Morrison’s economic recovery plan dead on arrival

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Conservative political organs representing vested interests dialed the whaaambulance on the weekend. The AFR led them:

Amid the chaos that has supplanted the once-co-ordinated national approach to responding to the coronavirus pandemic, the federal government is trying to stick with the original plan.

As state and territory leaders spent the week freelancing over border closures and other restrictions, with each measure bringing increased hardship and inconvenience to people’s lives, Scott Morrison, apart from laying low to avoid questions on aged care, remained largely focused on the October 6 federal budget.

…Postponing the budget would “provide more time for the economic and fiscal impacts of the coronavirus, both in Australia and around the world, to be better understood”, Morrison and Josh Frydenberg said in late March.

“It will also ensure that the 2020-21 budget can set out the path to economic recovery.”

Before the Victorian outbreak erupted, thanks to twin failures in quarantine and contact tracing, things were tracking better then expected. On May 8, with the virus being suppressed, the states and Commonwealth leaders agreed at national cabinet to reopen their domestic economies and lift border restrictions by late July, with the aim of living in a COVID-19-safe economy.

…Despite the setbacks caused by Victoria, the federal government will not be deterred from its budget plans.

Yes it will. Just not yet. Which is pretty stupid politics. Don’t lead or get out front of it. Stick with a stone dead plan and be forced to change it. Then spin, spin, spin until you spew!

The assumptions of the AFR’s thinking on the virus are as obvious as they are fallacious. Its point of view is that the virus cannot be eliminated, that we must suppress it, that money is more important than lives, and any state that gets in the way of that must be bullied out of the way.

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Other conservatives are busy with their usual blame games. Gerard Henderson is typical:

For example, on July 14 ABC Online reported that “an elimination strategy would likely involve tougher lockdowns and has proved successful in New Zealand”. One of the commentators said that a really tough lockdown would prevent the need for a similar response at some later time.

Alas, this has not proved to be the case in New Zealand. It is not clear what is the cause of the resurgence of community transfer of the virus in New Zealand. However, Australian National University infectious disease physician Peter Collignon, is not surprised.

Speaking on Sky News’ The Bolt Report on Wednesday, Collignon said he “was always a bit concerned about this elimination term — because I think that’s very difficult to get but, more importantly, to sustain”.

Collignon is aware of the various theories about the virus cluster in Auckland. His essential point is that “one of the problems is that people who are young, 20s and 30s, often have minimal or no symptoms”. Consequently it’s easy for COVID-19 “to percolate below the surface for quite a long period … and then … it comes back”.

New Zealand had the toughest lockdowns in the whole of Australasia. But COVID-19 has not been eliminated. Victoria had the toughest lockdowns in all of Australia — but it has implemented an even stricter lockdown as it faces what appears to be a serious second wave of infection.

Meanwhile the economic consequences of the lockdown continue to wreak harm on Australia’s businesses and the nation’s mental health.

With respect, it beggars belief that the virus percolated for 102 days in the youth of New Zealand before resurfacing. Clearly somebody was still infectious when they left quarantine recently, or managed to skip it altogether, for one reason or another. Re-eliminating the virus ought to be a simple matter with a short hammer lockdown.

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Meanwhile, the New Zealand economy has tracked much better than the Australian and letting the virus out in New Zealand instead would end in far more livelihoods being ruined. It will deploy appropriate fiscal support and the RBNZ is FAR more active and innovative than the shockingly conservative RBA.

The truth is, the conservative loon pond long ago mistook ideology for reality and this tangled politics and pragmatism distorts the truth facing the Morrison recovery plan. You can blame whatever and whoever you like but it just won’t work. Mike Seccombe at The Saturday Paper makes the point well:

An Essential poll, conducted last weekend and released on Monday, asked 499 Victorians how the outbreak had affected their view of Andrews. Forty-four per cent said they viewed him either much more favourably (24 per cent) or a little more favourably (20). Another 26 per cent said it had made no difference. Only 29 per cent thought less of him.

Curiously, this regard does not seem to translate into support for his government – only 49 per cent thought it had done a good job – just as Morrison’s high approval numbers have not seen any significant lift in the polls measuring federal voting intention.

Even more significant, though, is that the survey found overwhelming support for the Andrews government’s imposition of tight lockdowns – stage four in Melbourne and stage three elsewhere in Victoria. This is despite the economic and social consequences, and the evidence that it was a failure of government hotel quarantine measures that allowed the virus to escape into the community.

By a margin of better than four to one, respondents thought the restrictions appropriate and likely to be effective in stopping the spread of Covid-19.

These results are no surprise to Kosmos Samaras, a former Labor Party official and now director of RedBridge Group Australia, a political/management consultancy based in Melbourne. RedBridge has conducted a large number of focus group interviews across Australia over the course of the coronavirus epidemic, concentrating on Victoria since the second lockdown.

“To summarise thousands of interviews,” he says, “most people’s feedback – to date anyway – has been, ‘This is not something we’ve ever experienced. I don’t expect politicians to get everything right. I expect mistakes to be made. We need Daniel Andrews to succeed.’

“The same goes for Scott Morrison. People want him to succeed.”

And no doubt, just as Andrews made mistakes in hotel quarantine, Morrison has made mistakes. As journalist Niki Savva, a former Liberal Party staffer, pointed out in The Australian on Thursday: “At almost every critical point on almost every contentious issue, he has been forced to shift position.” She enumerated some, including waiting too long to block travel from the United States, opposing school closures, wage subsidies and pandemic leave, and suspending parliament.

And that is only a partial list. Other issues include his early insistence that the economy would snap back quickly, and that JobKeeper and JobSeeker would end in September.

A long-time political operator, who is no fan of the prime minister’s, said he admired the political flexibility. “Morrison’s very agile,” he said. “He shifts his position constantly, without any apparent embarrassment.”

But in relation to lockdowns and border closures, he was not so agile. No sooner had the first Covid-19 wave passed than he and his federal and state colleagues began agitating for the states to open up. Criticism for being too cautious was largely directed at the Labor governments of WA, Queensland and Victoria.

The criticism fell most heavily on the Palaszczuk government, which faces an election on October 31. It looks like being a tight contest, despite Palaszczuk’s personal approval rating.

Before the reopening of Queensland’s border, Morrison went in very hard, as did the Queensland Liberal National leader, Deb Frecklington, and others.

“There was lots of tough talk about how this was outrageous,” Katharine Gelber, head of the school of political science and international studies at the University of Queensland, says of the border closure.

Then came the second wave in Victoria. “Those people have all gone very quiet now,” she says.

Attacking Palaszczuk and Labor on economic grounds might have seemed a good idea at the time, but it probably wasn’t, even then. At the end of May, The Australia Institute commissioned a survey of voters’ attitudes on border closures across the four largest states. It found 77 per cent support for them. It ranged from 70 per cent in NSW to a whopping 88 per cent in the west. In Queensland it was 78 per cent.

Bottom line, says Samaras, is that the conservatives badly misread the public mood. Most people are more concerned about contagion – “literally a life and death issue” – than about the economy.

“They’ve seen what’s happening around the world. They know how bad this can get,” he says. “Their contrast is Trump.”

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There will be NO border reopenings until there is NO virus. Neither state nor, therefore, international (notwithstanding today’s insane move on 300 foreign students). Both virus suppression and elimination are all or they are none.

If you’re not basing your recovery plan on this bedrock reality then you are either corrupt or stupid.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.