Thursday, July 23, 2020

Today by Paddy Manning


Sea of red?
Australia is faring comparatively well. Let’s not snap back to austerity

Treasurer Josh Frydenberg and Finance Minister Mathias Cormann. Image © Lukas Coch / AAP

Perhaps the most worrying thing about today’s economic and fiscal update is that the huge numbers unveiled by Treasurer Josh Frydenberg and Finance Minister Mathias Cormann are probably over-optimistic. They assume not just the success of the current six-week hard lockdown in Victoria but also that similar measures will not be introduced in NSW. Given that case numbers are still rising in Melbourne and Mitchell Shire despite the lockdown being nearly halfway through, and with NSW on exactly the same trajectory as Victoria, those assumptions appear heroic. Frydenberg readily conceded the uncertainty of the forecasts released today, highlighted by the fact that budget numbers were only provided for the current financial year. Among the headline figures is the official unemployment rate, which is expected to peak at 9.25 per cent in the December quarter. Far from being back in black as predicted before the last election, the federal budget will be in deficit by $86 billion for the 2019–20 financial year, and by $185 billion in 2020–21. In what looks like a V-shaped recovery, Treasury predicts that Australia’s GDP will fall by 3.75 per cent in the 2020 calendar year, and then return to 2.5 per cent in 2021. So, amid the biggest shock since the Great Depression, the government expects the economy will grow at a faster rate next year than the two per cent it recorded before the pandemic in 2018–19. It’s below the consensus estimate of market economists – at 3.4 per cent, according to Bloomberg – but still seems unlikely.

Maybe the most interesting thing about today’s press conference was what Frydenberg and Cormann wouldn’t say. They would not say how long it would take to restore the budget to surplus or pay off the new debt. They would not say whether the coming October budget for 2020–21  (which will include standard four-year forward estimates) would include public service cuts. Asked by Nine’s senior economics correspondent Shane Wright, they would not say whether there would be a return to the kind of austerity principles adopted in the Abbott years, that any new spending commitment in the budget would have to be offset by matching cuts elsewhere. “Clearly we’re in a very difficult and different time,” said Frydenberg rather cryptically, adding it called for a “different approach”. Sounds ominous. 

Frydenberg was adamant that the 960,000 businesses on JobKeeper who had relied on flexible industrial relations practices during the pandemic (allowed under emergency legislation supported by the Opposition and the union movement) should be able to maintain them. The Coalition is hoping that those flexible IR arrangements will continue into the recovery, and that there is a chance to expand them through the talks underway between unions and employers, brokered by Attorney-General and Industrial Relations Minister Christian Porter. Frydenberg reeled off the key components of the prime minister’s so-called JobMaker plan for the recovery – IR reform, infrastructure investment, skills and training, and cutting red tape – and insisted the Coalition would remain the party of lower taxes. It all sounds like a snapback to exactly the same economic philosophy the Coalition took to the last election, notwithstanding the fact the world has changed utterly. It is striking that roughly two thirds of the 194-page update accounts for the impact of myriad policy decisions taken since December’s mid-year economic and fiscal outlook, mainly in response to the bushfires and pandemic.      

The Opposition renewed its criticism of the government’s failure to properly plan for the recovery, saying today’s update had no new policies. In a joint statement, shadow treasurer Jim Chalmers and shadow finance minister Katy Gallagher said: “Australians already know the economy is in bad shape – they need to hear what the Morrison government is going to do about it. With nearly one million Australians unemployed and another 240,000 expected to be unemployed by Christmas, Australians need and deserve a plan to tackle the jobs crisis and create well-paid, secure jobs into the future.” 

Markets did not react heavily to today’s update, as most economists had forecast a higher budget deficit for 2020–21, topping $200 billion. And even with Australia’s gross debt expected to crash through the statutory debt ceiling of $850 billion, the books are in good shape, with net debt-to-GDP forecast to hit 36 per cent by June, compared with an advanced economy average of more than 100 per cent. The real sea of red, as Frydenberg’s slides showed clearly today, is overseas. This underlines that the Morrison government, in seeking to limit the budget impact and taking an optimistic view of the recovery, is ignoring the human impact and causing unnecessary hardship. 


“Maybe Ita should pop into the regional ABC offices where many of my millennial colleagues have been nothing but resilient while smashing coverage of the binfire that’s 2020 – hug free!”

ABC journalist Erin Somerville, based in Wodonga, tweets in response to a report that chair Ita Buttrose, 78, said millennial employees lack resilience and “need hugging”.

“From today, masks are mandatory in Victoria.”

Institute of Public Affairs policy director Gideon Rozner tweets a picture of himself wearing an #EndTheLockdown mask, alongside an image of other masks with slogans like #ReopenMelbourne or “Sack Andrews”.

Scott Morrison and the invisible woman
The decision to pull subsidies from childcare has caused alarm in the sector – especially because it is the first place the government cut support. Now questions are being asked about the men-only committee that made the decision.

9

The number of female LNP elected officials and former candidates in Queensland who have said they were asked explicit questions about their sexual history and preferences as part of extreme vetting procedures.

“While the decision raises some important issues of legal principle, they are far outweighed by the very real pain and hurt that the live export ban inflicted on our cattle industry … The government disagrees with some of the principles as they have been applied by the court. The court’s reasoning in this matter represents a departure from existing legal principles governing both the validity of delegated legislation and the tort of misfeasance in public office. The government reserves its right to press its view of the relevant legal principles if an appropriate case arises in the future.”

Attorney-General Christian Porter announces the federal government will not appeal the Federal Court judgement in Brett Cattle Company vs Minister for Agriculture, which could limit the power of all ministers.

The list
 

“The past 12 months have seen the Australian director’s profile soar. Her two episodes of Killing Eve are among its most acclaimed, and Babyteeth opens here to a rapturous response. The film vividly tells the story of a seriously ill teenage girl, her self-medicating parents and the small-time drug dealer who inveigles himself into their lives … That a film so full of specifically Australian humour can cross cultures so easily is a testament to the humanism at the heart of Kalnejais’s screenplay, and the direction of Shannon Murphy.”

“Gwyneth Paltrow allegedly said that she’d rather die before serving her children instant noodles. A friend of a friend claimed that crushed pumpkin seeds cured her exhaustion and her mother’s rheumatoid arthritis. Patients ask me if certain foods are the cause of their depression, anxiety, fatigue, their syncope, their multi-limb paralysis. Gluten, lactose, fructose, sugar, meat. Pity the chefs facing the now kaleidoscopic array of intolerants.”

“The National Archives of Australia was urgently searching late [last] week for at least three missing letters sent between then governor-general Sir John Kerr and Queen Elizabeth II around the dismissal of the Whitlam government in 1975. The missing correspondence is part of the ‘palace letters’, made public following a 10-year battle between the archives and historian Jenny Hocking.”

Paddy Manning

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?

 

The Monthly Today

Image of Victorian Premier Daniel Andrews

Called to account

Victoria’s second wave has landed a heavy blow

Out of sight, out of mind

Held for seven years in immigration detention, then COVID-19 strikes

Image of Aged Care Minister Richard Colbeck appearing via video link during a Senate inquiry

Aged rage

As coronavirus deaths mount in nursing homes, the anger grows

State of disaster

Stage-four restrictions, a curfew and workplace closures shutter Melbourne


From the front page

Image of Victorian Premier Daniel Andrews

Called to account

Victoria’s second wave has landed a heavy blow

Image from ‘Hamilton’

America’s imperfect angels: Lin-Manuel Miranda’s ‘Hamilton’

Post Black Lives Matter, the hit musical already feels like a souvenir from a vanished pre-Trump America

Image from First Cow

Milk it: ‘First Cow’

Kelly Reichardt’s restrained frontier film considers the uneasy problems of money and resources

Image of Prime Minister Scott Morrison

A unitary theory of cuts

The Morrison government is using the COVID-19 crisis to devastate the public service, the ABC, the arts and tertiary education


×
×