But this week showed a hesitant government, dithering in making the necessary shift to the next phase – to move from an emergency rescue to a growth plan. When Treasurer Josh Frydenberg and Finance Minister Mathias Cormann presented the government’s fiscal and economic update this week, it exposed the void at the centre of Australian policy.
By the end of their joint press conference they were complaining that reporters kept wanting to know about the future and not just the past. “Everyone wants to talk about the budget today”, Cormann chided.
Frydenberg responded by ending the show with an explanation of why their statement was so inadequate: “As Mathias said, you would all like us to deliver the budget. That will be on October the sixth. What we’ve delivered today is a consolidation, a crystallisation of the decisions, more than 100 different measures that we have taken” since the mid-year update in December.
It was a statement of accumulated debt, deficit and the economic outlook. A stocktake. Necessary, yes. Sufficient, no. It wasn’t only the pesky press but also every business leader, investment planner, economist and concerned citizen in the country who wants to know what the plan is. Australia is suffering in the present and anxious about the future. National confidence has held up reasonably well in the circumstances, but it’s a delicate moment.
Every business, every worker, every investor, every family wants to see a purposeful national government with a credible and cohesive plan for recovery. There isn’t one. The government has a bucket of bits and pieces for patching things up but lacks a structured recovery plan.
A reporter on Friday asked Frydenberg what he could do to encourage people to have more babies. With immigration effectively suspended and a poor economic outlook, the government projects that population growth next year will be its lowest in a century: 0.6 per cent.
Frydenberg said that the solution was “to create a strong economy for them to be born into”. He pointed to policies to support families, too, including funding for child care.
While those conditions are necessary they are, again, insufficient. The decision to have children overwhelmingly depends on confidence. Confidence in the future of the country, the society, the economy, the household. Fertility rates depend ultimately on the same magic elixir as economic growth itself – confidence for the future.
Labor’s critique of this week’s economic statement was effective. “The defining feature was the fact that the government expects an extra 240,000 Australians to lose their job between now and Christmas but there wasn’t a single element of any kind of plan to respond to that situation,” said the shadow treasurer, Jim Chalmers.
“Today was a missed opportunity. The Australian people already know that things are grim in the economy. People are worried about their jobs. They have a right to expect from their government a plan to respond to that and didn’t get that today.”
To now, the opposition has been largely irrelevant since the pandemic struck. Partly that’s because, to Anthony Albanese’s credit, he’s chosen to be a responsible political leader. He’s not exploited the coronavirus crisis or fearmongered but he has made constructive criticisms. He was well ahead of the government in calling for a wage subsidy, what we now know as JobKeeper, for instance.
And partly Labor has been irrelevant because as long as the government has been observing the expert medical advice, the opposition is hardly better qualified than the epidemiologists. Labor has been wise to respect medical expertise, too.
But the economic situation is very different. It opens the first real opportunity for Labor to make some political inroads. And the criticism that the government has no plan for the future is a potent one.
The government shouldn’t get too cocky about the Prime Minister’s current standing in the polls. Scott Morrison has an exceptionally high approval rating. But the percentage of people saying they’d vote for the Coalition is not exceptionally high. In fact, it’s not budged since last year’s election.
Why the disparity? It’s because the people are cheering, not voting. Australians appreciate that Morrison is handling the crisis well and they are cheering him on – keep going! They have not reconsidered their voting intentions. That is a verdict for another day. And it’s that day that Morrison and Albanese need to have in mind.
The next federal election day could be anything up to two years away. The state of the economy will weigh heavily on voters’ minds. We know from long experience that the electorate doesn’t vote according to gratitude for past events but on expectations of the future.
So a plan for the future is a vital national necessity as well as a political one. The risk here is that, now that the urgent crisis is in hand, Morrison will allow the pollsters and political consultants to wield veto over the policy process. If he wants to consign the nickname “Scotty from marketing” to the dustbin of recent history, he will not do this. He will develop a fair dinkum plan, not one designed as an election slogan. Build the policy first; the election slogan can follow.
It’s a historic moment for Australia. A 30-year boom has ended in shattering collapse. Morrison can allow political timidity to take over and consign Australia to a second-rate future, or he can seize the opportunity to set the country up for a golden era. No prime minister will ever get such a good opportunity again.
Relapsing to a pre-COVID agenda – a tinpot political agenda of focus-group-tested tax cuts and deregulation – would be a betrayal. The governor of the Reserve Bank helpfully has explained why – pre-COVID Australia was already running itself slowly into the ground and will again. Australia was lacking “economic dynamism” before anyone had heard of COVID-19. “Unless we change something,” Philip Lowe explained last month, “we’re going to have a world of lower growth in Australia. And if that’s the world we’re in, we can’t just resolve that problem by continuing to borrow. Borrow to build the bridge, but we can’t borrow to address a slower growth world.
“What we can do is reform, and the list of areas where we should be doing reforms are well known – they include tax, infrastructure, human capital, industrial relations, entrepreneurship and R&D,” research and development. “If we don’t address those areas, we will just meander along with mediocre growth, and we can’t borrow our way out of that.”
This is a delicate moment where Australia is poised between political timidity and economic mediocrity on the one hand and real boldness and national rejuvenation on the other.
As he draws his plan for the national future, Morrison would do better to shut the pollsters and political marketers out and bring Lowe in. He doesn’t have a medical degree but he is an apolitical doctor of economics. Ambitious reform would be just what the doctor ordered.
Peter Hartcher is political editor.
Peter Hartcher is political editor and international editor of The Sydney Morning Herald.