3 April 2020
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A message to the ABC and all media: STOP scaring us and start spreading the right messages

Peter Switzer
20 March 2020

I’m stranded in a Canberra hotel room and the TV doesn’t have Sky News or a US business channel, so I mustered up the courage to watch our beloved ABC. And now I’m so scared I’m not sure if I’ll ever recover!

The majority of 30,000 Qantas workforce will be stood down and the Italian deaths are now at 3,405 (now topping China) were enough to make me turn off the TV!

And get back to the fact that we’ll soon learn (I think on Saturday) that help is on the way with the PM and Treasurer tipped to produce bazookas to shoot down the threats to the economy.

Yesterday, the Reserve Bank Governor brought out his big weapons to help the economy fight the Coronavirus containment policies, which are shutting down businesses, killing jobs and crushing confidence, along with share prices. This is what the RBA promised:

• A cash rate at 0.25%, down 0.25%.

• A 3-year bond rate targeted at 0.25%.

• Cheap money for the banks to lend to small and medium-sized businesses.

• Help banks help the economy with a better-than-expected rate for deposits of banks held at the RBA.

The Bank will provide a $90 billion line of credit to banks to lend cheap money to SMEs on top of the $15 billion the Government has found for smaller banks and non-banks.

This is the RBA throwing everything, including its kitchen sink, at the Coronavirus problem for the economy.

“Maximum firepower has been brought to bear on the virus crisis,” CommSec’s chief economist, Craig James said. “Rates are effectively at zero. That was expected. The Reserve Bank will start quantitative easing (QE) or the purchase of bonds. That was also expected. But there is also targeting of the yield curve, there is forward guidance on the cash rate and there is also a facility that will allow financial institutions to get dollars into the hands of small and medium sized businesses.”

And in a significant move, the CBA passed on the rate cut to its home loan customers while its fixed rate for 1-3 years was dropped by 70 basis points to 2.29%, showing what cheap money from the central bank can do.

Meanwhile, term deposit rates were raised by 70 basis points to 1.7%, which a lot of retirees will cheer.

This is help is on its way of Little River Band proportions. (Sorry, I couldn’t resist that.) It’s actually more like help of Die Hard proportions!

But as my old mate Tim Shaw used to say for Demtel: “But wait, there’s more!”

Prime Minister Scott Morrison and Treasurer Josh Frydenberg bunkered down with some of Australia’s brightest people yesterday and a massive help package is expected to be announced over the weekend.

My insiders suggest that this bazooka of a package will be of the order of $50 billion, that could threaten our AAA credit rating but frankly, I don’t think Scott and Josh could give a damn about that right now, as they fight to keep any future recession as short and as shallow as possible.

The Kiwis had a stimulus package, which was 4% of GDP. If we have an all-up one totalling $80 billion, then that would be around 6% of GDP.

If you throw in what the RBA is contributing, it’s getting close to 10% of GDP.

No one can calculate the economic impost of the Coronavirus containment policies’ costs. However these measures are a serious emergency rescue operation that hopefully will help stock prices recover to a more accurate reflection of what the country’s companies are really worth. And they will help shorten the time Aussies are out of work and businesses are under threat of bankruptcy!

I believe the Government is considering everything from small business loans, small business grants, helicopter money, shopping centre rent holidays for tenants and even allowing some of us to access our super!

I have to say, all this rescue stuff has made me forget how scared the ABC made me only an hour ago!

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