There’s been a lot of talk about the ongoing US Government shutdown lately.
Partly, that’s because the US hasn’t had one since 1996, and partly because despite talk that a US default is unlikely, the shutdown is actually having an immediate impact on the economy.
This chart from the weekend shows that economic confidence just suffered its largest drop since Lehman.
But if you’re reading shutdown stories in Australia, it’s probably mostly out of curiosity. Because what kind of a system allows a government to send 800,000 employees home and lock up its national parks?
In a word, Australia’s. Here’s how:
– A Government shutdown occurs when parliament refuses to consider or pass bills which affect a government’s ability maintain supply.
– And by “supply”, that means parliament allowing government to receive the funding it needs to maintain or enact its policies.
– In Obama’s case, the Republican-controlled House of Reps won’t pass a spending bill until Obama agrees to delay the implementation of his landmark healthcare legislation, which was signed into law in 2010.
– The closest Australia last came to a shutdown was in November, 1975, when Malcolm Fraser’s Liberal opposition refused to consider appropriation bills related to Whitlam’s attempt to secure $4 billion in overseas loans.
– That refusal would have resulted in supply being withheld on November 30.
– Fraser offered Whitlam a deal – he’d concede supply if Whitlam held a House of Reps election a year early. Whitlam refused, but instead of facing a government shutdown, he found himself dismissed as PM by the Governor-General Sir John Kerr. Or, the Queen, if you’re happy enough to face that ugly truth that yes, she can pull rank on Australia when she needs to.
So what exactly happens when a government is forced into a shutdown? Or more specifically, what would an Australian shutdown look like?
And before you read on, know this – every shutdown is different and affects different sectors in various ways. So we’re not saying this is exactly what would happen if Australia’s politicians locked the Treasury doors.
We’re, you know, just sayin’.
In the US, about a third of employees, in fact, which is in the realm of 800,000. They're not sacked, just put on hold. The correct terminology is 'furloughed'.
They're not guaranteed backpay when they return to work (although those affected in the current shutdown have won that right). They're not even allowed to check their emails.
The Australian Government employs roughly 170,000 people. Nearly 70,000 of those work in the ACT. The largest employers are the Department of Human Services (37,000) and the Australian Taxation Office (25,000). Both departments are likely be considered non-essential and almost 100% affected by a shutdown.
The Feds provide capital and yearly running costs for our national champion incubator, the Australian Institute of Sport.
That's the CSIRO, in case you didn't know. They're kind of a big deal in research circles.
Also, in Australia, the Feds get very high revenues. The vast majority of all tax revenue goes straight into the national coffers in the form of income tax and GST, before being distributed to the states. That said, shutdowns generally don't last long enough for any kind of trickle down effect to impact on Australian state revenues. There's been 17 shutdowns in the US, and the longest was the last one in 1996, which went for 21 days.
National Security and Defence are usually exempt from shutdown operations.
The ADF's 80,000 standing troops will keep on keeping on, but it would be under pressure to furlough its 20,000 public employees.
That's food inspection authorities (which have been given a reprieve in this current US shutdown after a chicken meat salmonella outbreak sickened 300 people), as well as safety inspection employees in roads and air services. And, alarmingly in the US, nuclear plant safety officers.
There's a good chance you'll still get your fortnightly payment, but if it's halted due to something you need to argue with someone about, you're in trouble.
Whatever little work left still under way on the NBN would cease immediately.
But slow down as non-essential staff are furloughed as soon as possible. If you've pulled jury duty, it gets even worse - you won't be paid until the shutdown lifts.
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