JobSeeker changed, loan postponement brings uncertainty to Australian economy

When the coronavirus crisis began to hurt businesses and homes in late March, Prime Minister Scott Morrison promised to “freeze” the economy of the day. Between loan deferrals, JobKeeper, and the bankruptcy moratorium, the Morrison government has done just that in many ways.

But now, as the economy begins to emerge from the six months of extreme freezing and we are assessing the situation in front of us, the road ahead is now as uncertain as the moon behind us. It looks like there is.

The range of estimates from various economic experts has exploded to the point where it might be better to randomly throw darts on the board to make predictions. Still, despite the widening gap between the various forecasts of experts, the data can disappoint expectations and find ways to prove that the entire panel is wrong.

Our economy is blindly flying into an uncertain future in many respects.

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On Monday, JobKeeper eligibility was signed for approximately 1.3 million people. They are currently facing a nervous wait to find out if the Treasury is among up to 400,000 workers who estimate they could lose their jobs before Christmas.

If the Treasury’s prediction that about 30% of previous JobKeeper recipients will lose their jobs is certainly correct, it raises a question of concern. If the program is further modified in December and ends at the end of March, could up to 660,000 of the remaining 2.2 million JobKeeper recipients lose their jobs?

If the current estimate is correct, it is certainly possible, but we do not know the truth.

And that’s the problem.

From the number of mortgage holders who may not be able to resume paying deferred loans to the number of companies that may go bankrupt when the bankruptcy moratorium ends, we generally have The best guess.

For example, estimates of the number of companies that may close a door vary greatly.

The Australian Bureau of Statistics (ABS) estimated that about 10% of companies, or about 240,000, could be forced to close their doors.

However, a survey of business owners by research firm Digital Finance Analytics (DFA) shows a completely different situation. Approximately 25% of business owners say they did not expect to trade within six months, and up to 600,000 businesses could eventually be closed.

It is not yet known which estimate proves to be the closest to Mark. However, due to government intervention and the constant evolution of economic conditions, the situation can change significantly in just a few months.

Related: When the real pain in Australia begins

Loans worth about $ 229 billion are currently being postponed, according to the latest data from banking regulator APRA. About one-11th of mortgages and one-sixth of small business loans have been postponed, and a huge number of Australians rely on the generosity of lenders.

Approximately 20% of 414,430 deferred mortgage holders now “ghost bankers” simply by choosing not to respond to various attempts to contact the bank by phone, mail, text, or email. It is presumed that it has become.

About 80,000 borrowers have to pay about $ 30 billion, which banks cannot reach. This is an increasingly worrisome issue for the financial system and the housing market.

The number of business owners and mortgage holders who resume repayment at the end of the deferral period remains a hotly debated issue. However, JobKeeper is scheduled to end at the same time as the mortgage is postponed in March next year, so there is a risk of default waves and forced sales.

After 6 months postponement or allowed rent and eviction moratorium

The coronavirus pandemic, a similar story in the national rental market.

Unlike mortgage deferrals, where terms are very well established, mortgage exemptions and / or deferrals are generally defined much more vaguely at the peak of the crisis.

For many tenants who have postponed payments, the deadline is approaching. For landlords, after the eviction moratorium has been extended, some states may continue to wait without rent until March next year.

According to Digital Finance Analytics, 41% of rental households are under financial stress, as are 25% of real estate investors.

The region remains a significant economic blind spot as it is difficult to determine the number of tenants who may be forced to evict and landlords to sell their property, and support measures continue to expire. I am.

The forecasts and modeling we have for these various indicators of a country’s economic health vary widely from cautiously optimistic to totally disastrous. However, some regions lack the forecasting and clarity needed to enable policy makers and households to make the best possible decisions.

Related: Barbaric changes in the Australian housing market

As this year, defined by uncertainty, continues to unfold, Australia is now blindly flying into the worst economic storm that hits our great southern lands in almost a century.

As the economy begins to become self-reliant for the first time since March, how households and the economy develop more broadly is in the mist of an ongoing crisis.

No one really knows what’s coming, but with over 5.1 million Australians relying on either JobKeeper or JobSeeker, there are many ways to achieve an optimistic scenario. Must be done correctly.

Ultimately, as government support continues to be removed, Australia is approaching dark clouds on the horizon, and no one really knows what they are waiting for.

Tarric Brooker is a freelance journalist and social critic. @AvidCommentator

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