Economy

Scott Morrison emerged from last Friday’s meeting of his national cabinet a defeated leader. His hastily constructed vehicle to co-ordinate a coherent response to the coronavirus pandemic crisis had fractured. The prime minister announced that the notion of ‘100 per cent, absolute consensus on any issue’ is not the way ahead. The notion was his entirely but if consensus meant everybody agreeing with Morrison, it was always doomed to failure.

The forecasts don’t paint a pretty picture. The Reserve Bank expects unemployment to climb to 10 per cent by the end of the year and still be above 8 per cent by the end of 2021. The Parliamentary Budget Office projects the economy will run below potential for the best part of a decade. This is not inevitable though – government policy choices can change this path.

On Wednesday, when the national accounts confirmed Australia’s biggest economic contraction since the Great Depression, the federal government had a ready and credible excuse. But it was of little consolation to the one million Australians already out of work, or for the 400,000 people who the government expects will lose their jobs by the end of the year.

The reason Australia doesn’t have a death tax – when almost every other developed nation does – can be traced back 40 years to a fear that old people would move to the Gold Coast to avoid paying one. On such absurd grounds, Australia has forfeited hundreds of billions of dollars and inequality has deepened.

Some economists in Australia are trying to force a debate about whether we ‘should’ let Covid-19 kill tens of thousands of people or ruin the economy and force millions of Australians into unemployment and poverty. What would you do? As a year 12 debating topic it would make for an interesting spar, but as a contribution to public policymaking in a pandemic it is juvenile.

Treasurer Josh Frydenberg’s hands were blue as he stood behind his lectern, physically distanced from Scott Morrison in the prime minister’s courtyard on Tuesday. The pair were holding an outdoor news conference on an icy Canberra morning, and nothing the country’s two most senior politicians had to announce could thaw the wintry malaise that’s set in across much of Australia. The chilling realisation is that they, like the rest of the nation, are at the mercy of a virus that is threatening to get out of control.

Four days after the voters of Eden-Monaro kept the marginal seat in opposition hands, the Reserve Bank governor summed up the nation’s predicament: we are all flying by the seat of our pants. Scott Morrison, too, put it succinctly: ‘This is a global pandemic. There are no guarantees in a global pandemic. You have to deal with the situations that are in front of you.’ It is how you deal with these situations, or rather how lucky you are in dealing with them, that can mark a leader up or down.

There’s nothing like the prospect of voters about to mark their ballot papers to focus the minds of politicians. And as parliament resumed this week, the spectre of the Eden-Monaro byelection hung over the place, jolting it out of its brief coronavirus togetherness. Make no mistake: even though the byelection in three weeks’ time will not weaken the government’s numbers on the floor of the house if it loses, there is a strong view that a Liberal win will reinforce Scott Morrison’s druthers to go to a general election early. And you don’t have to look very far to find the reasons why.

At the National Press Club on Tuesday, Scott Morrison went all medical as he framed his prescription for economic recovery. Key ministers in the room smiled their nodding approval when he said: ‘At some point you’ve got to get your economy out of ICU. You’ve got to get it off the medication before it becomes too accustomed to it.’

Just at the moment the government claimed vindication for a big win on the world stage, China ridiculed its grandstanding. A terse, one-paragraph statement from its Canberra embassy called Australia’s response ‘a joke’. If anything encapsulates how fraught relations are with our biggest trading partner, this was it.