Terry McCrann: That’s enough stimulus, now for the exit strategy
It’s time for the government to focus on devising and implementing an ‘exit strategy’ from both the virus pandemic and the recession it has imposed on the Australian economy, writes Terry McCrann.
Terry McCrann
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That must be it for stimulus. And the government’s focus must now switch to devising and then moving as quickly as possible to implementing an ‘exit strategy’ from both the virus pandemic – or panic – and the business and job-destroying recession it has deliberately imposed on the Australian economy.
Those are the two critical take-outs that flow from the Government’s third so-called stimulus package.
A fourth package – especially if it continued the rate of arithmetic acceleration of the first three, from $18 billion, to $66 billion, to $130 billion – would be completely unacceptable. It would also not simply be ineffective if not outright useless, it would be actively and serious damaging.
For so long as great swathes of the economy are quite literally forbidden from operating, more and more so-called stimulus can’t work the way it would in a normal downturn, getting people and businesses to spend.
This is or should be obviously not a criticism of Monday’s massive wage subsidy. It was exactly what I’d called for a week ago, and called for twice when the message didn’t seem able to penetrate Canberra’s mental concrete.
The wage subsidy is the only way to keep as many Australians theoretically or indeed actually employed and connected with businesses that are kept half alive rather than sent in to oblivion and with those jobs gone for ever.
The $130 billion will also obviously sustain spending on necessities – that’s both necessary for the perhaps 10 million or so Australian that will directly benefit, help them pay them bills more broadly, and so sustain other businesses and jobs and the economy overall.
But at the end of the day, it is only a temporary patch-over job. The overall economy will still slide into recession, businesses and jobs will still be destroyed – and even more disturbingly the underlying economy, which is our future, will continue to corrode devastatingly.
We have to get out of the lockdown as quickly as possible. That means getting on top of the virus as quickly – and even more, as smartly – as possible. That does not mean waiting for the very last person to be infected and so no new infections.
The idea that the economy can go into ‘hibernation’ – the word seems to have been marketed first by the prime minister and then picked up enthusiastically by the extreme Left media, the ABC, the Guardian and the Nine newspapers – for six months is very, very disturbing.
The word sounds almost cuddly, or that we all get to take a holiday. No, a six-month lockdown would utterly and irreparably destroy Australian economic functionality and be very, maybe even terminally, damaging to the broader society.
Just when you think we are about to get forward-looking leadership from the PM, we got a combination of marketing and policy vacuity.
Disturbingly, it was not just marketing, as the PM and I presume also the treasurer Josh Frydenberg seem to have adopted the six-month lockdown as the foundation of not just their economic policy but by implication their antivirus strategy as well.
As I explained yesterday they copied the New Zealand wage subsidy package almost exactly. But there was one big difference: the NZ package is, at least initially, for 12 weeks; the ScoJo one is for six months.
Why not three-months, with the possibility of extension? Was it because then they would have announced ‘only’ $65 billion?
Who knows; after building his entire time as treasurer on the promise of getting the budget back into surplus, Frydenberg has gone the Full Monty in now embracing deficits.
Indeed, he is now certain to deliver the first triple-digit (in billions) budget deficit ever in our history; and he could easily deliver two-in – a-row. He will certainly deliver two and then maybe even three-in-a-row, if he and the PM stick with their six-month lockdown.
A six-month lockdown would not just be utterly calamitous – disastrous is just too inadequate a word – for the economy, it would also announce they had adopted a worst-option strategy for attacking the virus itself.
The unusual coalition of the Fin Review’s Christopher Joye and our Andrew Bolt have been persuasively and intelligently arguing for a much more nuanced, focused strategy, that sits between the lockdown and the initial ‘let-it-rip to build so-called herd immunity’ approach.
Broadly they argue for much more aggressive protection of the old and the specifically virus-vulnerable – while opening up for everyone else within a structure of much more aggressive testing, attacking any so-called ‘hot spots’ and so on – essentially some version of what Taiwan and South Korea have done, seemingly successfully.
We can’t wait six months for every last vestige of the virus to – seemingly – die away. We can’t wait six months for even an accelerated vaccine.
What could instantly transform everything is if the use of antivirals around the drug hydroxychloroquinine (not the older chloroquine, which the media almost universally in its lazy, anti-Trump hysteria uses interchangeably) is shown and shown quickly is an effective treatment and indeed cure.
This would not simply enable exactly that strategy but demand it.
It would also do two other things. As it would ‘work’ everywhere it would instantly transform the global dynamic, in terms beating the virus and also supercharging both the economy and share markets.
Just as we’ve never before had a deliberate recession to fight a virus; we equally have never had a virus cure to supercharge our economy and our sharemarket. In the broader context of a global economy and market on fire.
It would demand both the government and the Reserve Bank to move rapidly to unwind all their stimulus.