Bad news on bad
The economic headwinds are getting stronger
Alarm about the coronavirus outbreak is only the latest bit of bad news for the federal government, with the number of domestic cases rising to five, efforts underway to evacuate Australians caught in China, and share markets selling off solidly as local investors worry about the possible impact on the mining, tourism, education and gambling industries. Commodity prices and the Australian dollar also tumbled. The outlook was already exceedingly grim, due to the cumulative impact of drought, the bushfire crisis and ongoing wage stagnation. The Conversation’s latest survey of 24 leading economists finds that 2020 is “shaping up as a dismal year for the economy, with no progress on many of the key measures that matter for Australians”. It all adds up to a major headache for Prime Minister Scott Morrison as he attempts to get on the front foot with a National Press Club speech on Wednesday, and for federal treasurer Josh Frydenberg as he prepares the May budget for 2020–21.
Future Fund chair and former federal treasurer Peter Costello, also chair of Nine, told The Sydney Morning Herald today that coronavirus was a more pressing issue than climate change. After unveiling the Fund’s annual results for 2019, Costello said: “As of today, the big short-term risk would be the coronavirus. We don’t know how far that will spread, we don’t know what it will do to the tourism industry, we don’t know what it will do to infrastructure assets, such as airports, airlines.” The SMH also reported today on PwC modelling that suggests coronavirus could have a $2.3 billion economic impact and trigger the loss of 20,000 jobs if it results in a significant drop in Chinese tourists and students coming to Australia. “We’ve had a soft economy, the drought, the bushfires and now this virus,” said PwC’s chief economist, Jeremy Thorpe. “It’s bad news on top of bad news.”
The Conversation’s survey findings are, on average, very bearish: wages are going nowhere, unemployment will stay above 5 per cent (notwithstanding the government crowing last week about a 0.1 per cent drop in the jobless rate), and growth is stuck at 1.9 per cent – well short of the 2.25 per cent for 2019–20 and 2.75 per cent for 2020–21 as forecast in December’s midyear economic update. The forecast “back in black” budget surplus for 2019–20 is likely to “all but disappear as a result of responses to the bushfires and weaker-than-predicted economic growth”, writes the survey’s author, Peter Martin, journalist and visiting fellow at the ANU’s Crawford School of Public Policy. Compounding the gloom, NAB’s latest monthly survey shows [$] that business confidence had dived to a six-and-a-half year low in December, even before the bushfire crisis peaked in January.
Shadow treasurer Jim Chalmers has wasted no time pointing out that the weak figures had nothing to do with the bushfires or coronavirus. “Business confidence has been weak because the Morrison government in its seventh year spends all its time spinning, pork-barrelling and playing politics instead of coming up with a plan to support the economy and boost business investment,” he said in a statement.
There was more bad news today for welfare recipients: the government plans to raise another $2.1 billion over the forward estimates from a further crackdown on supposed overpayments. With Newstart unmoved in real terms for 25 years, and after the robodebt disaster, it is impossible to believe those savings exist. Morrison and Frydenberg, clearly, have not given up on delivering their budget surplus, and people are going to suffer.
NSW Nationals leader and deputy premier John Barilaro hits back after the federal government threatened to take responsibility for the Murray–Darling Basin.
Brendan Nelson’s gravy sandwich
As minister for defence, Brendan Nelson controversially spent
$6.6 billion on Boeing fighter jets. Now he is running the company’s Australian division. In this episode, Mike Seccombe looks at the links between our government and the global weapons trade.
The approximate number of reports of sexual assault in the decade to 2017 that were rejected by Australian police because they believed they were “unfounded”. This amounts to around one in every 12 reports being rejected on these grounds.
“An urgent, two year extension of funding for the Australian Renewable Energy Agency (ARENA) is required to maintain its critical role in improving energy reliability and reducing costs as Australia transitions to low-carbon sources … This short-term funding solution will enable the Federal Government to deliver its promised ‘Energy Technology Investment Roadmap’ and extend the essential work of ARENA in the short-term, while a long-term plan for the organisation is negotiated.”
“When Australia eventually and inevitably becomes a republic, it will be the obvious time. But more thoughtful commentators are now pointing out that the republic will be incomplete without the recognition of and reconciliation with the original Australians. So this must come first: Makarrata, and a treaty, which would confirm that all of us are indeed one.”
“In theory at least, the recent sports grants program involved an open and competitive application process. But many other federal grants programs do not. Increasingly, the government is opting to run closed, non-competitive or restricted grants programs in which it reserves the right to make decisions based on more than just merit … [Former independent member for Indi Cathy] McGowan describes it as ‘a very shoddy way to do business’.”
“Ninety-five per cent of my friends didn’t engage with the federal election one iota unless it was via a Betoota Advocate article, because most Australians feel allergic to politics and are committed to mutually assured passivity with occasional flashes of opinion. But by election night, my family was fighting an uncivil culture war via group chat. Despite having similar country Queensland upbringings, we couldn’t be less connected to each other’s aspirations. We are the microcosm of a divided Australia.”
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?
Alarm about the coronavirus outbreak is only the latest bit of bad news for the federal government, with the number of domestic cases rising to five, efforts underway to evacuate Australians caught in China, and share markets selling off solidly as local investors worry about the possible impact on the mining, tourism, education and gambling industries. Commodity prices and the Australian dollar also tumbled. The outlook was already exceedingly grim, due to the cumulative impact of drought, the bushfire crisis and ongoing wage stagnation. The Conversation’s latest survey of 24 leading economists finds that 2020 is “shaping up as a dismal year for the economy, with no progress on many of the key...