Pearls and Irritations

In last week’s truncated edition of parliament, Scott Morrison declared stridently that he did not have a crystal ball.

By this he meant that he could not be blamed for any previous pronouncements about the economy because coronavirus had made them irrelevant, assuming they were ever relevant in the first place.

And it also allowed him to say that he had no real idea of how or when things would get back to normal in the aftermath – except that the elastic band had well and truly broken, and would not snap back. The past could be forgotten, the future was unknowable, and even the present looked a bit hard to fathom. As someone had mentioned, the situation was unprecedented.

But his trusty Treasurer, the indefatigable (and fortunately disinfected) Josh Frydenberg was on hand to set him straight. Frydenberg was justly criticised for telling us nothing new in his state of the economy speech on Tuesday, but it did provide a succinct summary of what we already knew: we are up shit creek in a barbed wire canoe.

But not to worry: the government was paddling like buggery and even if it was unlikely to actually get us back to shore, it would at least do a lot of splashing about in the process.

The oars, as Frydenberg saw them, would be pretty much the usual ones, if suitably supercharged for the occasion:

reskilling and upskilling the workforce, maintaining our $100 billion 10 year infrastructure pipeline, cutting red tape to reduce the cost burden on businesses and the economy and tax and industrial relations reform as a means of increasing our competitiveness.

In case there was any doubt, tax reform did not, must not, be about more or higher taxes, even including the GST; it was about reducing company tax in the tired and discredited old formula of trickle down economics. And industrial relations reform was, as always, about plain old union bashing.

He would not hazard a guess about the size of the budget deficit, but most forecasters are looking at well over $130 billion. And the horrendous debt bill would take many years to repay – try about ten of them. And this was the good news; if there was to be a second wave of COVID-19 infection, and we had to reimpose the restrictions which are now being gradually lifted, the cost would be all but unimaginable.

Ominously, there was a series of mini-outbreaks all over the place last week – not necessarily a precursor to the dreaded second wave we have seen in other countries, but enough to worry both the politicians and the public at a time when a reassurance is desperately needed.

And the other bad news was Morrison filling in one of the gaps: reducing government spending, doubling down on his determination to end the necessary and worthy stimulus measures for which he has been widely applauded as soon as possible. So back to the dole queue and starvation assistance for the hapless victims who may have finally had a taste of what welfare actually meant. And as for the ones who missed out on the brief, current bonanza, what they don’t know won’t hurt them.

It better not, because suddenly there are a lot of them. On Thursday the bomb dropped: almost 600,000 extra jobs lost in April, nearly five percent of the workforce. The statisticians massaged this down to a rise of just one per cent in unemployment, mainly due to a big drop in the participation rate – a lot of people have simply given up looking for non-existent jobs, and, absurdly, are thus not included in the numbers.

And JobSeeker is also an effective masker – those on it theoretically remain employed, although whether they still will be when Morrison pulls the rug under them is highly problematic. And even if you accept the 6.2 per cent jobless statistic, it avoids the awkward reality that nearly one in seven classed as in work are underemployed, and wages growth have fallen to an all time low.

So being somewhere close to honest, not a known characteristic of the Morrison government, the real unemployment rate is already hitting the ten per cent mark with a lot more on the brink; even Morrison and Frydenberg admit that there is worse to come.

And they should know, because September, when they have promised that JobKeeper will end, is already looming. In the circumstances it is both silly and heartless of the gruesome twosome to keep rabbiting on about resilience, innovation, the great ability of Australians to turn disaster into triumph. The vast majority of those still standing are already on some form of welfare but if that is snatched away from them, they too will be socially distancing their way to Centrelink.

The wildly optimistic prediction that by then the jobs will be surging back – 850,000 of them by the end of July – is simply not believable., and is unlikely to be believed by the many thousands on the brink. It is certainly not believed by the economists, who keep warning that unemployment is a lag indicator – it rises very quickly, but takes a long time – years, in fact – to fall back to what we used to call normal levels.

And there is very little Morrison can do to hasten the process. Instead he is being forced to fall back on a wait-and-see policy, urging the states to ease restrictions and hoping that if anything goes wrong, they will be blamed.

But this is not what he wants: he needs to keep the momentum going, which is why we are still getting announcements, like the one on mental health, and ramping up of the we-warn-the-czar campaign on China.

Morrison needs to maintain the feeling of crisis, the idea that we are still in deep trouble (which indeed we are) and that he is the only one who can save us (which is considerably more contestable). And when the recovery has gone as far as it can be pushed, he needs to be the unquestioned saviour, the man of vision, courage and achievement.

It can be done, he could get lucky.

And he is no doubt praying with more than his usual fervour. Because if it all falls apart in September, a disillusioned electorate will be ready to give him a big kick in his crystal balls.

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