News

As the government concedes Australia’s borders can’t reopen until mid-2022, concern is growing about damage to our reputation internationally. By Karen Middleton.

Business leaders push back against ‘fortress Australia’

Australian businesspeople working overseas are accusing the Morrison government of adopting a damaging “fortress Australia” mentality by not easing border restrictions for those vaccinated against Covid-19.

This week, the government’s big-spending federal budget hedged on the crucial issue of when and how the international border would reopen, suggesting it would not happen before mid-2022.

The prospect of another 12 months of closed borders has prompted an increasingly organised group of overseas-based Australians and foreign citizens with significant business interests in Australia to speak out. They are urging the government to set out a clear plan for reopening that involves more bespoke quarantine arrangements.

Among the group is Jacinta Reddan, former chief executive of the Australian Chamber of Commerce in Hong Kong, who has told The Saturday Paper that Australia’s lack of a plan to reopen is damaging its reputation as an open country that welcomes skilled migrants, visitors and investors.

“We feel Australia is at grave risk of missing out,” Reddan says. “As the rest of the world is opening up, is Australia going to continue to be this fortress island?

“Australia’s image has been tarnished and we need to not be so inwardly focused and really start to focus on the global recovery or risk being left behind. The short-termism is going to hold Australia back.”

This week’s budget included a firm assumption of “no extended or sustained” state border closures during the coming year, but only vague statements about both vaccination rollout targets and an international border reopening timetable.

That drew strong protests from the tourism industry, which fears the delay will spell the death of many businesses.

Qantas immediately pushed back the resumption of international flights planned for October to December.

Reddan wrote to Health Minister Greg Hunt and Trade and Tourism Minister Dan Tehan last week on behalf of the overseas group, which includes Australian businesspeople throughout the world. She urged the government to adjust its mandatory hotel quarantine arrangements for incoming Australians from low-risk destinations.

The letter said adopting a “fortress Australia” approach in the face of a global vaccination program “will only harm Australia’s long-term interests”.

“We urge the government to consider a combination of hotel and home quarantine for such Australian citizens as part of a sensible risk-based strategy,” Reddan wrote.

“A strict testing regime should remain in place to ensure the highest degree of vigilance … This would be no cost, close to zero risk and, importantly, no threat of jail for Australians wanting to come home.”

The group acknowledges that vaccinated people can still transmit the virus but is seeking more flexibility in the way quarantine is managed, based on the level of risk, favouring countries where virus circulation is low. Reddan said that would immediately free up quarantine capacity for Australians trying to get home, especially from India. This week, the Federal Court upheld the government’s ban on Australians travelling from India and threats of criminal penalties under the Biosecurity Act, although it still faces challenges on constitutional grounds.

The overseas citizens’ proposal reflects an approach recommended in the October quarantine review by former Health Department secretary Jane Halton.

Foreign investors are joining the call, including the Hong Kong-based owner of the Ovolo hotel group, Girish Jhunjhnuwala, who owns eight hotels in Australia.

A British citizen, Jhunjhnuwala has been told he still cannot come to Australia to manage his investments in the country, worth almost $500 million, and to which he has just added a property in Melbourne’s South Yarra. He oversaw its construction and fitout remotely.

“I just opened a brand-new hotel on Zoom,” he says from Hong Kong. “I built it on Zoom and I opened it on Zoom.”

He questions why – now he is fully vaccinated – he still can’t visit the properties.

“I need to not just look at my current investments but plan what I do next. I’m interested in new acquisitions and opportunities, and I can’t do that over Zoom. I’ve got 400 people there, but all key decision-makers should be there … I have a very able team but there are a lot of things you need to do face to face … There’s only so much you can do on Zoom.”

He warns that Australia is “really shutting its doors to foreign investment” in failing to move to a risk-based approach.

Australian Paul Hart, managing director commercial markets for real estate consultants Knight Frank, also based in Hong Kong, concurs that ongoing border restrictions are impacting investment.

“This will cast a long shadow over Australia,” Hart says. “It needs to be resolved … We’ve got to live with it [the virus]. We’ve got to start having a road map for opening up. Having a vague date is not helpful.”

This week, Hong Kong eased restrictions on arrivals from Australia and New Zealand and halved the length of quarantine for those who have been fully vaccinated.

“The Australian government has to look at these measures and how they’re being used elsewhere,” Hart says.

He also points to the need to encourage foreign students to return, suggesting they could be quarantined at the Northern Territory’s Howard Springs facility – or somewhere similar – and fee-paying or scholarship students from unvaccinated populations could be offered the vaccine as part of their package.

He says educating foreign students is a crucial arm of soft diplomacy.

There is no significant plan to bring in foreign students and no new budget support for universities, other than a $54 million program to support international research collaboration, part of which is coming from other programs.

Prime Minister Scott Morrison is making a political virtue of the apparently popular border closure, insisting the opposition’s questioning of his approach amounts to undermining Australians’ health.

“I will let the Australian people judge them for that,” he told parliament.

“… I can guarantee the leader of the opposition this: he may wish to fight me, but I am fighting this virus on behalf of the Australian people.”

The overseas Australians’ and investors’ concerns also highlight the slow vaccination program in Australia, with Morrison, Treasurer Josh Frydenberg and the budget papers all at odds over when the nation can expect to be fully vaccinated.

“The assumption is that every Australian who would like to get two shots of the vaccine will be able to do so by the end of the year,” Frydenberg told a news conference on Tuesday.

But the budget papers are much more noncommittal.

“It is assumed that a population-wide vaccination program is likely to be in place by the end of 2021,” the documents say.

On Wednesday, Morrison told parliament the government aimed to get “as many Australians vaccinated as quickly as possible”.

“The budget papers themselves make no reference to first or second doses,” he said. “It makes no reference to either of them.”

On Thursday, the minister for Senior Australians and Aged Care, Senator Richard Colbeck, said the “clear aspiration” was to have a first dose available by the end of the year.

“For it to be two doses, you would need to bring that forward significantly and that’s never been part of our plans,” Colbeck told ABC Radio National.

1 . The budget big picture

Tuesday’s federal budget was a significant departure from the austerity-inclined Coalition budgets of recent years. It has given rise to renewed speculation that an election, due before next June, could be brought forward to this year, despite Morrison’s denials.

Since the previous budget, released six months ago because of pandemic delays, the coffers are $110 billion better off than forecast, due to a rocketing iron ore price and boosted tax receipts.

The government has jettisoned concern about debt and deficit. The forecast deficit of $161 billion this year is $53 billion better than expected and improves again to $106.6 billion next year. But deficits in the years following are bigger than forecast previously.

Unemployment is set to fall to 5.5 per cent this financial year, to 5 per cent by mid-2022 and to 4.75 per cent in mid-2023.

Treasurer Josh Frydenberg says his budget will create 250,000 new jobs in two years.

“Jobs are coming back, the economy is coming back, Australia is coming back,” he told parliament on Tuesday night. “And this budget will ensure we come back even stronger, securing Australia’s recovery.”

Real gross domestic product (GDP) is forecast to increase by 1.25 per cent this financial year, and by 4.25 cent in 2021-22.

But real wages are declining. Wage growth of 1.8 per cent last financial year has been downgraded to 1.25 per cent this year. Wage growth will only increase by 0.25 per cent in 2021-22. Accounting for inflation, this amounts to a cut.

While welcoming the budget’s social spending, the opposition seized on the wage projections.

“Only a Liberal government could spend $100 billion, rack up a trillion dollars in debt and still have workers go backwards,” Shadow Treasurer Jim Chalmers said.

Independent economist Saul Eslake says the closed borders have helped prop up the budget, especially on unemployment. He says fewer incoming migrants mean less competition for jobs and a stagnant population growth means fewer jobs need to be created to support a healthy workforce participation rate.

“It’s a lot easier to get unemployment down in the local population if they don’t need to compete with migrants,” Eslake says.

2 . Spending boost for aged care

The spending centrepiece of this year’s budget is a $17.7 billion package for aged care, in response to last year’s critical findings by the royal commission.

There are 80,000 new home-care packages – although not the 100,000 plus that the royal commission said was needed to address the current waiting list – and 33,000 places for training aged-care workers. Other changes, including a minimum 200 minutes of care per resident per day, will be introduced gradually.

Providers will receive an extra $10 a day per resident, as the royal commission recommended.

The government chose budget day to also publish its full response to the royal commission. It accepted most, but not all, of the commission’s recommendations, rejecting the call for a new levy to fund aged care in future.

Council on the Ageing’s Ian Yates called the aged-care spending a “serious and meaningful response” to the royal commission.

“Older Australians are pleased to hear that the government says it is serious about improving the pay, skills and careers of aged-care workers,” he says. “Older Australians care about those who care for us.”

But there is no funding or strategy to address the broader issue of elder abuse, financially or psychologically – most of which is perpetrated by family members at home.

Diedre Timms of Elder Abuse Action Australia says while aged-care funding is important, not enough is being done to address abuse, most of which is perpetrated by family members at home. Estimates suggest at least 10 per cent of older Australians experience it.

“It could be as small as keeping the change to Mum’s shopping, up to selling her home and leaving her with nowhere to live,” Timms says. She says a study of the prevalence of abuse in Australia has been completed and is with government – but there is, as yet, no response.

“I think we actually need a really well-funded campaign about elder abuse,” she says. “Who’s doing it and how do we stop it? We need a system where we can encourage older people to ask for help.”

3 . More jobs, less tax

The budget includes a range of other big-ticket spending.

At a cost of about $18 billion, business tax concessions have been extended, including the instant-asset writeoff and loss-carry-back provisions, for another year.

For lower-paid individual taxpayers, the government has extended an effective tax cut, in the form of the low-and-middle-income tax offset for another year through 2021-22. Costing $7.8 billion, it is worth up to $1080 for singles earning under $126,000 and $2160 for couples.

The budget includes $15 billion for infrastructure projects across Australia and funding for apprenticeships and traineeships.

There are new tax breaks for brewers and distillers.

4 . Disability funding and mental health

There is another $13.2 billion for the National Disability Insurance Scheme, which is expected to cost more than $30 billion by 2024-25, overtaking the cost of Medicare.

The budget also includes what the government says is the single biggest funding injection for mental health – $2.3 billion particularly for suicide prevention and more Headspace support centres for over-25s.

5 . Immigration detention, defence and national security

Despite closed international borders and the operations of Border Force preventing asylum-seeker arrivals, the government has earmarked $465 million over the next two years to expand onshore immigration detention centres and extend the use of the detention centre on Christmas Island.

It says this is because the pandemic has limited its ability “to remove unlawful non-citizens from Australia”.

Defence spending is at just over 2 per cent of GDP, or $44.6 billion – a real dollar increase of 4 per cent on last year’s budget.

Another $1.9 billion is allocated to the Australian Security Intelligence Organisation and law-enforcement agencies.

Support for nest eggs

The government has expanded its housing support package, subsidising home buyers with small deposits, allowing access to more of their superannuation to buy a house and extending its HomeBuilder scheme so that the previous six-month construction deadline is pushed out to 18 months for existing applicants.

On superannuation, the budget lowers the threshold for paying the superannuation guarantee contribution to include people earning less than $450 a month.

The legislated proposed increase of the superannuation guarantee to 12 per cent is not addressed in the budget papers amid ongoing speculation that it could be dumped.

The budget also includes a measure allowing those who downsize their home to put $300,000 from the proceeds into superannuation.

6 . Women’s economic security

Following strong criticisms of its handling of issues relating to women, the government has included an 81-page women’s security statement worth $3.4 billion that includes $1.7 billion for childcare. Like many of the major measures, this had been announced previously.

The funding includes income and accommodation support for people experiencing family violence, as well as legal assistance and programs to boost online safety.

7 . Are there any cuts?

The budget also contains targeted savings. Foreigners taking up residence in Australia who currently must wait four years to access JobSeeker and Youth Allowance will now have waiting times extended similarly for all other government payments, from January next year, saving $671 million over five years.

Foreign aid is being cut by another $144 million.

A new employment-services model reducing face-to-face contact with job agencies from next July is set to save $860.4 million over four years.

And changes to magnetic resonance imaging (MRI) subsidies will save $107 million over four years.

8 . The ‘gas-fired’ recovery and other investments

On energy and the environment, the focus is on water and on gas. The budget contains $3.5 billion for a national water grid and subsidies favouring irrigation and dams, and it foreshadows opening up Queensland’s North Bowen and Galilee basins for gas exploration. Another $1.2 billion over 10 years will be devoted to investments in low-emissions technology. But there is little support for renewables.

A digital economy strategy is funded to the tune of $1.2 billion, with concessions to encourage research and development. A new concessions regime for patents seeks to encourage innovation.

9 . Arts, tourism and culture

There is another $300 million for the creative and cultural sector, which the government acknowledges continues to struggle. A billion-dollar aviation and tourism support package includes 800,000 half-price airfares, and targeted support for small tourism businesses.

10 . Labor’s budget response

On Thursday night, Labor leader Anthony Albanese presented his budget reply.

He focused on the budget’s real wage cut and offered policy proposals based on what he said were three principles: delivering for working families, investing in Australia’s future and leaving nobody behind.

In a crucial speech given his low approval rating against Morrison, Albanese said the Coalition had presided over “eight years of neglect” and accused the prime minister of “buck-passing and blame-shifting”.

He called the budget “a patch-up job for the next election” and “a showbag” that looked less good the next day.

“The past eight years have been very good to this prime minister – and his mates,” he said. “But has it been good for you?”

Albanese highlighted the absence of any budget funding for a national integrity commission.

He noted the budget’s indication that the government would build a production facility for the mRNA vaccine and said Labor would prioritise it, along with quarantine, which he accused the government of bungling.

Labor’s policy centrepiece is a new $10 billion “housing Australia future fund” for social housing, creating an estimated 21,500 jobs annually and building 20,000 new homes over five years.

Of those, he said 4000 would be earmarked for women and children escaping family violence, with more set aside for essential workers and veterans.

Labor also proposes start-up loans for innovative research and 10,000 new apprenticeships focused on renewables and energy efficiency.

Albanese said the government’s budget offered low growth, low productivity, low wages and a trillion dollars of debt.

“Is that really the best we can aspire to?” he asked.

“I want Australia to emerge from this crisis stronger, smarter and more self-reliant, with an economic recovery that works for all Australians.”

Working towards recovery is what they all have in common.

After the Coalition stole much of its script, Labor’s proposed path for getting there is now a lot narrower.

But the government still faces broader criticism from those who say they can’t see a map at all.

This article was first published in the print edition of The Saturday Paper on May 15, 2021 as "Business leaders push back against ‘fortress Australia’".

A free press is one you pay for. In the short term, the economic fallout from coronavirus has taken about a third of our revenue. We will survive this crisis, but we need the support of readers. Now is the time to subscribe.

Karen Middleton is The Saturday Paper’s chief political correspondent.