Treasury warns the coming downturn is unprecedented in “speed, magnitude and shape”
“We have not seen a shock hit this fast in any period,” said Treasury secretary Dr Steven Kennedy in this morning’s hearings of the COVID-19 Senate select committee. Kennedy defended the apparent delay in getting the federal government’s stimulus money out the door, after inquiry chair Katy Gallagher asked why just $10 billion of the $200 billion-plus in announced fiscal response measures had been spent. Making literally billions of dollars’ worth of payments within four weeks of their announcement was a rapid response, Kennedy said, and “from an administrative perspective, I’m incredibly impressed by what the ATO and Services Australia has been able to achieve”. As Kennedy himself acknowledged, that’s cold comfort to those in the community who are still to receive payments, whether it’s half a million businesses with lower or no cashflow continuing to pay employees while waiting for JobKeeper payments soon to flow, or the newly unemployed workers who have yet to have their JobSeeker claims processed. For others, of course, such as temporary visa holders, there is simply nothing.
The AFR[$] reported recently that Kennedy is perfectly qualified to advise the government on the coronavirus response: he is a former nurse whose ANU economics doctorate had a health focus, and was lead author of a 2006 Treasury paper [$] on the macroeconomic effects of an influenza pandemic. His evidence today was sobering, telling the committee the events of recent weeks were without a doubt unprecedented. “Unemployment rose to higher levels in the Great Depression, but it did that over the course of a couple of years; these movements are happening in just a couple of months,” he said. “We have never seen an economic shock of this speed, magnitude and shape, reflecting that this is both a significant supply and demand shock.” Kennedy warned there would be permanent job losses, and said the “final shape of this shock remains hard to predict because it depends on how the virus’s transmission unfolds in the face of efforts to suppress it – both in Australia and overseas”.
This only underlines the urgent need for the stimulus spending. As Gallagher pointed out in a doorstop press conference after the hearing, Treasury confirmed to the committee that “the biggest injection of money into the economy as at this hearing today has actually come from private savings”, referring to the $6.3 billion accessed through early access to super arrangements.
Overnight, Treasurer Josh Frydenberg announced he would give a ministerial statement to the parliament on May 12 – originally budget night – outlining the impact of the coronavirus on the economy and the government’s actions to date. He will also update the economic and fiscal outlook in June, following the release of the March quarter national accounts. As the Nine newspapers reported, shadow treasurer Jim Chalmers’ response was that a speech by the treasurer was not a proper substitute for a detailed update.
Health Minister Greg Hunt has given an update on Australia’s successful response to the pandemic, which is seeing some states relax social-distancing restrictions this week ahead of a decision by the national cabinet on May 11. That decision will be influenced by the success of the COVIDSafe app, now downloaded by 2.4 million Australians. Hunt had to field questions this afternoon about hoax text messages and social media posts advising of false positive tests. Hardly promising, only two days in.
But the success of our pandemic response so far, and the opening up of overseas economies including New Zealand, raises the prospect that Australia might be able to avoid some of the worst economic impacts of the coming recession. This tantalising prospect was highlighted [$] by Business Council modelling released yesterday, which showed the huge difference between a lockdown that lasts three months ($278 billion, or 14 per cent of GDP), versus six months ($403 billion, or 21 per cent of GDP).
That’s separate from a debate about what the economic recovery should look like, represented by contrasting visions today from the chair of the Australian Renewable Energy Agency, Martijn Wilder, calling for a green stimulus package like the European Green Deal, while former Howard government minister and Minerals Council chair Helen Coonan called [$] for a mining-led recovery. The sooner we can have that debate in earnest, and stop shadow-boxing, the better.
“He should just say where it came from … And if he won’t do it, the prime minister must make him come clean to parliament. Lying to parliament is a very serious offence. And we can’t have a circumstance whereby it is just swept away like it didn’t happen. You can’t have a circumstance whereby a minister simply is allowed to deliberately mislead parliament on multiple occasions and still sit there in the cabinet.”
Labor leader Anthony Albanese responds to statements from NSW Police that Energy Minister Angus Taylor could not have downloaded a fake City of Sydney annual report from the council’s website, as he told parliament in October.
Heath Minister Greg Hunt waxes lyrical about the coronavirus infection rate at a press conference this afternoon.
How Indigenous communities got in front of the pandemic
Remote Aboriginal communities across
Australia reacted swiftly and effectively to the COVID-19 outbreak. Their response reflects the disproportionate burden these communities often carry when it comes to infectious disease. Today, Amy McQuire on the pandemic and self-determination.
“Australian children living in poverty will experience exacerbated risk as a consequence of the COVID-19 school interruption … Subsequently, the equity gap will increase and for many the chance of recovery from the impact of living in these vulnerable contexts will be diminished. Importantly, there is a probability that across the education life course, the size of the vulnerable group will increase.”
A report by the University of Melbourne’s Graduate School of Education, made public by the federal government yesterday, warns students in need are most harmed by weeks of online learning during the coronavirus crisis.
“I am writing this from isolation, you’re likely reading it from isolation too. Every friend and acquaintance of mine on every continent is confined to quarters, separated from all but their immediate households. At the same time, they are somehow together in the same condition of enforced quarantine. The streets of nearly every major city in the world are still, their businesses defunct, in hibernation or limping. Each news bulletin begins with a death toll, and all of the segments of the news, from the finance to the non-existent sports report, are monopolised.”
“It’s no secret the system is already unfair for reasons of poverty and family violence, school resources, health and access. The end-of-year scores and certificates that open up the world of university, trades and employment are weighted to try to iron out these inequalities, but the COVID-19 pandemic has created new disparities and reinforced old problems.”
“The insults of age had been piling up for so long that I was almost numb to them. The husband (when I still had one): “You’re not going out in that sleeveless top?” The grandchild: “Nanna, why are your teeth grey?” The pretty young publisher tottering along in her stilettos: “Are you right on these stairs, Helen?” The flight attendant at the boarding gate: “And when you do reach your seat, madam, remember to stow that little backpack riiiight under the seat in front of you!” … Really, it is astonishing how much shit a woman will cop in the interests of civic and domestic order.”
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?
“We have not seen a shock hit this fast in any period,” said Treasury secretary Dr Steven Kennedy in this morning’s hearings of the COVID-19 Senate select committee. Kennedy defended the apparent delay in getting the federal government’s stimulus money out the door, after inquiry chair Katy Gallagher asked why just $10 billion of the $200 billion-plus in announced fiscal response measures had been spent. Making literally billions of dollars’ worth of payments within four weeks of their announcement was a rapid response, Kennedy said, and “from an administrative perspective, I’m incredibly impressed by what the ATO and Services Australia has been able to achieve”. As Kennedy himself acknowledged, that’s cold comfort to those in the community who are still to receive payments, whether it’s half a million businesses with lower or no cashflow continuing to pay employees while waiting for...
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