Coronavirus: We need a strong economy, but people come first

The challenge is to reopen the economy as soon as possible without unleashing the full force of the disease. Picture: Getty Images

While other countries have had tens of thousands of confirmed coronavirus cases and many thousands of deaths, so far Australia has had fewer than 7000 confirmed cases and only 75 deaths. Either the Lucky Country has been lucky indeed; or, more likely, our policy has been more effective than elsewhere in limiting the transmission of the disease.

In early February, we were one of the first nations to restrict travel from China. And on March 13, the ­national cabinet was formed when known cases were just 198, with three deaths, and we started social distancing. Soon, sporting events were cancelled; churches, theatres and cinemas shut; cafes and restaurants largely closed; everyone who could was working from home; gatherings of more than two were banned (other than for ­essential work); and we applied strict quarantining of all incoming travellers and anyone who had been exposed to the disease.

Now, scarcely a month later, not only has the “curve been flattened”, but the number of active cases has declined sharply.

That’s the good news.

The bad news is that while we’re winning the fight to preserve lives - and all credit to the Morrison government - the fight to preserve livelihoods will be much more ­protracted and is not yet going nearly so well.

With the tourism, hospitality and entertainment sectors all but shut, education mostly online, retailing much curtailed and everything other than modest local travel at a standstill, economy-wide spending is down at least 20 per cent, GDP is tipped to fall about 10 per cent and unemployment might touch 20 per cent ­ — although some of that might be masked by the $1500-a-fortnight subsidy to workers whose businesses were hit by the shutdown.

So far, the government has budgeted to spend more than $200bn on people and businesses impacted by the virus. That’s close to the world’s biggest fiscal package — hence the government’s budget deficit is tipped to exceed $100bn, and federal government debt might reach $1 trillion.

So, with our hospital system geared up to deal with the pandemic and with testing and tracing much better organised, the challenge is to reopen the economy — and wind back all the additional government spending — as soon as possible without unleashing the full force of the disease.

Living with the virus likely means a gradual and perhaps ­partial reopening of schools, universities, cafes, restaurants, gyms and retailers, with international travel subject to strict quarantine except from substantially “corona-free” countries.

So not only will be there a big hit to the economy, there’ll likely be long-lasting change, with some sectors taking years to recover.

In this new world where goods can continue to move around, but people much less so, the political task will be to not inflict any more economic harm over that needed to keep people reasonably safe.

Inevitably, parties of the centre left will be inclined to maintain spending, and the economy chloroformed for longer. Big government is their natural inclination. They will justify it on the grounds that we’re better safe than sorry.

For parties of the centre right, keen to restart the economy, the risk will be the accusation that they are putting wealth before health — even though, in Australia, about 3000 take their lives each year, there are 250,000 hospitalisations for mental illness and perhaps 300,000 episodes of domestic violence — all of which might considerably worsen if economic stress remains.

In a world where economic life is harder, issues such as climate change and identity politics will probably become less important. And it should be easier to wind back much of the green tape restraining us, and some of the culture war institutions that have divided us. And as long as people know that it’s only their national government from which help can come, patriotism will be in and ­globalism out.

But the part-holiday from standard party politics won’t last. Once battle resumes, for the centre right there should be less dogma about the size of government and more of an appeal to the strength of our country and the quality of its citizens. While subsidies to business can be readily enough withdrawn, personal benefits such as the ­double-dole will be harder, especially when recipients will be able to say it was government policy that threw them out of work.

Instead of just withdrawing the payment — on the grounds the immediate crisis has passed and it’s no longer affordable — I’d be inclined to turn it into a wage subsidy for older people and a part-time environmental job with local government for younger people.

I’d make it about improving ­society rather than about improving the budget. Eventually, the budget will improve because people will earn their pay (and won’t need subsidies) and people will choose their job (and won’t just stay where they were allocated).

But the successful political leaders will be those who make it less about economics and more about ensuring people have purpose in their lives.

It’s true that governments can’t give to some what they don’t get from others, hence the need to be prudent and frugal. But it’s a moral vision of self-reliant individuals and cohesive communities that will win the political argument, not a Scrooge-like concern over dollars and cents.

Of course, you can’t have healthy communities without a strong economy to sustain them, but economics is a means to that goal of human flourishing, not an end in itself. It’s the strength of our commitment to those communities and to the society they make up that will be the key to political success in the new world ahead.

To adapt Bill Clinton, it’s ­society, stupid!

Tony Abbott is a former prime minister of Australia. This is an edited version of remarks to an International Democratic Union webinar this week.