The Politics    Friday, July 24, 2020

Voodoo economics

By Paddy Manning

Image of Treasurer Josh Frydenberg speaking at the National Press Club today

Treasurer Josh Frydenberg speaking at the National Press Club today. Image via ABC News

The treasurer harks back to the supply-side revolution of Thatcher and Reagan

“We are rejecting austerity. We are not a government of austerity,” said Treasurer Josh Frydenberg in a surprise announcement during questioning at his National Press Club address today. That bald declaration may anger millions of Australians, including those who are about to receive lower JobKeeper payments or get kicked off it altogether, or those JobSeeker recipients who are about to lose more than half the coronavirus supplement and fall back below the poverty line. It might also anger those migrant workers, casual workers and employees in the universities or arts and entertainment sector who were never eligible for wage subsidies in the first place. Not to mention the hundreds of thousands of people who were issued illegal debt notices under the robodebt scheme. But Frydenberg referred with approval to an editorial in the Australian Financial Review, and said that “not everyone is a Keynesian and thinking about income support. It is important to go to the supply side. Thatcher, Reagan, that’s an inspiration.” Pretending to reject austerity while embracing supply-side reforms – lower taxes and deregulation – sounds like a shifty neoliberal rebadging exercise, a recipe for more of the same trickle-down economics of the past four decades that gave us the global financial crisis and left the Australian economy mired where it was before COVID-19: with inequality rising, wages stagnant and mired in per-capita recession. 

More likely, Frydenberg’s offhand comments rejecting austerity are just more hollow verbiage from a federal government that is trying to appease the dries but has probably just spent more on welfare than any Australian government in history. Nobody will be angry that Frydenberg purports to reject austerity, because nobody will believe a word of it. We should look at what the Morrison government does, not at what it says.

Yes, the government should get credit for abandoning ideology, embracing wage subsidies and doubling unemployment benefits, albeit temporarily. Yes, the government should get a modicum of credit for extending JobKeeper for another six months, but that decision was a no-brainer that took way too long given the near-universal support for it. And the rest of the $20 billion in extra stimulus measures announced on Tuesday was beyond stingy and based on optimistic assumptions about how quickly the pandemic will fade. Frydenberg spent a fair bit of time congratulating Australia for its economic performance through the pandemic to date, but instead of patting ourselves on the back for our low debt-to-GDP ratio we should perhaps be looking at why almost every other advanced economy has seen fit to look after their citizens more generously at this time – never mind the budget – and how much hardship is being inflicted at home unnecessarily. If Australia was able to recover from 120 per cent debt-to-GDP ratio after World War Two, through the highly protectionist postwar boom years under Menzies, there is no reason we can’t do it again. 

The AFR editorial says the country’s “debt bill needs to become the burning platform that creates the urgency for structural pro-growth changes that have been put off for too long”. No prize for guessing what that might entail – it’s the same old Business Council reform agenda. Frydenberg reinforced that workplace deregulation would be central: 

The temporary industrial relations changes we have made in response to the crisis have been absolutely critical to keeping more people in work. Early survey results on the use of these provisions indicate businesses have found the changes to be essential to their ability to adjust and get through these challenging times … 80 per cent of surveyed employers support the continuation of the JobKeeper flexibilities for a further period of time, with job losses and business closure being the most commonly cited impact of not being able to use the provisions into the future. These temporary changes have shown us how big an impact a more flexible system can have. There is no doubt that our industrial relations system is overly complex and rigid. For the system to deliver more jobs, it will need to evolve to meet the jobs challenge the country faces.

The prospect that workplace flexibility rushed through during an emergency might become permanent has caused Labor to arc up, accusing the government of using the pandemic as cover for an extreme IR agenda. At a doorstop press conference today, shadow industrial relations minister Tony Burke effectively accused the government of a betrayal: “Now they’re saying that the same workers and businesses that the government says no longer need support, the same businesses and workers that the government will now refuse to support, need to have the loss of job security applied to them as well. You know if there’s one lesson out of this pandemic for the Australian workforce it’s that we need more job security, not less.” The government can call its economic principles whatever it likes – let’s call them “voodoo economics”, coined for Reagan’s hang-the-deficit philosophy – but it looks like it will at last have a fight on its hands.

“I feel relieved and secure finally. But, at the same time, I cannot fully celebrate this because so many people who were incarcerated with me are still struggling to get freedom, still in PNG, on Nauru, in detention in Australia. And even if they are released, Australia’s policy still exists.”

Kurdish-Iranian journalist and author Behrouz Boochani, detained for six years on Manus Island, has had his refugee status formally recognised by New Zealand.

“Look, he is a guy under pressure. I accept that [and] I just want to make sure that we can help him and help his government, and ultimately the people of Victoria.”

Peter Dutton bows out of a slanging match with Victorian Premier Daniel Andrews, who yesterday rejected an offer of assistance from the home affairs minister, saying: “If I need something I don’t hesitate to ask and I’ll tell you who I ask. I ask the prime minister. I don’t waste my time asking the bloke who he beat in a party room ballot.”

The broke and the brittle
As the government reveals the extent of the budget deficit, Scott Morrison has become increasingly short in answering questions. He no longer meets with his virtual party room, and some MPs say he doesn’t like being asked to explain what’s happening.

The amount of funding for research into bushfires and natural hazards announced by Emergency Management Minister David Littleproud.

“The Council considers that the statement concerning the Bureau of Meteorology fraudulently changing weather records is one of fact and implies an element of dishonesty or deception on its part. The Council does not consider there was anything in the material relied upon by the publication to substantiate this. The Council also notes a 2017 federal government commissioned report, which dealt extensively with the issue of adjusting weather data, found the BOM dataset to be well maintained and an important source of information on Australian climate records. Accordingly, the Council considers the publication breached General Principles 1 and 3 in this respect.”

The Australian Press Council considered whether its standards of practice were breached by an article by Ian Plimer titled “Let’s not pollute minds with carbon fears”, published by The Australian in November 2019.

The list

“The global financial crisis has demonstrated already that it is no respecter of persons, nor of particular industries, nor of national boundaries. It is a crisis which is simultaneously individual, national and global. It is a crisis of both the developed and the developing world. It is a crisis which is at once institutional, intellectual and ideological. It has called into question the prevailing neo-liberal economic orthodoxy of the past 30 years – the orthodoxy that has underpinned the national and global regulatory frameworks that have so spectacularly failed to prevent the economic mayhem which has now been visited upon us.”

“Kelly Reichardt makes films – six features so far – that are scrupulous, concise, and very, very quiet. She concentrates on the lives of ordinary Americans, mostly women, who come close to being undone by their circumstances, but there is nothing rough or disorderly about her cinematic style. Each shot is essential, every line of dialogue – and there aren’t many – earned … Her films ache with the weight of emotional, and often material, loss.”

“This album is so brightly coloured, so pop-focused, that its deeper concerns may be concealed, initially. But they are there, for those willing to listen. The Chicks display a unique obsession with the circularity of time on Gaslighter – how it can speed for some and slow for others, stretching heartbreak into an eternity.”

Paddy Manning

Paddy Manning is contributing editor at The Monthly and the author of Inside the Greens and Body Count.

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