“When the pandemic hit, the Prime Minister did the right thing by bringing in JobKeeper and doubling the JobSeeker payment – saving jobs and reducing poverty overnight,” says Cassandra Goldie, head of the Australian Council of Social Service.
“The main challenges now are to keep the fragile recovery going and keep the community united and safe.”
It is a sound assessment of what matters most. There is a political challenge ahead, of course – holding power – but talk of an early election is overblown.
Australians will not reward Morrison for playing games with election dates while they try to escape a virus that has killed two million people worldwide. His team knows this.
Yes, the government could go to a standard half-Senate election at any time from August 7. But why speed up the political cycle when Morrison thinks he has the edge over Labor Leader Anthony Albanese? Morrison could wait as long as the last possible date for a half-Senate election – May 21 next year.
Labor’s frontbench reshuffle on Thursday might take the fight up to Morrison, but Albanese presides over a peevish, unruly caucus.
Patience could bring its reward for Morrison if the vaccines work, the economy opens and growth rebounds. If. If. If. Everything comes down to competence.
The best advice comes from Health Secretary Brendan Murphy. “I don’t want to predict more than two or three months ahead,” he told the ABC two weeks ago. That holds true for the politics as much as the science.
Life after JobKeeper
Protecting jobs took priority in the $101.3 billion JobKeeper scheme, which was meant to last six months but will run for a full year by the time it stops at the end of March. The government is planning to stick to that deadline.
“It will be challenging when the big Band-Aids, notably JobKeeper, come off,” says Deloitte Access Economics director Chris Richardson.
“Businesses will go bust and jobs will be lost. But it is probably fair to say that, as of today, that looks a lot less dangerous than it did a few months ago.”
Morrison and Treasurer Josh Frydenberg have to decide whether to continue some form of aid for industries suffering the most from cabinet decisions like international border bans. Tourism, hospitality and education all want help. Should there be further programs to help industries still struggling?
“Yes, but they should be pretty limited,” says Richardson.
This year’s growth rate will not tell the whole story. Times will be tougher for many. Life in Australia cannot be the same without the growth from about 600,000 people – tourists, workers, students – who are not here.
Australia went into the pandemic with an unemployment rate of 5.1 per cent, a workforce of 12.98 million employed people and 703,600 unemployed people, on seasonally-adjusted figures for December 2019.
After a horror year, Australia emerged in December 2020 with an unemployment rate of 6.6 per cent. The country had 12.91 million people in work and 912,000 unemployed.
The most pressing decision is obvious for Goldie and many others: lift the Newstart rate to a permanent level that keeps people out of poverty. She wants more spending on social housing and job creation as well.
“The Prime Minister’s legacy would then include a historic reduction in poverty among over three million people, including over one million children,” she says.
Richardson agrees. So does Business Council of Australia chief Jennifer Westacott. The government has to make an urgent decision before the temporary COVID-19 supplement ends in March. The rate is now $150 per fortnight, after starting at $550 per fortnight last April.
Morrison has a workplace reform agenda, led by Attorney-General Christian Porter, but his ambitions will disappoint those who want substantial change. On this and other questions, his team does not see 2021 as a year of sweeping reform. The pandemic takes priority.
Have we run out of fiscal firepower to stimulate the economy?
“No, we haven’t,” says Richardson. With interest rates so low, the cost of the debt is falling even as the debt grows. Richardson does not expect Australia to need another stimulus of the scale seen last year. “It depends on the chance that more bad things come our way,” he says.
If Morrison needs to spend more, he can do so, fast.
The vaccine rollout
The strength of the recovery depends on the speed of the vaccine production line. Morrison is hostage to vaccine nationalism in Europe and the capacity of the CSL factory in Australia – the first because it can interfere with the shipment of 10 million Pfizer doses from Belgium, and the second because it is due to ship 50 million AstraZeneca doses from Melbourne.
But the logistics are up to Morrison and Health Minister Greg Hunt. Only some of the decisions are about when it starts. The “how” of the rollout is crucial because a new infrastructure has to be built to test every batch, transport every vial and ensure clinical advice and consent with every jab.
The Pfizer vaccine must be stored at minus 70 degrees Celsius but remains safe and stable for up to five days after being thawed, as long as it is kept between 2 and 8 degrees.
A division of labour is taking shape. State and territory governments are setting up the hospital hubs that will serve as the major Pfizer vaccination points. Canberra is taking responsibility for aged care – as it should after the failures last year when 678 died in homes that did not get help fast enough.
Some decisions are yet to be finalised, such as the names of the medical contractors that will go into aged care homes to vaccinate residents and staff.
Federal authorities are fielding suggestions from GPs and pharmacies on how to cope with the queue of patients getting two COVID-19 jabs three weeks apart and then getting a flu vaccine at least two weeks later. (Or earlier, depending on where that person is on the priority list for COVID-19).
The government has a $23.9 million advertising campaign ready – the pictures began airing this week – but it does not have public answers, yet, on the fundamental logistics.
The agreements with GPs and pharmacies are federal decisions that need huge spending. As the Grattan Institute’s Stephen Duckett wrote on Thursday, doctors are being paid $30 for daytime first vaccinations but get more for out-of-hours jabs. Duckett thinks the scheme needs work to make it more efficient.
Some clinics say they will need to open on Sunday to meet demand, which means a higher payment for every jab. The workforce, not the money, is the likely constraint.
Hunt talked on Friday of having a “single, simple front door” for all Australians to find out where they can be vaccinated. The address is yet to be revealed. The government’s fate may depend on whether that door, and everything behind it, works smoothly.
Morrison suffered a real rebuff in December when he was turned away from a climate summit in London because he would not match other leaders in committing to net-zero emissions by 2050. British Prime Minister Boris Johnson had asked Morrison to attend online, but other countries vetoed the idea.
This cost Morrison nothing among the Coalition’s conservative base, but that base is too small to keep the Prime Minister in The Lodge. He needs a better answer on climate to satisfy the wider electorate – and avoid being an outlier at every future summit.
The government’s immediate target, to cut emissions by 26 to 28 per cent by 2030 on the levels of 2005, is dismissed as inadequate by those looking at the science. Australian National University professor Will Steffen and fellow members of the new Climate Targets Panel estimate the nation must reduce emissions by 74 per cent by 2030 and reach net-zero by 2035. Steffen says this is the way Australia can do its share to limit warming to 1.5 degrees.
Morrison cannot go that far. The Coalition party room would revolt, just as it did against his predecessor Malcolm Turnbull. With some of the Nationals demanding a new coal-fired power station, and some of the Liberals dismissing climate science, the Prime Minister promises all things to all people.
This means more gas fields, more coal mining and a technology roadmap that is supposed to cut emissions. A smaller economy will do some of the work to reach the target, but the roadmap is a promise, not an outcome.
Morrison has one tactical advantage: a divided Labor Party. Albanese has to bridge a gulf within the caucus on how to appeal to blue-collar workers without sacrificing ambition on climate. He commits to net-zero by 2050 but hedges on whether to adopt an interim target for 2035.
The rise of Joe Biden to the US presidency changes the dynamic. Morrison will find it more difficult to hold out on net zero. Biden’s climate envoy, John Kerry, says “all nations must raise ambition together” at this year’s climate summit in Glasgow in November. Without a meaningful pledge, Morrison could be shunned again.
Some within the government believe Morrison could make that pledge. He would only commit to net-zero by 2050 if he could point to results that show Australia is on a path to the target without great cost. Armed with that, he might overcome the Nationals’ scaremongering. Some of his allies think it possible.
A decade of failure will be confirmed when the royal commission into aged care delivers its final report on February 26. Morrison, the man who set up the inquiry, has a personal stake in acting on its findings. He has talked about spending more on the sector, but money alone will not be the solution.
The government’s failure on aged care was laid bare in the commission’s interim report in October.
“We have found that the aged care system fails to meet the needs of our older, often very vulnerable, citizens,” it said. “It does not deliver uniformly safe and quality care for older people. It is unkind and uncaring towards them. In too many instances, it simply neglects them.”
One of the government’s former ministers, Concetta Fierravanti-Wells, believes the answer will have to be a structural change to the way people pay for care, the way homes are run and the way Canberra funds the providers. She says this as the Coalition’s spokeswoman on aged care before the 2013 election, the point at which she says the incoming Abbott government dropped the ball.
“More tinkering at the edges is not an option,” she adds.
Morrison chose not to overhaul aged care in his cabinet reshuffle last December. Aged Care Minister Richard Colbeck reports to Hunt, who is responsible for aged care at cabinet level and is already one of the busiest ministers in the government. The titles changed, not the personnel, and the question for the future is obvious. Does this team have the capacity to respond to the royal commission and the pandemic at the same time?
Morrison did not come to office as a hawk on China but now finds himself in a deep freeze with Australia’s biggest trading partner. Every move by China’s president for life, Xi Jinping, has dropped the temperature. Every response from Australia, such as vetoes on Chinese takeovers, keeps it down.
Is there a way out? Australian National University professor Hugh White says the opening days of the Biden administration have seen a new uncertainty.
“There is a real chance that we’re going to see this strategic rivalry between the US and China escalate sharply this year, as Xi sees Biden as a weak leader running a divided country with a huge domestic agenda – and decides to test him,” says White.
Today’s problems, such as China’s sudden bans on Australian goods, will seem small if those global tensions grow. The danger is already in the skies near Taiwan, where the Chinese air force has made a series of incursions.
“I think if Biden pushes back, the Chinese will push back harder,” says White. “And that’s how confrontations turn into crises and crises turn into conflicts.”
Morrison has tried to play down the idea of a strategic rivalry between Australia and China, but that may be meaningless if Biden sees China as a competitor to be restrained. Biden is more orthodox than Donald Trump, but the previous president only confronted Xi on trade. How Biden acts is yet to be seen.
“Of course we have a big interest in America preserving a strong role in the western Pacific,” says White. “But if the United States finds itself drawn towards a war with China, we have to be very conscious of how that war might look. This would not be something like Iraq or Afghanistan. This would be the biggest war since World War II. And it’s far from clear that America wins it.”
That is a dire scenario. White says the Australian interest is in doing everything possible to avoid it. As if the pandemic was not demanding enough on its own.
Five challenges. None easy.
David Crowe is chief political correspondent for The Sydney Morning Herald and The Age.