Australian prime minister has so far opposed a UK-style wage guarantee, but says employers need to remain connected to employees

The government’s forthcoming wage guarantee will include people who have already lost their jobs as a result of the coronavirus outbreak, and is designed to keep employees connected to their employers, but on Sunday Scott Morrison gave no details on how it would work, other than that it would be in addition to measures already announced.

The prime minister has so far been reluctant to install a government-backed wage guarantee, claiming it would take too long to build a new payment system, and that it would lead to inequalities in government assistance, with higher income earners receiving more.

But with hundreds of thousands of people losing their jobs as more and more businesses close down, Morrison said the government was open to establishing a wage guarantee to try to keep employers’ relationships with their employees.

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“Treasury is meeting as we speak, they met yesterday and the day before that and the day before that,” Morrison told reporters on Sunday.

“These are not simple things to do when you’re talking about rolling out programs of income of support to millions of people. Anyone can have an idea about that but converting that into an actual deliverable program that can reach millions of people is a very complicated exercise and that is the work we are engaged in doing.

“But the principle, I can say, is that the package would support those who have more recently been the victims of these closures that have taken place and we will be seeking to support people involved in those closures, but we will advise further details of the starting point about that.”

Morrison said the new measures would be on top of the existing coronavirus crisis package and would be announced “as soon as we can”.

“It is not that far away,” he said.

ACTU boss Sally McManus, who along with Labor and the Greens has been pushing for a government-backed wage subsidy, said she was heartened by the government’s new proposal.

“This will be a very welcome announcement for all those workers who have lost their jobs or are facing losing their jobs.”

McManus also called on the wage subsidy to be backdated in circumstances where job losses had already occurred and said it needed to be applied to small as well as large enterprises, and should apply across all categories of workers, including casuals and temporary visa holders.

Labor also welcomed the news, but said the government needed to ensure the final product kept the relationship between employer and employee and was conditional on keeping people in work.

“If Scott Morrison, instead of ruling this out weeks ago had been working on it then, then some of the scenes we’ve seen in the last couple of weeks, we may not have,” the shadow minister for industrial relations, Tony Burke, said.

“We’ve seen a lot of people transfer from work to the welfare system. The best approach is if we can have a wage subsidy so they can keep their connection to work, so on the other side of this, we’ve got an economy that is ready to go again.”

Earlier in the day, the finance minister, Mathias Cormann, said the government was looking at rolling out the program through existing payment schemes, rather than build a new payments program, like the UK proposed to do.

“We are going to do it in an Australian way,” he told the ABC’s Insiders program.

“We’re going to do it in a way that actually is going to be able to be delivered, using our existing systems and our existing architecture.

“Just making a broad promise without giving ourselves the capacity to deliver would not be responsible thing to do. So we are working very hard on further expanding the level of income support through businesses to enable more businesses, either to stay there or to survive through this difficult period ahead for a strong bounce back on the other side.”

Cormann gave no answers as to how that would work, other than it would be addressed through the existing welfare and tax systems.

“Well, what it means is providing significantly enhanced income support through business,” he said. “What form that will take will be announced once all of those decisions have been made.”

Morrison had previously publicly resisted calls for a government-backed wage scheme, telling a press conference on Wednesday that building a new payment scheme was not the answer.

“And that can put at great risk the sort of resources we’re trying to get to people. The best way to get help to people is through the existing payment channels, through the existing tax system arrangements,” he said then.

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“That was the lesson from the GFC. Of all the money that went out in the GFC ... 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.”

Cormann would not say what any future package would look like for people who had already lost their job.

“Whatever support we will provide moving forward will be provided on a way that is fair and equitable. But again, when it goes to the futures of the next announcement which is to be made in the next few days,” he said.

As part of its stimulus package, the government has provided payments of up to $25,000 to businesses to cover employees wages, but there was no obligation to keep employees on.

As businesses continue to close, Morrison has said the Australian economy will be going into a form of suspended animation or “hibernation”, which Cormann said was about “spreading the pain”.

“Business is facing a perfect storm,” he said.

“We’re focused on helping bring down the costs, helping defer costs where that is appropriate. Working with the banks, working with state and territory governments around some of the things that we can do ourselves in our capacity as landlords for businesses in some of the properties that are owned by government.

“The idea here is to spread the pain as fairly and as equitably as possible to as many business as possible to be there on the other side when we expect a very strong recovery.”

The states and territories are still working on a rental assistance plan, which has been on the national cabinet agenda for the past two weeks. Cormann said he believed landlords risked too much in the current climate to evict tenants, both in the commercial and residential sense, but gave no hint as to when a solution would be forthcoming.