2020 and beyond. Comeback, but to what?

Dec 31, 2020

Scott Morrison’s government has been spruiking its life and economy saving program named Comeback on television and digital platforms. This means comeback from the unexpected changes imposed on individuals and the economy in 2020 by the COVID virus. But comeback to what?

The Comeback is an advertising campaign designed to persuade an exhausted public that Job Seeker and Job Keeper will bring the economy out of the hole in which it landed due to the virus and return it to some kind of normality perhaps recognizable from past years. It is responding to the events of 2020, a year almost unique if judged by the last two decades. Above all, the response to the virus has required the LNP to abandon its habitual anathema towards increased government expenditure for the benefit of the entire economy, instead of focussing only on the top ten percent.

There are two sides to this: firstly, the economies of the individual states have been severely diminished by the downturn in economic activity dependent on changing work patterns and the severe reduction of economic activity due to the necessity for many people to be quarantined and for states to close their borders. Secondly, is the federal government’s massive expenditure through Job-Keeper and Job-Seeker, and the proposed tax cuts.All of this has required considerable and immediate government expenditure to stimulate the economy. It has put paid to any possibility of a federal budget surplus for a number of years.

Comeback says, ‘The economic recovery plan is about rebuilding the economy and creating jobs, and includes measures that will benefit individuals and households.”? But will Comeback really do all that is claimed for it? All the evidence is unambiguous that the economy has been running down under the Coalition government since 2013, with increasing income inequity, dramatically increasing tax evasion by large corporations, malfeasance by the large banks, and consistent underpayment of workers–especially casuals on short term visas–in many areas. Despite the odd royal commission nothing of real substance has been done to change these underlying conditions which have led to a flattening of the economy, severely muting the media’s continued cry of Australia enjoying 24 years of continual growth and, on that measure alone, outflanking all other advanced economies.

Job Keeper and Job Seeker are designed to give the impression something positive is being done, and they roll nicely off the tongue. But when both are progressively wound back, with Job Seeker at the end of March, the short-term demand that has been created will inevitably decline. And with the new industrial relations legislation that is designed to further weaken the power of the unions, the diminishing of aggregate demand will be further exacerbated.

Leaving aside COVID 19, the social and economic effects of which will take considerable time to play out, the two large events of 2020 were the horrendous bush fires in January and February, and the ongoing attacks on China instituted above all by the Prime Minister and then by other ministers with the support of the main stream media.

Whilst the memory of the bush fires will have diminished in the face of the immediate effects of COVID– hundreds dying in Victoria, curfews and mask-wearing–, it was significant that some leading country fire fighters in various states came out attributing the severity of the fires in part to climate change. For some of the time the PM was on holidays in Hawaii, but even when he returned he fobbed off questions about climate change. He continues to do this, even under the censure of most of the Pacific nations and many others, with the notable exception of the USA, though that will hopefully now change.

Consistently the LNP has refused to accept the reality of anthropogenic climate change and even though Australia now seems to be an international pariah, this government is still strenuously resisting taking meaningful measures to reduce carbon emissions and develop the renewable economy. No doubt Comeback will not stop this from continuing, even where individual states are beginning to play the role the federal government should take. Even today there has been a new report on the effect of climate change on diminishing water flows in the Murray Darling Basin with its attendant effects on food supply.

As for China, the damage seems to be done and it was all to impress the former president of the United States and as an appeal to a latent racism in a certain part of the Australian population. The damage it will do to Australian exports (and GDP)–40% of which go to China–and the effect on imports from China to Australia, will take several years to determine, though it might be concealed for a short period by the rising price for iron ore.

Given the extent to which China is one our main trading partners, this has been an unmitigated disaster, and reminds one of Australia’s attitude after 1949 when we traded agricultural resources with China whilst refusing to recognize the legitimacy of the communist regime. It too will reduce the capacity of Comeback to bring the economy back to what it might have been, even though it has been declining over the past seven years.

Perhaps unsurprisingly, for its stimulatory activities during the COVID crisis the LNP has seemingly been given a slight boost in the polls. Anthony Albanese and the ALP are considered by most commentators to be struggling, with the expectation that the government will be returned at the next election whenever that is to be held.

There is no doubt 2021 will be a transitional year. But Comeback will remain what it essentially was intended to be, a marketing gimmick enabling the LNP government to continues the policies it has so successfully used in running down economic activity even before COVID hit the country. One can only hope we do not have a comeback to previous economic conditions over the past seven years, though that is probably a false hope.

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