What is Scott Morrison’s plan?
The morning after the three-ring circus that is budget night in Canberra, Scott Morrison came close to telling the truth: that he and the treasurer are in fact flying blind.
Morrison repeated in his round of dawn media interviews that he has a plan, a very big plan. But if that is meant to sound reassuring, it’s mightily hedged by an economic reality that he almost admits is out of his control. Almost admits, because the $100 billion added in this budget to the $200 billion price tag of dealing with the Covid-19 pandemic guarantees nothing.
Australia’s situation may be the envy of the world, as we are being constantly told, but we are still as much a hostage to the virus as countries that have catastrophically succumbed to second and third waves.
Josh Frydenberg, in the budget lock-up news conference, admitted that “we do not know what’s around the corner with the virus”. Finance minister Simon Birmingham was more forthright. He said the key assumption of the plan was that Australia would continue to successfully suppress the spread of Covid-19.
Morrison told the government party room that their enemy is not the Labor Party but the virus. That was news to many, who are convinced this budget, the most pre-announced in memory, was all about wedging, isolating and defeating Labor in an election due anytime in the next 12 months.
Normally governments like to leave something for the treasurer to reveal during their moment in the spotlight, but not this time. Morrison is well aware that his path to victory will be as narrow as it was before. So, if something is worth announcing, it’s worth announcing ad nauseam in the hope the voters targeted by the Coalition will notice by the time they come to cast their ballot.
It’s assumed the Morrison government will replicate other incumbents throughout the federation and be easily returned. Yet the massive and continued spending suggests no such confidence around the cabinet table, and with good reason.
It is simply unfathomable how, on the two crucial tasks for suppressing the virus that are overseen by Canberra – quarantine and vaccination – the government has fumbled and is running for cover. This has opened up the strongest attack lines for an opposition aware that it’s at the business end of the electoral cycle. Labor also needs to overcome the attention deficit imposed on it by the pandemic drawing all the focus to the government.
The shadow treasurer, Jim Chalmers, set the scene for Labor’s question time attack on Wednesday when he said it beggared belief that the Liberals can “rack up a trillion dollars in debt and say nothing meaningful about quarantine”.
The budget has no policy objective on when our international borders will open. As soon as possible doesn’t cut it, and the line has an eerie resonance with another political hot potato target of net-zero emissions by 2050. The prime minister and treasurer aren’t sure how to spin this unwillingness to commit to a targeted date for fear failure to achieve it could have dire political consequences. It is the only explanation for why we are left with wishing, hoping and assumptions.
This political cowardice has the international tourism and education sectors furious. Their viability is at serious risk. The vice-chancellor of the Australian National University, Brian Schmidt, expressed his frustration on ABC Radio, pointing out the federal government has no plan to facilitate the return of substantial numbers of fee-paying foreign students. Plans put forward by the university to do so have either been ignored or rejected.
The government trumpets its half-billion-dollar expansion of the Howard Springs quarantine facility in the Northern Territory to cater for 2000 people. It will be an improvement, but the stranding of 9000 Australians in India, including 900 considered the most vulnerable, shows how inadequate this plan remains.
The budget could find $464.7 million to expand the immigration detention centre on Christmas Island, but this wasn’t for quarantine purposes – it was for detaining non-citizens awaiting deportation. When asked why there was no mention of the proposed $700 million quarantine facility in Victoria, the Finance minister assured that the funds were in the budget. Morrison said it was a very good proposal “and we’re working through the detail right now”. The lack of urgency, let alone federal initiative, is remarkable.
Queensland premier Annastacia Palaszczuk is on the money when she says the “most glaring omission from the budget was regional quarantine”. She says that returning stranded Australians, the gaps in the labour market caused by a lack of migrants, the return of foreign students and the return of international travel are problems “all solved with regional quarantine”. So far, her support for a regional quarantine hub in Toowoomba has fallen on deaf ears in Canberra.
The longer the pandemic continues, the more intense the arguments over quarantine have become. Epidemiologists warn that as Australia moves to reopen our international borders, it is “absolutely inevitable” the virus will spread. This certainly makes the stalled vaccine rollout less tolerable. Here, even Treasury has difficulty coming to terms with this reality, as did its political masters.
In Budget Paper No. 1, Treasury says the vaccine and treatment strategy began in February 2021 with “most priority populations having been vaccinated” already. But the prime minister told the ABC that more than 30 per cent of those aged over 70 have received the jab, which hardly translates as “most” in that priority cohort.
Treasury’s next claim had journalists in the lock-up news conference clamouring for clarity. “It is assumed that a population-wide vaccination program is likely to be in place by the end of 2021,” the department said. Simon Birmingham said that meant everyone who wanted it would have received their two jabs by then.
One enterprising scribe said that by his back-of-the-envelope calculations, that would require 1.2 million jabs a week. Last week, Australia managed just 400,000. The treasurer’s response – “not everyone wants to be vaccinated” – raises an even more worrying question: Whether trust in the vaccine has eroded to the extent that reaching herd immunity, or at the very least suppressing the spread of severe and fatal infection, has been compromised.
When Michael Rowland on ABC TV asked Morrison if every Australian will be fully vaccinated come December 31, the prime minister replied: “No. These are assumptions that go to the rollout, they are not policy settings.” He said the rollout would accelerate next week.
While government members seem increasingly confident the strength of the recovery will be enough to see them through at the election, that could well prove delusional. Not only because of the pandemic’s ability to wreck the rosier forecasts, but also because, as we saw in last week’s Essential Poll, the government is the one being blamed for the vaccine shambles, rather than overseas suppliers.
Chalmers says the “weasel words” in the budget don’t make clear when the prime minister thinks “the Australian people will be vaccinated so we can properly open up the economy again”. He says, “It’s been one humiliation after another for the prime minister when it comes to vaccinations. First the failed delivery promises and then the abandoned targets.”
These are issues that will remain long after the blizzard of numbers and claims in the budget has faded. Even if this budget is well received – and there are 100 billion reasons for believing it will be – the often talked about bounce is more a myth than a reality. Good budgets, ones with more winners than losers, tend to disappear. It’s the bad ones that hang around like a bad smell. The 2014 Hockey austerity budget is a case in point. Morrison and Frydenberg will be hoping the memory of that budget is well and truly buried under the weight of their historic huge spend.
But it may be harder to expunge the words Frydenberg uttered in his “back in the black” 2019 budget speech – sounding almost as flat as he did in this year’s address. Back then he said “our commitment to fairness means the next generation not having to pick up the tab for the last”. And the greatest virtue in almost achieving the holy grail of a budget surplus was that he was doing it “without increasing taxes”.
If that shibboleth remains etched into his Liberal soul, it must mean that a return to austerity will be needed to complete the budget repair. The pressure is already there to at least embrace Morrison’s medium-term budget repair policy framework.
Surely the nation would be better served if under the cover of the extremes foisted upon the Liberals by the once-in-a-hundred-year pandemic, genuine and fairer tax reform was attempted? But the signs are the vestiges of trickle-down economics will get in the way.
Frydenberg was asked how the government could afford to stay committed to the legislated $137 billion third round of tax cuts in 2024 in light of the $57 billion deficit he is forecasting for the same year. He said they would remain because they would stimulate the economy and they are still progressive in that the rich pay more. They also receive more – millions more – and do nothing to narrow the iniquitous widening gap between the 20 per cent at the top of the heap and the rest.
Still, if the forecasts in the 2019 budget couldn’t survive two years, the odds are even shorter of this year’s not holding.
There is no vaccine protection for the budget crystal ball gazers in this time of Covid-19.
This article was first published in the print edition of The Saturday Paper on May 15, 2021 as "A plague on all your forecasts".
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