New concerns surround the government’s increased use of legislative powers to bypass the parliament and create laws that cannot be amended or overturned. The federal government has embedded special powers in new Covid-19 laws to make unilateral changes to non-pandemic-related legislation, using what are known as ‘Henry VIII clauses’ – named for the unchecked power they involve.
Unplugging the economy’s life support
At the National Press Club on Tuesday, Scott Morrison went all medical as he framed his prescription for economic recovery. Key ministers in the room smiled their nodding approval when he said: “At some point you’ve got to get your economy out of ICU. You’ve got to get it off the medication before it becomes too accustomed to it.”
No one doubts that Dr Morrison and his consulting team got the diagnosis right eight weeks ago when – with “a big gulp”, as he revealed on Sunday – they realised the economy was failing fast. They knew what they needed to do and, in Morrison’s telling, “didn’t flinch”. Rushed out the door in a matter of weeks were $210 billion worth of job subsidies, beefed-up unemployment benefits and other stimulus measures. There is, however, every indication the government is beginning to flinch right now about the ongoing treatment.
It may come down to an understanding of what the prime minister means when he says, “Now it is true that, in the short term, demand stimulus by government can boost your economy.” He says this is why the treasurer and the cabinet “supported this as an emergency response”. But, he stressed, “it must only be temporary”. How “short” is “short term” and how “temporary” is “temporary” – we don’t know.
Earlier in his address Morrison gave an assessment of the patient’s progress, and it wasn’t reassuring. Australia is looking at a grim three to five years, as we are all “in uncharted territory”. During that time, he says, “we can also, sadly, expect unemployment and underemployment to rise before it falls, [and] debt and deficits to rise sharply, as costs rise and revenues fall”. He said this would “test our confidence and our resolve”.
It was notable that the prime minister came up with not one new number in his speech, and certainly no commitment to new stimulus. In fact, he, like the treasurer last week, was sticking to the September deadline for JobSeeker and JobKeeper payments to cease. No doubt he didn’t want to remind everybody of the biggest error ever made in budget calculations – on the cost of the job subsidy program. It was a mere $60 billion overshoot that Treasury and the Australian Tax Office fessed up to at the end of last week. One Labor wit observed “the only new numbers were the page numbers of the speech”.
Morrison is now into “JobMaker” mode – another marketing slogan that for many is wearing thin, especially because it is thin. He says, “We must enable our businesses to earn Australia’s way out of this crisis.” But there is not a reputable economist in the country who thinks business has the grunt to do that without billions more injected into the economy by the government.
Economist Stephen Koukoulas points out that the biggest casualty of the $60 billion “mistake” is in fact the size of the economic stimulus that the government had committed to. Maybe it is just bravado, but the prime minister and the treasurer claiming it was good news – because that’s $60 billion they don’t have to borrow, thus “saving future generations” – is dangerously misguided. Koukoulas says: “It amounts to 6 per cent of GDP on a half-yearly basis. It’s massive.” In the scheme of things, it is quibbling over the level of spending needed to avoid a crushing recession.
Economics writer Ross Gittins puts it starkly in The Sydney Morning Herald: “If Scott Morrison lacks the courage to spend as much as is needed – as it seems he may – he’s likely to be kicked out at the next election because we’ll still be languishing in a recession that’s deeper and longer than it needed to be.”
Deloitte’s Chris Richardson has been making a similar point of the government needing to spend a lot more to revive the economy. We need the cabinet to gulp again, and maybe it will in the October budget, although the prime minister’s rhetoric is doing nothing to suggest that. Morrison quoted a Depression-era American labour leader, William Green, to explain his fiscal fear: “We cannot indefinitely support one-sixth of our population on money borrowed against future taxes.” Except that’s exactly what then president Franklin Delano Roosevelt did to lift the United States out of the rubble of the Depression.
Two weeks ago on ABC Radio – before the $60 billion costing error – Assistant Treasurer Michael Sukkar helpfully suggested that if only half the six million workers needed to be covered then “there’s more of a likelihood of wholesale changes” to extend the eligibility to casuals and others. He told Rafael Epstein that perhaps they would be “having a different conversation”. But as it turns out, not too different; a week later Sukkar backtracked on the same show. That leaves five million Australians, covered by either JobSeeker or JobKeeper, with the prospect that their support will collapse to the $40 a day of the old Newstart payment. According to an ABC–Vox Pop Labs survey, 57 per cent of Australians would find this outcome unacceptable.
Morrison’s mind may be focused by the looming Eden-Monaro byelection, to be held on July 4. The electorate has been particularly hard hit by the shutdown of tourism, first by the bushfires and now by the virus. At his first appearance on the campaign trail last weekend, Morrison was trumpeting his spending largesse rather than foreshadowing its contraction. His immediate problem is much of the $75 million of direct support he boasts of has been slow to materialise.
Nowhere has it been slower than in Cobargo, the small town closest to Liberal candidate Fiona Kotvojs’s home. Her first appearance with the prime minister was safely hundreds of kilometres away, at Murrumbateman, in the north of the sprawling electorate. Cobargo, you may remember, was where, in early January, the locals gave Morrison a hostile reception after his Hawaiian holiday at the height of the bushfire catastrophe.
The byelection will give the hitherto bellwether seat a chance to be represented again by a member of the governing party. Labor strategists are taking no consolation from the fact it has been 100 years since a government has won a byelection from the opposition: the last time it happened, there had also been a pandemic.
Whoever is the underdog – and both major parties are putting their hands up for the title – the byelection is being hard fought and will be tight. The first week both parties were out campaigning coincided with the beginning of the Royal Commission into National Natural Disaster Arrangements, otherwise known as the bushfires royal commission. Evidence from the CSIRO and the Bureau of Meteorology left no doubt there was a strong link between the intensity of the fires and climate change. The “Black Summer” played out exactly as scientists had predicted it would. CSIRO chief research scientist Dr Helen Cleugh told the commission that reducing global emissions would help reduce the severity of future disasters, but some were already “locked in”.
Kotvojs, despite having an honours degree in coastal geomorphology, disagrees with the scientific consensus about the impact of climate change on rising sea levels in the South Pacific. She published an article on it last August. In the 2019 election, according to Labor campaigners, she did little to hide her scepticism. But what a difference a catastrophe can make, not only to her views but also to public opinion in the badly singed electorate.
On Sunday, with Morrison standing beside her, Kotvojs leapt at the opportunity to reset the record – straight out of the government’s talking points. In answer to a question about whether she believed in a zero emissions target by 2050, she thanked the journalist for giving her “the opportunity to make clear my position on climate change”.
Kotvojs dodged the 2050 target date, but said she believed the climate was changing. She continued, “I believe that humans contribute to that changing climate and I believe that we need to have a reduction in emissions.” She said Australians’ take-up of solar power, the highest per-capita rate in the world, was “fantastic” and her own home was “completely off grid [and] runs on solar”. Morrison said the government was helping the economic rebuild with the “gigantic” Snowy 2.0 project, which has enormous benefits across the region. He said it was all part of the government’s plan to “get communities back on their feet as they look optimistically forward to that future”. The Tuesday speech was, according to the prime minister, an early instalment of the plan. His focus on reskilling and upskilling the workforce with reforms to technical and vocational education is a hoary old chestnut that his and other governments keep talking about while slashing funding to the sector.
Morrison’s invitation to the Australian Council of Trade Unions to join planning for an industrial relations shake-up is certainly a first for a Liberal prime minister. It was welcomed by Labor’s Tony Burke, who also noted “so far no jobs have been created” – just a set of meetings.
What the voters of Eden-Monaro make of the government’s mixed messages on debt, spending and the environment is as unpredictable as the toll of the pandemic.
This article was first published in the print edition of The Saturday Paper on May 30, 2020 as "Unplugging the life support".
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