a commitment, and coming up with something that’s both a higher payment and a less punitive approach than JobSeeker or Newstart.” 

Going forward, Ms Cook said there were recommendations Australia could put in place to reshuffle our welfare system.

For one thing, she said new staff payments should settle at a significantly higher level than they were pre-COVID.

“That may not be as high as it was with the coronavirus supplement, but I think you’re talking at least $100 a week more than the level we’re at,” she said.

“There’s a very strong case for a boost to rent assistance, which has been insufficient for a very long time.

“I think it’s also worth revisiting some of the mutual obligation requirements – whether they really make sense, as well as the actual employment providers and whether they’re providing the right services that unemployed people need to get them back into work.”

In the post-COVID world, Professor Quiggin put forward the idea of a “liveable income guarantee”.

“We need to essentially accept that the economy, since the GFC, has never recovered to the point of providing adequate employment to everybody,” he said.

“In the post-COVID period, rather than assuming that unemployment is at the centre of the problem… we need to accept that we’re not going to be able to provide significant market work in the future for everybody who needs an income.

“We need to be looking both at more generous and less punitive unemployment benefits, but also allowing people to contribute to society in other ways – like volunteering, more generous contributions to full-time students, artistic and creative activity and things of that kind.”

Here’s a look at how Australia compared to some of the world’s major players on its coronavirus response.

Japan – 21.1 per cent

The first coronavirus case reached Japan on 16 January.

Former prime minister Shinzo Abe declared a state of emergency for seven prefectures on 7 April – Tokyo, Saitama, Kanagawa, Chiba, Osaka, Hyogo, and Fukuoka – and then expanded to the rest of the country on 16 April.

The state of emergency was lifted incrementally from 14 May, and nationally by 25 May.

The world’s third-largest economy implemented one of the world’s biggest welfare responses to the pandemic.

On 7 April, the Japanese government adopted the Emergency Economic Package Against COVID-19, which cost 21.1 percent of Japan’s 2019 GDP.

A second package was announced on 27 May, worth the same amount, to cover health-related measures and extend further support to businesses and households.

Japan's fiscal response to the pandemic ranked among the best in the world.

Japan’s fiscal response to the pandemic ranked among the best in the world.

Kyodo News

New Zealand – 19.5 per cent

New Zealand reported its first case of COVID-19 on 28 February. The Ardern government subsequently moved to level 4 restrictions after domestic transmission of the virus was found in late March.

The country was globally heralded for “eliminating” the virus, after going more than 100 consecutive days without recording a single locally-transmitted case.

But a second wave saw the country return to lockdown restrictions on 12 August.

New Zealand’s overall pandemic response amounted to NZ$58.5 billion – or 19.5 per cent of its GDP – through FY2023-24.

This money went into healthcare, social spending to protect vulnerable people, a wage subsidy to support employers severely impacted by the pandemic, income relief payments for people who lost their jobs, and support for various impacted sectors.

Despite a second wave, New Zealand has won global praise for its overall handling of the pandemic.

Despite a second wave, New Zealand has won global praise for its overall handling of the pandemic.

Getty

Canada – 15 per cent

Canada’s economy has been slammed on two fronts – by the coronavirus pandemic, and the sharp decline in global oil prices.

The Trudeau government has announced around $CAD317 billion in relief measures – amounting to 15 per cent of the country’s GDP.

This included $CAD212 billion in direct aid to households and firms, $CAD85 billion in liquidity support through tax deferrals, and $CAD20 billion to the health system to support increased COVID testing, vaccine development, medical supplies and greater support for Indigenous communities.

The Trudeau government announced COVID relief measures equating to around 15 per cent of Canada's GDP.

The Trudeau government announced COVID relief measures equating to around 15 per cent of Canada’s GDP.

AFP

United States – 13 per cent

The United States confirmed its first case of COVID-19 in January, and currently has the highest number of cases and deaths in the world.

The US has committed to the largest rescue package in raw numbers of any country.

These include a $US44 billion for extra unemployment benefits and student loan payment deferrals: the $US483 billion Paycheck Protection Program and Health Care Enhancement Act; an estimated $US2.3 trillion for the Coronavirus Aid, Relief and Economy Security Act (“CARES act”), $US192 billion for the Families First Coronavirus Response Act, and $US8.3 billion for the Coronavirus Preparedness and Response Supplemental Appropriations Act.

This roughly equates to 13 per cent of the US’s GDP.

The United States spent the most money on coronavirus relief measures, but not as a proportion of GDP.

The United States spent the most money on coronavirus relief measures, but not as a proportion of GDP.

AP

Australia – 11.2 per cent

At the federal level, Australia has put in expenditure and revenue measures worth $180.9 billion – or 9.3 per cent of the country’s GDP, through FY2023-24 – the majority of which will be executed through the current financial year.

The JobKeeper wage subsidies represents the largest single expenditure, at 5.4 per cent of the country’s GDP.

Australia’s State and Territory governments also announced fiscal stimulus packages, together amounting to $36.9 billion – or 1.9 per cent of GDP. This included payroll tax relief for businesses and relief for households, support for health spending and infrastructure packages.

Australia's welfare response was among the best in the developed world.

Australia’s welfare response was among the best in the developed world.

AAP Image/Lukas Coch

Germany – 8.9 per cent

Germany adopted the most generous COVID-19 package in virus-hit western Europe.

The federal government adopted two separate budgets – one worth 4.9 per cent of Germany’s GDP in March, and another worth 4 per cent in June.

The March measures went towards healthcare equipment and hospital capacity, the expansion of access to short-term work, expanded child benefits and easier access to basic income support for the self-employed. Further grants went to small business owners and self-employed persons.

The June measures included temporary VAT reduction, family support, financial support for local governments and investment in green energy.

India – 6.9 per cent

India recorded its first case of COVID-19 on 30 January. On 24 March, its leader Narendra Modi announced a nationwide lockdown – the largest lockdown in the world.

Localised lockdowns in containment zones were extended to 30 September.

The economic impact from these lockdowns was broad-based, with GDP contracting 23.9 per cent year on year.

The country’s fiscal support measures equated to just under 7 per cent of its GDP, including direct spending, deferred revenue, and measures designed to support businesses and shore up credit provision to several sectors.

India imposed the world's largest lockdown earlier this year.

India imposed the world’s largest lockdown earlier this year.

AFP

Italy – 5.7 per cent

Italy was the first country in Europe to document a large number of coronavirus cases, with the northern Lombardy region the worst-affected.

The Italian government announced a series of fiscal measures in response.

On 15 May, the government adopted a “Relaunch package” that amounted to 3.5 per cent of its GDP. On 8 August, the government adopted a new support package at 1.6 per cent of its GDP, followed by an additional €12 billion.

Italy was the first country in Europe to be hit hard by the virus.

Italy was the first country in Europe to be hit hard by the virus.

AAP

China – 4.5 per cent

China, where the coronavirus first officially broke out, implemented strict restrictions from January.

Since the pandemic began, an estimated RMB 4.6 trillion has been announced in relief measures, equating to around 4.5 per cent of China’s GDP.

These include increased spending on epidemic prevention and control, the production of medical equipment, unemployment insurance, waived social security contributions and public investment.

Since the pandemic began, China has announced an estimated RMB 4.6 trillion in relief measures.

Since the pandemic began, China has announced an estimated RMB 4.6 trillion in relief measures.

AAP

United Kingdom – 3.2 per cent

On 11 March, the UK government announced a £30 billion fiscal stimulus package designed to protect the economy from the pandemic.

The measures consisted of £12 billion to deliver support for the response to the pandemic, and £18 billion to keep the economy afloat as stock markets tumbled.

The United Kingdom saw cases peaking in April and May, before declining. The country reopened slowly throughout June and July, which has seen cases back on the rise.

The British government implemented a range of restrictions from 23 March, including social distancing rules, travel restrictions, closures of businesses and increased testing.



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