Paul Bongiorno
An economy on life support

It’s been a long six weeks since Australia’s governments first imposed economy-crushing lockdowns to flatten the coronavirus curve. Scott Morrison has no doubt the pain has been worth it, saying “thousands of Australian lives have been saved”. Now he’s leading the charge to get back to business as soon as possible. He adds the qualification “safely possible” but he is taking a huge gamble, risking a relapse that could only lead to a deeper recession.

Treasurer Josh Frydenberg spelled out the gruesome detail of the economic havoc at his National Press Club appearance. The economy, he said, is likely to shrink by a whopping 10 per cent in the June quarter, the equivalent of $50 billion. And he said an eight-week lockdown like Europe’s would more than double the damage.

The scenario was stark enough for the prime minister to blow the whistle. At his post-national cabinet news conference on Tuesday, he said that just having the low number of Covid-19 cases “is not success”, particularly in light of the fact “you’ve got a lot of people out of work”. That “lot” is close to a million in just one month, according to Treasury’s analysis.

“That is the curve that I am looking to address now,” Morrison said. He continued: “We have had great success on flattening the health curve, and that is great … but it has come at a price and we now have to start balancing that up.” On Friday, Morrison and the premiers mapped out a three-stage strategy to get “a million Australians back to work” in what he calls a “sustainable Covid-19 safe economy” by July.

There is a bit of fudging going on about just how this can be delivered. Morrison is placing great store by the COVIDSafe app as an almost infallible way of tracing infection outbreaks, which he concedes will happen when the restraints come off.

In mid-April, the prime minister told radio station 6PR that you would need at least 40 per cent of Australia’s population to download the app for it to be effective. Now he says he is aiming for 40 per cent of the country’s 16 million smartphone users. The much lower figure, just 25 per cent of the population, casts even more doubt on the claimed usefulness of the device.

Morrison’s desperation to get the economy off life support has been frustrated by the reluctance of certain premiers, Victoria’s Daniel Andrews in particular, to reopen schools. The prime minister pointed to the Treasury analysis that attributes 304,000 job losses to school shutdowns as yet another reason to lift restrictions. But he was keen to also say that it was the premiers’ prerogative, not his.

It was a diplomatic and necessary caveat, after the botched job his Education minister, Dan Tehan, did with his attack on the Victorian premier. Tehan went on Insiders, no doubt with riding orders to put pressure on Andrews. The trouble was he overegged it.

Tehan accused the Victorian leader of taking a “sledgehammer” to education in his state and of a “failure of leadership”. Morrison watched on in horror, fearful the delicate consensus he had achieved with the national cabinet could be damaged if the outburst went unchecked. He called Tehan after the interview and told him to retract the criticism. Within four hours the minister had issued a statement – he “withdrew” his remarks, but he didn’t say he was sorry.

Premier Andrews’ caution is shared by a majority of Australians, if an ABC–Vox Pop Labs survey of 2225 people is any guide. It found most Australians may not be ready to go back to normal, even if coronavirus restrictions are lifted. It found only about one in eight Australians would attend a large event, even if they were allowed; fewer than one in five would board a plane; and only 40 per cent would go to a bar or restaurant. Forty-one per cent of respondents thought it would be 12 months or more before things are “more or less back to normal”.

These opinions are broadly in line with the Reserve Bank governor’s analysis that, even in the best-case scenario, unemployment will remain high and the economy weak well into next year. “On the other hand,” Philip Lowe said, “if the lifting of restrictions is delayed or the restrictions need to be reimposed or household and business confidence remains low, the outcomes would be even more challenging than those in the baseline scenario.”

Journalists at the National Press Club were taken aback when the treasurer, after painting his dire economic scenario, stood by his six-month time limit on his multibillion-dollar JobKeeper and JobSeeker payments. Frydenberg, like the prime minister, apparently still believes that once the one million people go back to work in July, the situation will rapidly spring back. But he also assumes the 4.7 million people on the $1500-a-fortnight job subsidy will have jobs to go back to.

The ABC’s Andrew Probyn reminded the treasurer that he said unemployment goes up rapidly in “an elevator” and comes down very slowly by the stairs. In fact, in his speech, the treasurer said it took seven years for unemployment to return to pre-1990s recession levels. Probyn asked, “Are you seriously putting to the nation that the JobSeeker payment – the higher JobSeeker payment – will return to the rather measly Newstart levels once the six months is up?”

The treasurer’s answer would have done Pollyanna proud. He said the government is “very conscious that the way to get people off the unemployment benefits is to get them back into the workforce, to encourage economic activity, and that’s why the lifting of the restrictions is so important. The quicker we lift those restrictions, the more economic activity we generate.”

Economist Nicki Hutley told The Project that if the payments were stopped, the economic impact would be catastrophic. She said at the very least they need to be phased out. Her Deloitte Access Economics colleague Chris Richardson says, “The task today is dealing with the virus. The task tomorrow is getting the unemployment rate down and that will begin with governments going harder, still spending more than they would like.”

The Labor Party has ratcheted up its criticism of the government’s botched design of the JobKeeper subsidy, a sure sign a byelection is in the wind. Shadow treasurer Jim Chalmers says the government’s own figures show it has undershot its own enrolment targets by more than a million workers so far. The $130 billion program was to fund six million jobs, but its complexity and exclusions have left those in the hardest-hit industries uncovered.

Casuals and young people in the tourism, catering, accommodation and food services industries, as well as arts and recreation, are missing out. But Frydenberg is adamant these gaps will not be addressed. Small business lobbyist Peter Strong, while welcoming of the scheme, says it is “incredibly complicated” and many small business employers struggled to get bridging finance to pay what for many are higher than usual wages bills through April.

Nowhere is this having a harder impact than in the highly marginal seat of Eden–Monaro, on the New South Wales south coast. The 106,000 enrolled voters will get their chance to pass judgement on the Morrison government’s handling of the health and economic crisis in the byelection to replace Labor’s retiring member, Mike Kelly. The sprawling electorate is reeling from the triple whammy of drought, catastrophic bushfires and the virus. Kelly at his farewell news conference said every aspect of the economy in the electorate “has been completely smashed”.

Labor’s candidate, Bega Valley mayor Kristy McBain, who won praise for her leadership in the bushfires, was out of the blocks campaigning the day after Kelly quit. The Liberals and the Nationals by contrast have been indulging in an unseemly preselection brawl that has bordered on farce and has undermined the standing of Deputy Prime Minister Michael McCormack.

The NSW deputy premier, the Nationals’ John Barilaro, is suspected by his colleagues of leaking vitriolic text messages accusing McCormack of failing to support his nomination for the seat because he “felt threatened” by him. Barilaro, who claimed polling showed he could win the seat, especially if the Liberals’ Andrew Constance didn’t run, said McCormack had “failed [his] team and failed as a leader”. Some of McCormack’s federal colleagues chimed in with criticism, exposing again the bitter rifts in the party.

Barilaro withdrew on Monday and yet another leaked story said he called Constance “a cunt” for breaking their understanding and putting his hand up to run. On Wednesday morning, barely 12 hours after holding a media conference to say he was nominating, the NSW Transport minister pulled out of an RN Breakfast interview at the last minute, telling a producer he had something to sort out. By midday he had confirmed he was no longer running. Labor could hardly believe its luck – an unseemly brawl “over who could get a better job for themselves”, as Chris Bowen put it, at a time when the community has so much more to worry about.

This article was first published in the print edition of The Saturday Paper on May 9, 2020 as "Riding the curve".

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Paul Bongiorno is a columnist for The Saturday Paper and a 30-year veteran of the Canberra Press Gallery.