Coronavirus: Nothing will challenge Australia’s pre-crisis values

Students protest against Scott Morrison over climate change in Sydney’s Darling Harbour in February. Picture: Flavio Brancaleone

Following the false predictions from the bushfires — that Australia was forever different, climate change was the new imperative and Scott Morrison was probably finished — the lesson is to beware similar apocalyptic declarations from the COVID-19 legacy.

The fundamentals of Australian life are too entrenched to be swept away. The free-trade economy with a strong social safety net will remain. We will not revert to a new protectionism or socialism, despite the populist drumbeat that is under way to resurrect failed ­nostrums the country has permanently left behind.

The nations seen to best manage this virus (Australia is likely to fall in this category) will emerge in a better position to get right what policy changes are essential and what should be shunned. Australia’s adjustment to its new world of indebtedness will occur within the framework that has guided the country for two generations.

If the Treasury estimates are correct and Australia’s unemployment rise is limited to a devastating 10 per cent, a doubling of the pre-crisis rate, that would constitute a remarkable achievement, sure to be below the US peak. Treasury’s estimate of a 15 per cent rate without the $130bn package quantifies the extent to which ­policy has averted a deeper crisis heading to depression.

There are two emerging stories: a debate within the Morrison government about the necessary policy rethink, and — beyond voting bipartisanship — the deepening Coalition-Labor policy differences over the management of the crisis.

Morrison has identified the principles that will guide the government. As with many principles, they contain contradictions to be resolved. Morrison sees national sovereignty as the essential theme from the crisis. He measures sovereignty in terms of capability and freedom — which means a broader concept of national security, with health, energy and investment dimensions and renewal, from the crisis, of our democratic freedoms. “We are not a coerced society,” he said. Today’s measures are temporary, by institutional agreement and for the public good.

His sovereignty concept is an assertion of Australian traditionalism, values and success. It is “enabled by having a vibrant market economy” that secures “our standard of living”, and the Morrison philosophy “to have a go and get a go”. For Morrison, our pre-crisis values are being reaffirmed by the crisis and endure beyond it. “We will not surrender this,” he said.

He sees the crisis in terms of shared sacrifice, from grocers to farmers. His vision is about restoring the nation, not transforming it.

John Howard’s sovereignty ­focused on border protection, the challenge of his time. Morrison ­offers a broader concept — a sovereign nation in this crisis is about the authority of the state to guarantee Australia’s “quality of life”, seen in “world-class health, education, disability (and) aged care and a social safety net”. In short, it is to uphold the Australian social vision advanced over the decades.

Morrison says his purpose is to fight the virus on behalf of “our principles, our way of doing things”. Because there will be losers, his commitment “to all Australians as Prime Minister” is that “once we have overcome these threats, we will rebuild and restore whatever the battle takes from us”.

Obviously, this will define his tenure as Prime Minister. Equally obvious, this is not a Prime Minister who thinks the country is being changed forever. He is not a radical. Pre-crisis, he was a pragmatic incrementalist. He has no time for radicals keen to manipulate the coronavirus crisis for radical new directions, the pitch of revolutionaries since the dawn of time.

After the crisis, self-reliance in medical equipment and pharmaceuticals will be important. Josh Frydenberg told the ABC’s Insiders the government would look at supply chains, after having to import more than 30 million masks. Fuel security would also need to be reassessed. But Australia would remain a niche manufacturer.

“We don’t need to engage in mass national subsidies or indeed nationalisation of industries,” he said. Rejecting protectionism, he described Australia as “a great beneficiary of free trade”.

You can forget any idea Australia is about to embark on a new ­series of major manufacturing industries requiring large-scale subsidies or tariffs. Public spending will need to be heavily prioritised. This is not to deny more government intervention in the economy. That is inevitable. The issue with intervention is smart and targeted. Morrison says we must play to our comparative advantage.

Industry Minister Karen Andrews, in her Tuesday ABC interview, captured the unresolved contradiction at work. She said manufacturing needed to be boosted for jobs and sovereign protection but noted that Australia was a high-wage nation tied to niche manufacturing. She rejected subsidies, backed free trade and said we needed to assess how to ensure “in a time of crisis that we are able to support ourselves”.

Morrison’s experience as treasurer will be pivotal in this re­making. When I interviewed him in March 2018 and asked whether he was a pro-market or government interventionist treasurer, he said: “I think those boxes are dated.” Morrison had no interest in the old wet/dry Liberal economic disputes. He declined to be typecast. He knew “big bang” reformism was dead and operated on the basis of results, not ideology. This is the stance he will bring to the nation’s recovery.

There will be government spending restraint but no imposed austerity. Frydenberg said: “The way to meet that growing debt burden will be to grow the economy.” This will be the Morrison-Frydenberg gospel as they repel the coming assault from the populist Right that they blew the crisis, betrayed Liberal principles and spent too much.

Meanwhile, Anthony Albanese and opposition Treasury spokesman Jim Chalmers have sketched the contrasting scope of Labor’s approach. First, Labor would spend far more on salvaging jobs and the economy. It wants the government to extend the JobKeeper funds to about a million casuals not tied to the same employer for 12 months, and it expresses concern about another million temporary visa holders, saying they deserve better.

Senior ALP figures say the foreign workers merit “some assistance”. Frydenberg said the cost of adding another million casuals would be $18bn, a hefty increase.

Second, Chalmers says the government stimulus “must come off more slowly than the growth in private-sector spending”. He argues the government must learn a second lesson — the need for ongoing public stimulus support to sustain recovery, as illustrated by the Rudd government’s second stimulus package during the global financial crisis.

Third, Chalmers has invoked one of Labor’s glories, the Curtin-Chifley postwar reconstruction agenda, saying we need to “modernise that spirit”. The aim should be to “reimagine”, not just “revive”, the economy. The message is obvious. Labor will recruit its Curtin-Chifley postwar historical success to promote itself as the party best able to manage the recovery.

Chalmers seized on the Treasury’s 10 per cent unemployment estimate to argue that under the JobKeeper legislation, Frydenberg had the remit to widen the ­eligibility criteria, and failure to act meant the Treasurer was choosing to make unemployment higher.

Given the revenue collapse within aviation, the Opposition Leader and his transport spokeswoman, Catherine King, have taken a more radical position than the government. They say the current airline structure must be sustained by extending a lifeline to Virgin or providing direct support to companies “by taking an equity stake” if required. This violates the government’s stance of industry support but no direct government ownership of individual companies. But the question remains: how will the government manage the aviation crisis?

In short, Labor, unsurprisingly, is building a significant distinction between itself and government: it would spend far more, prolong the stimulus spending, launch an ­ambitious reconstruction phase (presumably at a higher cost) and plunge into part-nationalisation.

Labor has no option but to develop a distinctive position while voting to support the government packages. It will promote this stance against the government, the question being — can it work?