Back in the red
Coalition governments have protected their own. Australia can’t afford it any longer
Amid signs that Australia’s COVID-19 infection rate curve is flattening, and with a scramble underway to boost healthcare resources (exemplified by yesterday’s landmark $1.3 billion deal between the Commonwealth and private hospitals), thoughts are turning to the outlook for the post-pandemic economy. Today’s minutes of the Reserve Bank’s emergency board meeting show Australia will suffer a “material contraction” in economic activity spread across the March and June quarters, and potentially for longer. In the wake of this week’s $130 billion JobKeeper program, credible forecasters tell [$] the AFR that the federal budget deficit will exceed $200 billion, and accumulated debt will top $1 trillion.
Still, Treasurer Josh Frydenberg batted away suggestions the government might shelve the legislated package of income tax cuts that it took to the last election, even though the third stage alone will cost the revenue some $137 billion by the end of the decade, according to the Fin. “We believe lower taxes make for a stronger economy, not a weaker one,” Frydenberg said, although he acknowledges the stimulus spending “will leave a debt burden that will take years to pay back”.
These tax cuts – particularly the third stage, which will radically flatten the tax scales – were reckless when they were announced in 2018. Now that the Coalition has spent $200 billion and counting in one month to combat the pandemic, the tax cuts look like nothing short of fiscal self-harm. How on earth will the federal government begin to repair the budget with revenues down due to recession, with net debt already at record levels, and while persisting with unaffordable tax cuts? The ends surely won’t meet. One thing is clear: the answer can no longer lie in a punitive welfare regime that has resulted in botched schemes like robodebt, which the government’s own lawyers acknowledge was illegal and which is going to result in refunds of more than half a billion dollars. The increased JobSeeker Payment constitutes an acknowledgement that Newstart at $40 a day was too little to live on and the government can’t go back in the face of community opinion.
It is time for a bit of austerity to be imposed on the rich and, yes, the big end of town. Inequality is already too high and likely to be exacerbated by the pandemic, according to the Melbourne Institute’s Roger Wilkins. Federal government spending is larded with unjustifiable handouts for people who don’t need them. Negative tax rates for self-funded retirees via the franking credit system were an unaffordable luxury before the last election, and we certainly can’t afford them now. Making big resource companies pay their fair share of tax through the petroleum resources rent tax, or by axing mining company subsidies such as the diesel fuel rebate, was good policy before the pandemic, and it is urgent now. Splurging taxpayer billions to fund an elite private-school arms race, replete with orchestra lifts and swimming pools with moveable floors, was outrageous enough already – if it continues during this coming decade of austerity, it will be pitchfork time.
And there are many other examples. The private health insurance rebate is propping up an industry in a death spiral for no public purpose whatsoever, especially now we’re halfway to nationalising the private hospitals. And the $200 billion we’re spending on expensive French submarines (which seems to be blowing out before they’ve even begun construction), and Joint Strike Fighters and all the rest – is it absolutely necessary?
The federal response to the pandemic has been well received on all sides, as a ditching of ideological positions and a reassertion of the power of governments to take decisive action. Shadow treasurer Jim Chalmers, in an op-ed harking back to the post–World War Two reconstruction effort commenced by then Labor prime minister John Curtin, argues it is time for new thinking. He concludes by proposing that “a treasury white paper on the post-pandemic economy with input from all parts of the parliament and all parts of the country would be a good way to go about it”. It is a good idea, and the time to start is now.
“The real concern is with this much bleaching without tropical forcing. This may be a sign we’ve now tipped over to near-annual bleaching in many locations. It’s quite concerning that we are getting this much heat stress across the Great Barrier Reef in an Enso [El Niño southern oscillation] neutral year.”
Dr Mark Eakin, coordinator of Coral Reef Watch at the National Oceanic and Atmospheric Administration, reacts to aerial surveys that last week concluded the world’s largest living organism has suffered its third mass bleaching event in five years.
“I don’t care at this point if I embarrass her, but people see this woman – from her knowledge of government, and her ability to articulate policy – people see in her a future Liberal female prime minister.”
Broadcaster Alan Jones anoints Sky News co-host Peta Credlin.
Should we bail out the airlines?
Australia’s airlines have been hit hard by coronavirus, and
they’re asking the government for billions of dollars in financial support. Today, Royce Kurmelovs on whether it’s time the government nationalised the airline industry.
“At the request of the Minister for Communications, Cyber Safety and the Arts, NBN Co and Australia’s five biggest retail service providers have formed a special working group, which includes Telstra, Optus, Vodafone Hutchison, TPG and Vocus. The group will share information, coordinate strategies to manage congestion and take other steps to address significant demand changes caused by the COVID-19 pandemic and the large numbers of people now at home during the day. The ACCC will be an observer on the special working group.”
“Soon Izett had hauled 10 paintings outside into the light. Lining them up against the building, she stood gazing at them. Then she phoned Dallas Gold, an influential art curator in Alice Springs. ‘Dallas,’ she said, ‘I think you better come up here.’”
“We find it easy to criticise foreign governments when we witness their bungles and cover-ups. But what about when the authorities perverting the truth are our own – in Australia – or those of our allies, the UK and the US? When they include banks, pharmaceutical companies, politicians, police and even judges? To what threat does that expose to us all?”
“The irony of this crisis, of course, is that it’s in times such as these that we need music the most – to transport, soothe, galvanise and inspire us. It is, for the vast majority, an essential part of life. Many of the Australian albums reviewed this week are available on Bandcamp, a service that pays artists more than any of the major streaming services. If any pique your interest, consider buying them there.”
Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Inside the Greens and the unauthorised biography of Malcolm Turnbull, Born To Rule?
Amid signs that Australia’s COVID-19 infection rate curve is flattening, and with a scramble underway to boost healthcare resources (exemplified by yesterday’s landmark $1.3 billion deal between the Commonwealth and private hospitals), thoughts are turning to the outlook for the post-pandemic economy. Today’s minutes of the Reserve Bank’s emergency board meeting show Australia will suffer a “material contraction” in economic activity spread across the March and June quarters, and...
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