Morrison governing from the rear

Oct 9, 2020

At the end of all the announcements in the budget of tax cuts and give-aways to the private sector to promote an industry-led recovery, Treasurer Josh Frydenberg had a somewhat unsettling (though it was not intended as such) rallying call: ‘The road to recovery will be hard – but there is hope. The Morrison government’s message to Australians is that we have your back.’

The phrase, ‘we have your back’, is rarely used in Australia. It’s originally a military term, much more common in the United States than here. It apparently is derived from the notion that a person going into battle will be defended from an enemy coming from behind. Its everyday meaning in the context used by Mr Frydenberg, is that the government will provide Australians with support, if required.

Its actually a reasonably apt description of the Morrison Government’s approach to the economic disaster triggered by the corona virus pandemic. The Government will stand by, in reserve. But it believes, and it is its strategy, that it is up to others to take the lead, to fight the battle.

A budget that spends so much that what was supposed to be a small surplus turns into a massive $213 billion deficit (a huge 11 per cent of GDP) – thanks in just a relatively small part to a decline in receipts – would appear to be breathtaking in its commitment to revive and revitalise the economy. Yet what is extraordinary is that the government can commit such enormous resources to that rescue operation while steadfastly refusing to provide leadership.

It is relying on taxpayers to spend their windfall refunds and tax cuts and for businesses to use subsidies to hire more workers and tax credits to invest in expanding their enterprises.

The government provides the money, but that’s it. There is some modest increased spending on infrastructure, on health, aged care and on training. Aside from last week’s indication of where the government would like industry to expand, the government’s approach is essentially hands-off.

Well not quite. It remains steadfast in its prosecution of the culture wars. It will do nothing of consequence to help the universities who were encouraged to expand their provision of educational services for foreign students and are now having to sack a significant proportion of academic and general staff. Additionally, in one of the few fields where the government is determining priorities, it is penalising financially those students who want to study the humanities and other areas of study that it has deemed unnecessary.

There is no relief for the ABC, but schools will have more money for chaplains. As for the arts…

The budget says a lot about this government. Nothing really has changed since the original reaction of the government to the crisis – its aim was ‘snap back’. Nothing has changed other than the scale, both the time-scale and the size of the economic hit that Australia took. But the Government’s aim remains the same: to return to the former status quo.

This is not one of those fabled crises that are not to be wasted – a crisis that this particular government might use to advance a particular program or set of policies. The Morrison Government’s only ambition appears to be to restore things to the way they were. It has no agenda to advance Australia, no vision for a post-Covid-19 future. Its Treasurer’s vision is rearward, his confessed and acknowledged heroes, Margaret Thatcher and Ronald Reagan.

While the tax cuts and incentives and other measures set down in the budget will be put into effect, their impact on the economy will depend not only on how taxpayers and businesses respond but also on some dubious but quite crucial forecasts contained in the budget. But in particular, everything depends on the impact of the virus, both here and overseas. That in turn probably depends on when a vaccine becomes available in Australia and throughout the world, how effective it is and how long it retains its potency. The medical experts say there will probably be one or more vaccines before the end of the year, but the remaining questions won’t be answered for a long time.

These forecasts in turn affect others, such as border openings – domestic and international – that will affect the course of the domestic economy.

Budget forecasts have been criticised in the past, but this year the doubters have been many and varied, ranging from those who consider them too conservative to others who consider them unduly optimistic. Yet we are already one quarter of the way through this financial year.

In the immediate aftermath of the budget, critics have been checking out the winners and the losers. The latter would seem to be quite numerous, and include women with children who want to work and anyone unemployed who is over 35 years of age.

But at least the Government can take comfort for the moment in that attention has drifted away from that other existential issue that many people think it should be facing up to: climate change.

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