No more unconditional corporate bailouts

April 6, 2020
Image: RatbagMedia

Working on the frontline of the response to the Global Financial Crisis (GFC) in Europe in 2008, I had a front-row seat watching the wealthy and powerful being bailed out at the expense of the poorest and most vulnerable.

We should learn from our mistakes: this time let corporations live or die by their own rules while we focus on supporting the whole of society.

We live in a time of low taxes, small government and an ideology of demonising the vulnerable in our society as “leaners” while praising the lucky as “lifters”. The New South Wales and federal governments have run down, privatised and deliberately defunded the services that COVID-19 has shown we are deeply reliant on.

They have done all of this from the ideological viewpoint of “business does it better”, gifting corporations the right to generate profit from our essential public services.

As a result, our public hospitals are so underfunded that they have been at or over capacity for years. Stripped of the resources essential to cope with even small spikes in demand, they are now being expected to manage the COVID-19 pandemic.

Our governments have devalued, defunded and privatised aged care services, childcare services, the education system, medical research, telecommunications network — the list goes on.

These essential services have been increasingly sold off to private companies over the past decades — private companies that will not provide these services unless they can turn a profit from them. Just like governments, the large corporations in charge of so many of our essential services have made the choice not to prepare themselves adequately to withstand an event like COVID-19.

On March 31, we saw the federal government spend $1.3 billion to “guarantee the viability” of private hospitals to ensure that their beds and critical equipment are put to use in the middle of a pandemic. Before that, we saw $715 million go to the airlines with no conditions attached — an opportunity Qantas took advantage of by immediately standing down 20,000 workers.


Then there’s the $130 billion to directly subsidise the wages bill of corporate Australia.

Rather than the government providing support directly to Australians, it is profitable businesses who are in charge of deciding who benefits from the $750 a week wage subsidy and who will be joining the rest of the unemployed who were already out of a job before the onset of COVID-19 at queues outside Centrelink for $550 a week.

Despite the capitalist mantra that these large businesses are entitled to earn a profit because profit rewards risk, the federal government is now taking on the risk part of that equation, while leaving the past and future profit stream in private hands.

We are subsidising corporate Australia, with no strings attached, and providing them with a safety net that transfers their risk to the public without any long-lasting return.

We have not sought guarantees that employers will retain workers longer-term, maintain their pay rates or improve their conditions. We have not taken an equity stake in failing companies, something that would allow us to guarantee they act in the public interest in the future.

We are repeating the mistakes of the GFC by using bailouts to patch over the holes in an economic system that is not fit for purpose.

Instead, we should be taking this opportunity to improve upon the economic status quo. Either the existing capitalist system can stand on its own two feet, or we should construct a different system that can.

It is critical that we acknowledge the flaws in a system that operates for the benefit of profit-takers rather than people and environment. We need to recognise that allowing corporations to run our essential public services was a mistake.

It is vital that we acknowledge the nonsense of a federal government in control of money supply being obsessed with budget surpluses and deficits. If we do not, we will see a continuation of the same faulty economic principles that will inevitably be used by the Coalition government to shift the burden of these corporate bailouts onto those least able to withstand it.

I spent decades working on banking regulation and financial stability policy in countries across the globe. In every country badly impacted by the GFC, I have seen how the resulting hardship has been so unfairly distributed — the wealthy and powerful get bailed out, while the vulnerable people are left to suffer.

Poor and vulnerable

At best, the poorest and most vulnerable people are simply overlooked, with governments failing to provide support to the vulnerable people who need it. At worst, they are actively penalised and made to suffer more than their wealthier counterparts, with governments choosing to further tighten the purse strings and defund crucial public services such as health, education, community services, energy and public transport.

We cannot allow governments to continue to corrode the public education system, lay off healthcare providers, cut wages to public service workers, or shrink welfare supports over the coming years as they try to make up the billions being spent to prop up businesses today.

Let’s do what we failed to do in the wake of the global financial crisis. Let’s reclaim our essential services from the private sector. The COVID-19 crisis has confirmed that the profit motive should have no place in the provision of services which are so fundamental to our wellbeing.

Let’s embrace the widespread realisation that government can afford to provide a safety net for each and every one of us, and ensure that the raise in the JobSeeker payment becomes permanent, universal and unconditional.

Whatever happens, let’s be vigilant in protecting the most vulnerable people in our society — not just in the immediate health crisis, not just in the economic crisis which is also now unfolding, but in the months and years following the response to this crisis when the impact of the government’s current actions will continue to reverberate.

[Abigail Boyd is a NSW Greens MLC. Before being elected to parliament in 2019, she worked as a lawyer specialising in global banking regulation and financial stability.]

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