A way forward to COVID-19 economic recovery

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When a global pandemic cast a mighty shadow across Australia, the Prime Minister, premiers and chief ministers rightly recognised that their duty was to prioritise the health and safety of their people.

Philip Lowe. (Photo by Brendon Thorne/Getty Images)

But as some of the health concerns ease and our national, state and territory leaders begin to turn their minds to easing isolation measures, the focus will soon shift to the challenges of our economic recovery.

The recently released report from the Grattan Institute on unemployment in a post-pandemic Australia makes for sobering reading — especially for those in the eye of storm who have already lost their jobs.

Much of the heavy lifting in terms of formulating policy for Australia’s economic recovery will fall to the Morrison government. The path it takes will either make or break their political fortunes.

The government’s success in managing the COVID-19 pandemic in Australia was, in part, due to strong collective leadership, a focus on the common good and the abandonment of ideology or at least curtailing it. Prime Minister Morrison could do well to continue down this path as he prepares the government’s work on Australia’s economic recovery.

To date, most of the Morrison government’s economic packages could best be described as ‘economic welfare’. They are measures designed to limit the impact on the economy of the COVID-19 pandemic. The recovery phase will very much need to be about stimulating the Australian economy.

 

'The parameters for reform cannot simply be traditional economic ones. Instead, they must include consideration of the common good, so to ensure that the path forward doesn’t simply continue to perpetuate a society of haves and have nots.'

 

The business community is already lobbying for company tax cuts and rumours abound that ‘other revenue measures’ needed to provide government revenue should include an increase to the rate or a broadening of the GST. These are legitimate policy options for debate, but they must be considered in the context of a broader economic plan.

That plan cannot simply be one where Australia strives to ‘snap back’ to what we had before the pandemic: a time of insecure employment, high rates of underutilised labour, low wage and economic growth. Going back to what we had before the pandemic should not be the goal; we deserve much better than that.

The government will need to resist its conservative urges to do a rerun of its 2014 Budget play book of debt and deficit reduction. Austerity measures harmed many economies in Europe after the Global Financial Crisis and heaped significant social and financial pain on their citizens.

Instead, the government should consider an interventionist approach — one where it sets an ambitious economic growth target for the Australian economy that is supported by a strategy focused on social and economic policies that will drive innovation, productivity and a broadening of the Australian economy.

In his recent Economic and Financial Update, Reserve Bank Governor Philip Lowe suggested the best way forward for Australia is to ‘reinvigorate the country's growth and productivity agenda’. He went on to say that ‘there is an opportunity to build on the cooperative spirit that is now serving us so well to push forward with reforms that would move us out of the shadows cast by the crisis’.

‘A strong focus on making Australia a great place for businesses to expand, invest, innovate and hire people is the best way of extending the recovery into a new period of strong and sustainable growth and rising living standards for all Australians,’ Dr Lowe said.

The Morrison government must now focus on how best to grow the economy, building on our economic strengths while at the same time broadening our economic base. The way forward, much like the response to the pandemic, will require collaboration and cooperation between governments, unions, business and civil society.

The parameters for reform cannot simply be traditional economic ones. Instead, they must include consideration of the common good, so to ensure that the path forward doesn’t simply continue to perpetuate a society of haves and have nots.

The path ahead will require some tax reform, but not necessarily tax cuts. It will require industrial relations reform, but not reduced working conditions and job security under the guise of increased flexibility. Most importantly, it will require leadership that can imagine an Australia where we have full employment and a standard of living that is the envy of others.

A new economic vision for Australia is within reach. We must not miss the chance to reshape the Australian economy — one which builds on our national strengths and drives innovation and growth for a fairer and more sustainable country.

 

 

Joe ZabarJoe Zabar is deputy CEO and director of economic policy at Catholic Social Services Australia.

Main image: Reserve Bank Governor Philip Lowe. (Photo by Brendon Thorne/Getty Images)

Topic tags: Joe Zabar, COVID-19, economics, auspol, stimulus, Morrison government

 

 

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Existing comments

That "new economic vision" sounds so exciting to look forward to... but when we eventually emerge there'll be a few culture shocks throughout the economy. All our cities will have been experiencing months of empty CBDs and we may have learned that those very expensive office premises aren't as necessary to the balance sheet as previously was untested. I don't doubt many will be reluctant to return to a couple of hours of daily commute at their own expense if they can demonstrate "work from home" was both efficient and productive. In 2017 Malcolm Turnbull thought that Australia can be innovative too, his vision was that nationally we'd be building military weapons for export to the world... so often those glossy, catchy business-speak words like "innovative" and "productive" can be directed to something as insidious as mass produced land mines, it just depends on the moral impetus...and who could know what PM Morrison has in mind? Invariably we need employment stimulus and innovation rarely includes more employees... today its just big machines automatically punching out techno-assembled widgets; companies didn't sack their robots when the economy went South, the flexible, disposable overheads were the employees. Tax robots...that's the future.
ray | 05 May 2020


Jobs, jobs, jobs and the dignity which goes with them. Cut the red tape, cut the green tape, send the unrealistic green forces of darkness to the Gulag for re-orientation in the common good.
Joe Sicher | 05 May 2020


Australia can’t simply “snap back to what we had before the pandemic.” Agreed. That was an economic Ponzi scheme built on 200,000 immigrants pa. “The recovery phase will very much need to be about stimulating the Australian economy.” Agreed. How? Patrick Deneen of Notre Dame University wrote that globalization failed because it promoted progressive politics that accelerated economic inequality and fragmented the civic and spiritual bonds that underpin the cultural life of democratic nations. Hence Brexit and Trump. Lyndon Johnson’s War on Poverty involved massive spending but increased dependence on welfare, discouraged people from working, and damaged the family structure. Italy’s 65 governments since WW2 all lacked the resolve to implement serious structural reforms and deregulation, instead seeking to spend their way out of economic lethargy. So with massive debts and youth unemployment at 33% in 2018, Italy again sought the easy way out and signed on to China’s One Belt One Road initiative. No wonder Chinese foreign policy guru, Yan Xuetong, has written off the EU as a basket-case saying that today’s rivalry is “the combination of China’s rise and Europe’s decline, rather than America’s relative decline.” Chinese saying: “From thrift to extravagance easy; from extravagance to thrift hard.”
Ross Howard | 05 May 2020


Thank you Joe for your review of future prospects post Pandemic. They say a Leopard does not change its spots. While I would like to believe the Morrison Government's u turn in fiscal and social policy will remain once the pandemic is over, or at least the threats to public health are contained, I am afraid that that scenario would seem on the balance of probability quite unlikely. The backers of the Morrison government, mainly big business , the banks and right wing media organizations will be looking towards a 'business as usual' approach which will benefit them as they try and recover the vast investments they have lost in the Corona induced recession. They had had it good since the LNP came to power, with the reduction in Trade Union power, casualization of the work force, weak wages growth, yet they made huge profits and hefty dividends. It seems highly unlikely that the Pandemic induced high unemployment will reduce quickly, leading to further casualization and weak wages growth. The only answer I can see is a huge backlash by affected voters against the LNP Government at the next Federal election.
Gavin O'Brien | 05 May 2020


There's an agenda in reiterating that COVID-19 is a paradigm shaker. The agenda is to insinuate that people in capitalist societies are weak. If they are weak, they have to be re-made, implying so too must the essentials of free enterprise, private self-restraint and personal responsibility. Depression from isolation is mostly, like the dodgy sociological concept of triggering (a backdoor virus to dismember freedom of speech), social media bully-pulpitting channelling some Joseph Goebbels trickery. The bug is only a blip, a technological showjumping hurdle. Even before the vaccine comes, life will go on because nobody who is normal sees this as an 'apocalypse'. What should be learned though is that 'globalism' as concocted by the masters of the universe symbolised by 'Wall Street' (and its companions around the globe) is not necessarily a friend of supply-chain resilience, which is what every Main Street around the world needs if it is to raise its children in safety. If nations can't rely on others, they have to rely on themselves. If the virus leaves to a nation a legacy of thinking that it has no friends but itself, etc., the Palmerstonian principle, then it would have been a godsend.
roy chen yee | 10 May 2020


Why are we still talking about growth? I thought, of all places, Eureka Street would be able to speak sensibly about the impossibility of continued growth on a finite planet, but, no. Can Mr Zabar respond to this? When he talks about a new economic outlook why is he not speaking about Circular economies, Donut economics, Steady State economics etc? On what does he base his 'growth' theories? More earth destruction? Well, that will help us all survive a bit longer, eh? A response please.
Deborah B | 17 May 2020


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