Coronavirus support packages will reshape the future economy, and that presents an opportunity

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Ilan Noy, Te Herenga Waka — Victoria University of Wellington

Governments across the world have rolled out extensive financial packages to support individuals, businesses and large corporations affected by the COVID-19 pandemic.

Equally, central banks have decreased their lending rates to almost zero, and have announced extensive and previously untested direct lending to private corporations and financial companies.

In many wealthy countries, the support packages are record-breaking in their size and scope, such as the US$2.2 trillion stimulus package for the US economy.

The US and Australian stimulus packages each represent about 10% of GDP. New Zealand’s program is about 5% of GDP, but each country is experiencing the economic shock differently, has different existing safety nets and priorities, and different mechanisms to deliver this assistance.

These support packages will play a significant role in shaping our world for many years, and we should not allow the clear emergency of the situation to stop us questioning their design.

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Goals for financial support

Our work on economic recovery following natural hazards and disasters defines a set of build-back-better goals, and how they should be assessed.

This kind of thinking applies equally to our current predicament. We argue that globally, the purpose of COVID-19 stimulus packages should be threefold, and we should assess them against these three goals:

1. make sure people’s basic needs are satisfied

2. make it possible for the economy to spring back into action once the necessary social distancing measures are relaxed

3. use these funds to create positive change, and rebuild areas we previously neglected (in many countries, this will mean investing in public health systems).

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To achieve the first goal of making sure people can meet their basic needs, many high-income countries – including the US, Greece, the UK and France – are either providing direct payments to all citizens (as in the US) or targeted support to those who lost income or jobs.

These payments are sometimes a fixed proportion of each recipient’s previous income, up to a cap (as in the UK), or are identical for everyone who has lost income (as in New Zealand).

From an economic perspective, it is clearly more efficient to provide support only to the people who really need it – those who have lost income and would not be able to support themselves and their dependants.

But these programs are also shaped by politics and ethics, and different countries chose different ways to distribute this assistance, not always based on need.

Restarting economies

Even better are programs that provide the wage subsidies through existing employers, such as Germany’s famed Kurzarbeit program (which translates to “work with shorter hours”) which was implemented during the 2008 global financial crisis.

New Zealand’s wage subsidy package is a similar program. It supports businesses to continue paying their staff even if they are unable to work.

Details of payments to businesses are posted online, to make sure employers comply and transfer these funds to their employees. This initiative was trialled after the 2011 Christchurch earthquake.

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A similar support was also implemented in Australia.

Generally, wage subsidies allow for continued employment of individuals who would otherwise be let go, and they will also assist in achieving the second goal of resuming economic activity once restrictions are relaxed.

Such programs have been shown to be effective in Germany and New Zealand in ameliorating unexpected shocks.

While employees need support, directly or indirectly, it is also important that small and medium-sized businesses are propped up so they are ready to forge ahead once it is possible to do so. They should receive grants and subsidised loans to pay their costs, other than wages. Otherwise many businesses will fail, and the recovery will be slow and hard.

Global impacts

Whether large corporations need to receive support depends partly on the longer-term importance of their sector. It is easier to justify support for national airlines, which are an important linchpin in many countries’ global ties, than to support fossil fuel producers, for example.

Nor are there many reasons why taxpayers (present and future) should bail out wealthy individual owners of large businesses, when these businesses could be restructured in bankruptcy proceedings that should not lead to their shutdown.

But the COVID-19 pandemic has impacts well beyond individual countries and their economies and may require global support mechanisms.

Most low- and middle-income countries have either not yet announced any assistance or their packages are less than 1% of GDP. They typically cannot afford more with their existing debt levels.

It is therefore incumbent on high-income countries that can afford larger fiscal support packages to help countries that cannot. But so far only a handful of high-income countries, including Finland and Norway, have provided such support.

The international institutions supported by the rich world, such as the International Monetary Fund (IMF) and the World Bank, should pull out all the stops and lend enough, and at concessionary rates, to low-income countries so they can, at the very least, provide for their people’s basic needs.

Without that support, the virus will continue to spread in low-income countries and defeat the draconian social distancing measures that almost every country is implementing now.

Finally, it is important that we scrutinise these programs carefully now, rather than only once the public health emergency has passed and they have been entrenched. The sums involved are incredibly large and we will be remiss if we mis-spend what we are now borrowing from our children and grandchildren.

* Stay in touch with The Conversation’s coverage from New Zealand experts by signing up for our weekly newsletter – delivered to you each Wednesday morning.

Ilan Noy, Professor and Chair in the Economics of Disasters, Te Herenga Waka — Victoria University of Wellington

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Can I get coronavirus from mail or package deliveries? Should I disinfect my phone?

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Euan Tovey, University of Sydney

According to Google Trends, the top two most searched terms about mobile phones this week in Australia were “how to disinfect phone” and “how to clean your phone.”

And the third most-searched “can I get coronavirus from…?”-style question in the past week in Australia was “can you get coronavirus from mail?” (If you were wondering, “can you get coronavirus from food?” was number one, followed by “can you get coronavirus twice?”)

In short, many Australians are wondering what role phones and mail and/or package deliveries may play in the risk of coronavirus transmission.

To better understand the risk, and what you can do to reduce it, it helps to think about how your phone or mail might come into contact with coronavirus – and what the evidence says about how long it lives on various surfaces.

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What do we know about how long the coronavirus can survive on a phone or mail?

Not a whole lot yet.

There has been some general media reporting on the role that surfaces play in the transmission of this coronavirus, termed SARS-CoV-2. That’s the disease that causes COVID-19.

But the main peer-reviewed journal paper on this topic was published about a week ago by the New England Journal of Medicine.

That paper found:

SARS-CoV-2 was more stable on plastic and stainless steel than on copper and cardboard, and viable virus was detected up to 72 hours after application to these surfaces.

It also noted:

On copper, no viable SARS-CoV-2 was measured after 4 hours […] On cardboard, no viable SARS-CoV-2 was measured after 24 hours.

These might be underestimates. The virus may survive even longer on these surfaces, depending on conditions. That’s because these studies looked at how long the virus would survive when in a “buffer” (a solution in which viruses live in the lab). In real life, they would be in mucous and would be more stable.

The fact that the viruses seemed to last longest on plastic is something of a worry and means that, on phones, the virus could potentially last for days.

It is important to remember this is a new virus and we don’t yet have all the data. New findings are emerging every day.

It’s also possible that, in reality, the virus may last longer on phones than indicated in the recent lab experiments.

CDC data published yesterday detected the faint genetic signature of viruses (viral RNA) which had survived 17 days on surfaces in cruise ships. That doesn’t mean infectious virus particles were found after 17 days – only a part of the virus was detected in this study – but it does suggest there may be some cause for concern regarding how long this coronavirus can last on surfaces. More research is required on this question.

Ideally, you should be cleaning your phones, tablets and keyboards with alcohol wipes – if you can get them.
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How might virus particles end up on a phone?

Talking on the phone generates an invisible spray of airborne droplets. A person with COVID-19 can have a lot of virus in the mucous at the back of their throat, so they’re likely spraying the virus on their phone every time they make a call.

If an infected person hands their phone to someone else, the virus could transfer to the new person’s fingertips, and then into their body if they touch their mouth, eyes or nose. (And remember, not every infected person displays the classic symptoms of fever and cough, and may be infectious before symptoms show).

It’s also possible there is an oral-faecal route for transmission of coronavirus. This coronavirus is often detected in faeces.

That means, for example, that tiny particles of poo generated by flushing a toilet could settle on a toothbrush, on a phone brought into the bathroom or on surfaces/food in an adjoining room. They could then end up in your mouth. At the moment this has not been shown, but it is certainly possible. SARS was sometimes spread by this route.

That’s why frequent handwashing with soap is so crucial.

What about mail?

It is technically possible a package or mail coming to your house is contaminated with virus picked up somewhere along the way by people handling or coughing on it. I think, though, the infection risk is very low because, as the New England Journal of Medicine study found, the survival time on cardboard is thought to be around one day.

And unlike plastic surfaces, cardboard is porous. That means a droplet would probably penetrate into the material and may not be so easily picked up when you touch the package.

The survival time on cardboard is thought to be one day.
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What can I do to reduce my risk?

For starters, do the obvious things: wash hands frequently, reduce your contact with others (and if you do see other people, stay at least 1.5 metres apart, particularly if you are talking). Definitely don’t go out at all if you’re unwell.

Keep your phone to yourself. I’d be very reluctant to share my own phone with anyone right now, especially if they seem unwell.

It’s not clear what role children play in the transmission of this coronavirus but, just in case, children should be washing hands before they touch their parents’ phones. That said, it seems more likely at present that adults give it to children than the other way round.

Ideally, you should be cleaning your phones, tablets and keyboards with alcohol wipes (which need to be around 70% alcohol). They are quite effective at deactivating viruses (if somewhat hard to get now). Most baby wipes only have a low percentage of alcohol so are less effective but just the wiping would help remove virus particles.

In the worst case scenario, you can try using a damp cloth with a small amount of soap and water to clean your phone – but don’t let water get inside your phone and wreck it.

When it comes to mail and package deliveries, try to keep apart from the delivery person. Many delivery people are already forgoing the customary signature on the tablet, meaning you don’t have to touch a device or e-stylus that many others have already handled. You could consider wiping down a package before opening it, and washing your hands well after disposing of the packaging.

At the end of the day, the risk is never zero, and the world is a nightmare if you go too far down this route of worrying about every single surface.

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Euan Tovey, Associate Professor & Principal Research Fellow in Medicine, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Levying GST on all packages is complicated and risky for everyone involved

Amazon has restricted Australians’ access to goods from its American site because of the GST reforms.
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Kathryn James, Monash University

If like most Australians you have an online shopping habit, then as of this Sunday you will likely pay 10% more for any goods you have delivered from overseas suppliers.

The reforms rely on local and overseas businesses and platforms (such as eBay and Alibaba) that make more than A$75,000 worth of annual sales in Australia to collect Goods and Service Tax on sales of imported goods worth A$1,000 or less, and then pass on that revenue to Australian authorities. Australia is the first country to require offshore suppliers to collect GST.

Once a platform reaches the A$75,000 threshold, any business making sales to Australian consumers through that platform will need to charge GST regardless of its size.

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However, the complexity of the reforms might jeopardise the necessary cooperation of overseas businesses, and place consumers at risk of paying wrongly charged GST. It could also leave governments locked in to an ineffective way of collecting GST on imported goods.

The government’s own estimates suggest that, after taking into account exclusions and non-compliance, the reforms will capture only half of all eligible sales. This will generate modest revenues of A$300 million over the first three years.

Why the reforms?

There are several good reasons to extend GST to goods bought by Australian consumers from overseas suppliers.

Much has been made of the need to “level the playing field” between domestic retailers (who collect GST on all eligible sales) and overseas retailers (where GST is charged only on sales over A$1,000).

At a more basic level, as a tax on household consumption, the GST should tax the purchases of final consumers. Therefore all imports should be taxed under a GST, as this is where the goods will most likely be consumed.

The choice to not tax imports of low-value goods was made for a practical reason – the cost of customs authorities collecting the GST at the border could outweigh the revenue obtained. Estimates suggest the exclusion cost about A$390 million, or less than 1% of total GST revenues of A$62.2 billion for 2017-2018.

But this has changed with the expansion of online shopping and the development of collection methods other than at the border. These reforms are therefore best understood as a revenue-integrity measure.

What will be the effect of the changes?

As border authorities will continue to collect GST on imported goods worth more than A$1,000, the reforms effectively establish two separate schemes for imported goods.

It is possible for one transaction to be taxed at the point of sale (GST is payable on sales that include low-value goods even if the total value of the sale is more than A$1,000) and again at the border (because GST will continue to be payable on imports where the value of the whole consignment exceeds A$1,000 even if it consists entirely of low-value goods).

So if a consumer buys three pairs of boots at A$400 (A$1,200 total) the transaction might be taxable either at the point of sale (as a sale that includes low-value goods) or at the border (because the total value of the consignment is over A$1,000).

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The reforms contain rules to address this double taxation. For example, it can be avoided by the supplier providing notice to customs prior to importation.

In the event this doesn’t happen, the consumer risks paying the GST twice because no provision is made for refunding GST paid at the border.

Consumers would need to rely on the goodwill of the supplier to refund the wrongly paid GST. The same risk applies if an overseas supplier wrongly charges GST at the point of sale on a GST-free good such as a medical aid or appliance.

All of this will require a lot of cooperation by suppliers with little reward for compliance and only patchy enforcement mechanisms for those that don’t comply.

The response of suppliers and platforms

Despite big players warning that the reforms might “force marketplaces like eBay to prevent Australian buyers from purchasing from foreign sellers”, Amazon has been the only one to act. It announced on May 31 2018 that it would no longer ship from its US website direct to Australian consumers as of July 1.

Consumers will instead be redirected to the Amazon.au site (with Amazon collecting the GST on imports) or would need to engage a redelivery service to ship items bought on Amazon.com to Australia (with the redeliverer responsible for collecting GST).

Although Amazon is right to question the “workability” of the reforms, there is little doubt that Amazon has the capacity to comply, as Treasurer Scott Morrison has suggested.

Amazon’s chosen method to comply with its GST obligations results in either reduced choice for consumers (64 million goods via Amazon.com.au compared to 480 million on Amazon.com) or increased cost (if shopping through Amazon.com).

It also transfers the compliance costs from Amazon to redeliverers (no doubt offset by increased customers) and makes the redelivery provisions in the reforms, intended as a last resort, far more significant.

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However, Amazon’s move is not simply about its capacity to comply with GST obligations in Australia. It must be understood in the context of governments around the world moving to collect GST and other taxes on online consumer spending.

Australia is the first jurisdiction to move to adopt a vendor-platform collection model and many jurisdictions are poised to follow suit (the European Union, Switzerland and New Zealand have all announced similar reforms). The Amazon response might give them pause for thought, and sufficient pause is all that might be needed.

Amazon would like transporters such as freight and logistics companies and Australia Post to collect GST on imported goods because it means suppliers and platforms like Amazon won’t have to do so.

The transporter method potentially offers a more reliable method to collect GST, but the paper-based international postal system is unable to do so at least until 2023.

Amazon appears willing to take a short-term hit while waiting for technology and regulatory change to make it viable to adopt its preferred method of transporter collection.

In the meantime, consumers should take care when making purchases from overseas suppliers to ensure as much as they can that GST is being correctly charged. And the world is watching.

Kathryn James, Senior lecturer, Law, Monash University

This article was originally published on The Conversation. Read the original article.

Government ‘dares’ the Senate on its corporate and income tax packages

Michelle Grattan, University of Canberra

The government will put both its company tax legislation and its income tax package to the Senate before parliament rises in late June, Finance Minister Mathias Cormann has confirmed.

Cormann also sought to scotch suggestions that the tax cuts for big businesses might be dropped if they were defeated then, saying “we are totally committed to the reform”.

He told reporters on Monday the corporate tax cuts were “even more important and more urgent now” than when the government took its package to the election as its central policy in 2016.

Within Coalition ranks there are doubts about persisting with the company tax measure if it can’t be legislated. The chances of the legislation passing the Senate plummeted last week when Pauline Hanson went back on her commitment to back it. But on Monday she appeared to be sounding a little less adamantly opposed, and invited people to contact her office with their views.

With three Senate votes Hanson has a veto.

Cormann committed the government to take the plan to the Super Saturday July 28 byelections if it was defeated in parliament.

He again ruled out a compromise that set a $500 million annual turnover threshold, which would give the package a greater chance of success. That would exclude the highly unpopular banks, as well as other big companies, from the cut.

Cormann said such a threshold “would be a barrier to growth. If you put an artificial ceiling on the growth that a business can aim for by essentially providing a disincentive to further growth beyond that threshold, you are putting a brake on jobs growth”.

The government has already legislated for tax cuts for firms of up to $50 million turnover. That limit was a deal with Senate crossbenchers.

The company tax cuts as well as the competing government and opposition income tax packages are set to be core battlegrounds in the byelections.

The government is also holding firm on not dividing up its three-stage income tax legislation. “We will not split the package”, Cormann said.
“Bill Shorten has to make a decision whether he wants to stand in the way of personal income tax relief for low and middle income earners.

“He has to make a decision whether his anti-aspiration, politics of envy vendetta is more important to him than providing cost-of-living pressure relief to low and middle income earners.”

Stage three of the government’s income tax package is the most controversial part because it flattens the tax scale. The benefits for low and middle incomes earners are in stage one, which the opposition supports. Labor, while highly critical of the third stage, has not said what it would do in the Senate if the government refuses to have at least that stage split off.

The government this week will continue talking with crossbenchers over the two tax packages.

Campaigning in Braddon, one of the byelection seats, Shorten said Malcolm Turnbull’s “corporate tax cuts are dead, buried and cremated – he is just too silly and arrogant to realise that.”

“‘Every extra dollar that goes to the Commonwealth Bank, or Westpac or ANZ or NAB, is a dollar less we have got in our in our kids’ schools, it’s a dollar less we’ve got to help the pensioners with their power bills, it’s a dollar less to help people when they are sick,” the opposition leader said.

Newspoll, published in Monday’s Australian, asked people whether the proposed changes to company tax rates should come into effect as soon as possible, in stages over the next 10 years, or not at all. More than a third (36%) said as soon as possible, 27% said in stages and 29% said not at all.

The poll had Labor back with a 52-48% two-party lead, compared with 51-49% in the last two polls.

It also saw Anthony Albanese heading Shorten as better Labor leader, 26% to 23%. Tanya Plibersek was also on 23%. The prospect of the byelection has stirred some leadership muttering in the ALP.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Plot Targeting Turkey’s Religious Minorities Allegedly Discovered

CD indicates naval officers planned violence against non-Muslim communities.

ISTANBUL, December 16 (CDN) — ISTANBUL, December 16 (Compass Direct News) – Chilling allegations emerged last month of a detailed plot by Turkish naval officers to perpetrate threats and violence against the nation’s non-Muslims in an effort to implicate and unseat Turkey’s pro-Islamic government.

Evidence put forth for the plot appeared on an encrypted compact disc discovered last April but was only recently deciphered; the daily Taraf newspaper first leaked details of the CD’s contents on Nov. 19.

Entitled the “Operation Cage Action Plan,” the plot outlines a plethora of planned threat campaigns, bomb attacks, kidnappings and assassinations targeting the nation’s tiny religious minority communities – an apparent effort by military brass to discredit the ruling Justice and Development Party (AKP). The scheme ultimately called for bombings of homes and buildings owned by non-Muslims, setting fire to homes, vehicles and businesses of Christian and Jewish citizens, and murdering prominent leaders among the religious minorities.

Dated March 2009, the CD containing details of the plot was discovered in a raid on the office of a retired major implicated in a large illegal cache of military arms uncovered near Istanbul last April. Once deciphered, it revealed the full names of 41 naval officials assigned to carry out a four-phase campaign exploiting the vulnerability of Turkey’s non-Muslim religious minorities, who constitute less than 1 percent of the population.

A map that Taraf published on its front page – headlined “The Targeted Missionaries” – was based on the controversial CD documents. Color-coded to show all the Turkish provinces where non-Muslims lived or had meetings for worship, the map showed only 13 of Turkey’s 81 provinces had no known non-Muslim residents or religious meetings.

The plan identified 939 non-Muslim representatives in Turkey as possible targets.

“If even half of what is written in Taraf is accurate, everybody with a conscience in this country has to go mad,” Eyup Can wrote in his Hurriyet column two days after the news broke.

The day after the first Taraf report, the headquarters of the Turkish General Staff filed a criminal complaint against the daily with the Justice Ministry, declaring its coverage a “clear violation” of the laws protecting ongoing prosecution investigations from public release.

Although the prime minister’s office the next day confirmed that the newly revealed “Cage” plot was indeed under official investigation, Prime Minister Recep Tayyip Erdogan criticized Taraf’s public disclosure of the plan as “interfering” and “damaging” to the judicial process and important sectors of the government.

But when the judiciary began interrogating a number of the named naval suspects and sent some of them to jail, most Turkish media – which had downplayed the claims – began to accept the plot’s possible authenticity.

To date, at least 11 of the naval officials identified in the Cage documents are under arrest, accused of membership in an illegal organization. They include a retired major, a lieutenant colonel, three lieutenant commanders, two colonels and three first sergeants.

The latest plot allegations are linked to criminal investigations launched in June 2007 into Ergenekon, an alleged “deep state” conspiracy by a group of military officials, state security personnel, lawyers and journalists now behind bars on charges of planning a coup against the elected AKP government.

Christian Murders Termed ‘Operations’

The plot document began with specific mention of the three most recent deadly attacks perpetrated against Christians in Turkey, cryptically labeling them “operations.”

Initial Turkish public opinion had blamed Islamist groups for the savage murders of Italian Catholic priest Andrea Santoro (February 2006), Turkish Armenian Agos newspaper editor Hrant Dink (January 2007) and two Turkish Christians and a German Christian in Malatya (April 2007). But authors of the Cage plan complained that AKP’s “intensive propaganda” after these incidents had instead fingered the Ergenekon cabal as the perpetrators.

“The Cage plan demanded that these ‘operations’ be conducted in a more systematic and planned manner,” attorney Orhan Kemal Cengiz wrote in Today’s Zaman on Nov. 27. “They want to re-market the ‘black propaganda’ that Muslims kill Christians,” concluded Cengiz, a joint-plaintiff lawyer in the Malatya murder trial and legal adviser to Turkey’s Association of Protestant Churches.

In the first phase of the Cage plot, officers were ordered to compile information identifying the non-Muslim communities’ leaders, schools, associations, cemeteries, places of worship and media outlets, including all subscribers to the Armenian Agos weekly. With this data, the second stage called for creating an atmosphere of fear by openly targeting these religious minorities, using intimidating letters and telephone calls, warnings posted on websites linked to the government and graffiti in neighborhoods where non-Muslims lived.

To channel public opinion, the third phase centered on priming TV and print media to criticize and debate the AKP government’s handling of security for religious minorities, to raise the specter of the party ultimately replacing Turkey’s secular laws and institutions with Islamic provisions.

The final phase called for planting bombs and suspicious packages near homes and buildings owned by non-Muslims, desecrating their cemeteries, setting fire to homes, vehicles and businesses of Christian and Jewish citizens, and even kidnapping and assassinating prominent leaders among the religious minorities.

Lawyer Fethiye Cetin, representing the Dink family in the Agos editor’s murder trial, admitted she was having difficulty even accepting the details of the Cage plot.

“I am engulfed in horror,” Cetin told Bianet, the online Independent Communications Network. “Some forces of this country sit down and make a plan to identify their fellow citizens, of their own country, as enemies! They will kill Armenians and non-Muslims in the psychological war they are conducting against the ones identified as their enemies.”

No Surprise to Christians

“We were not very shocked,” Protestant Pastor Ihsan Ozbek of the Kurtulus Churches in Ankara admitted to Taraf the day after the news broke.

After the Malatya murders, he stated, Christians had no official means to investigate their suspicions about the instigators, “and we could not be very brave . . . Once again the evidence is being seen, that it is the juntas who are against democracy who [have been] behind the propaganda in the past 10 years against Christianity and missionary activity.”

Patriarch Bartholomew of the Greek Orthodox Church also openly addressed the Cage plot, referring to recent incidents of intimidation against Christian and Jewish citizens in Istanbul’s Kurtulus and Adalar districts, as well as a previous raid conducted against the alumni of a Greek high school.

“At the time, we thought that they were just trying to scare us,” he told Today’s Zaman. Several of the jailed Ergenekon suspects now on trial were closely involved for years in protesting and slandering the Istanbul Patriarchate, considered the heart of Eastern Orthodoxy’s 300 million adherents. As ultranationalists, they claimed the Orthodox wanted to set up a Vatican-style entity within Turkey.

Last summer 90 graves were desecrated in the Greek Orthodox community’s Balikli cemetery in the Zeytinburnu district of Istanbul. The city’s 65 non-Muslim cemeteries are not guarded by the municipality, with their maintenance and protection left to Greek, Armenian and Jewish minorities.

As details continued to emerge and national debates raged for more than a week over the Cage plan in the Turkish media, calls came from a broad spectrum of society to merge the files of the ongoing Dink and Malatya murder trials with the Ergenekon file. The Turkish General Staff has consistently labeled much of the media coverage of the Ergenekon investigations as part of smear campaign against the fiercely secular military, which until the past two years enjoyed virtual impunity from civilian court investigations.

According to Ria Oomen-Ruijten, the European Parliament’s rapporteur on Turkey, the long-entrenched role of the military in the Turkish government is an “obstacle” for further democratization and integration into the EU.

Report from Compass Direct News