Daily Times

Grocery stores hiring staff by the tens of thousands. A telecommunications company pausing a major workforce cull. Big banks slashing mortgage rates by several times the official rate cut, and offering loan holidays for shuttered businesses. After a period of scandal and public distrust, the coronavirus pandemic has prompted a show of largesse from Australia’s biggest companies wanting to portray themselves as responsible community actors.

Australian companies say they are doing their part to prop up the economy to support those most affected by a crisis that has already put hundreds of thousands out of work.

But their actions will also likely protect profits by taking customers from rivals, minimising loan defaults and re-setting the skillset for a world that has rapidly shifted to living and working at home, according to researchers.

“It sounds philanthropic but it is purely commercial,” said Rob Nicholls, an associate professor of business law at University of New South Wales.

“A landlord knows that it’s much better to have a tenant than to have nobody. A lot of it is actually pragmatic.” When the coronavirus pandemic gripped Australia last month, sentiment towards big business was low after a powerful public inquiry into the finance sector left bank reputations in tatters, while the supermarkets were named in wage underpayment scandals that drove them to issue public apologies.

Telstra Corp Ltd, the largest telco and one of the country’s most complained about companies according to industry figures, was part-way through cutting a fifth of its workers. As the Australian government shuttered most of the economy to slow the spread of flu-like illness, those companies were among the first to announce relief measures.

INCOME DELAYED

Billions of dollars in government cash injections and central bank guarantees have helped.

Commonwealth Bank of Australia, the country’s biggest lender, cut fixed-interest mortgages by 70 points after the Reserve Bank of Australia made an emergency 25-basis-point rate cut, while small business borrowers got a full percentage point cut – all backed by central bank guarantees.

CBA also deferred business and property loan repayments by six months, confirming interest still had to be paid, but later.

“They are a business at the end of the day, and they need to ensure that they are profitable,” said Andrew Tang, a research analyst at Morgans Stockbroking.

“It’s not income lost, it’s income delayed. ‘We can just switch on again and operate normally’: that’s the hope.”

Like the other banks which offered similar packages, fixed-interest mortgages and small business loans are a small percentage of CBA’s total loan book which is dominated by variable-rate mortgages which it did not change, analysts noted.

CBA did not respond to a request for comment, but has said it wants to support the economy by keeping small businesses open and helping vulnerable clients.

“It will have an end date, so from their point of view there’s no incentive to recognising bad debts and not being generous,” said Hugh Dive, chief investment officer at Atlas Funds Management, which owns bank shares.

“By pushing it out, it means they don’t have to report anything unpleasant and improves their standing in the community. Having gone through a range of these crises in the past, this will pass.”

STOCKPILING WORKERS

Telstra removed internet data limits, froze redundancies and advertised for 1,000 contractors to handle customer calls as people rejigged their set-ups to work, teach and entertain from home. The company, which also brought forward A$500 million ($306 million) in capital spending, said it was trying to help employees, customers, suppliers and the economy “while we maintain a focus on long term value creation”. “While it is critical we maintain a strong position, we also believe there are a range of additional initiatives we can undertake now to help support the broader economy,” Telstra CEO Andy Penn said in an email.

As panicked shoppers stripped supermarket shelves in anticipation of a lockdown, grocery giants Woolworths Group Ltd and Coles Group Ltd said they were hiring more than 30,000 people between them to cope with the rush. Qantas Airways said it would help its laid off workers find jobs restocking shelves.

Supermarkets also opened time slots for older shoppers to avoid the stampede, plus partnerships with charities to deliver essential items to those who could not make it to a store.

Woolworths and Coles did not respond to a request for comment.

Nicholls said the test of whether companies had improved their reputations during the coronavirus outbreak would come later.