Covid-19 mission isn’t over until the economy delivers for all

In their ‘haste to declare victory’ over the recession and its aftermath, Scott Morrison and Josh Frydenberg are ignoring the fact more than two million Australians still don’t have work or enough work, Jim Chalmers writes. Picture: NCA NewsWire/Gary Ramage

On the first day of May in 2003, barely six weeks after the Americans entered Iraq, George W. Bush stood on the flight deck of aircraft carrier the USS Abraham Lincoln, dwarfed by an enormous banner that read “Mission Accomplished”.

History tells us the war in Iraq dragged on for several years afterwards, and many more lives were lost. Since then, Bush’s declaration became a cautionary tale for leaders tempted to declare victory prematurely.

Scott Morrison and Josh Frydenberg now are having a “mission accomplished” moment of their own, but without the aircraft carrier. Their haste to declare victory over last year’s recession, and its aftermath this year, ignores the fact more than two million Australians still don’t have work or enough work, wages are stagnant, and our economy had become less dynamic and resilient well before the pandemic.

Banner moment: George W. Bush, aboard the aircraft carrier USS Abraham Lincoln in 2003, declares the end of major combat in Iraq. Picture: AP

It’s true that there are some encouraging signs of recovery. Some industries are recovering strongly, particularly as state restrictions ease, and it was good to see a monthly increase in jobs in last week’s labour force figures. But we can’t pretend there aren’t many families, workers, small businesses and communities still struggling, nor should we be satisfied with a recovery that strands too many Australians in joblessness, underemployment, insecure work or with wages that don’t keep up with the real costs of providing for loved ones.

An unemployment rate of 6.6 per cent is still unacceptably high, and nowhere near the level required to generate healthy growth in wages, particularly when we have the kind of rampant underemployment that sees nearly 1.2 million without enough work. As Deloitte highlighted in a recent report, the recovery is likely to be defined by even weaker wages growth for those in a job, with growth in average earnings expected to plummet to 1 per cent next year and not expected return to 2 per cent before 2024-25.

Prospects for the economy this year will rest partly on how at least six uncertainties play out: subsequent COVID-19 outbreaks and how they’re managed; the pace and efficacy of the vaccine rollout; developments overseas especially in major nations most affected by the virus; our relationship with China; how and when Australians spend down what they’ve saved; and, finally, how the government manages the withdrawal of existing economic support and what it does to replace that support when and where it’s still needed.

Naturally, the Prime Minister and Treasurer will claim credit and influence where things go well in the economy and pretend that what goes badly is outside their control. But in response to these uncertainties we’re seeing a failure of national leadership and lack of sound decisions based on what’s really happening in local economies and communities.

There is no national plan for the safe quarantining of incoming passengers, no strategic approach to China or industries affected by trade restrictions, and a failure to listen to communities crying out for targeted support after JobKeeper ends in March, despite having no plan for jobs in its place.

Even the government’s hiring credit scheme that Frydenberg claims will replace JobKeeper deliberately excludes almost a million unemployed workers aged over 35, and he was sprung exaggerating the likely jobs benefits by a factor of 10.

I was in far north Queensland again last week and in places such as Cairns it is clear that support for workers, small businesses and local industries should be targeted to those still doing it tough, whether tourism operators or hospitality workers, who rely on free-flowing international travel.

Amid all this uncertainty, some things are clear: we won’t create good jobs and opportun­ities by cutting wages and super and winding back consumer protec­tions in the banking system — which is the sum total so far of the government’s economic approach.

Returning to the busted policies of the recent past will be a recipe for more of the wage stag­nation, flatlining living standards, weak business investment and other weakness that characterised the economy under the Liberals and Nationals before coronavirus. This risks not having enough jobs and opportunities to show for their $1 trillion in debt; not having enough ambition or understanding to address longstanding economic problems; and too much wasted on advertising, rorts and taxpayer-funded executive bonuses.

Instead, we need a plan for jobs that starts to tackle big national challenges at the same time, like the need to build a more diverse and innovative economy, invest in better education and care, deliver cheaper and cleaner energy, and make Australia’s place in our region more secure.

This requires proposals for cheaper childcare; better energy infrastructure and policy certainty; revitalising manufacturing in the regions; more apprentices on public projects and other ideas already put forward by Anthony Albanese and the Labor team.

We can and should be ambitious about making the economy stronger after the pandemic than it was before, and ensuring it delivers for Australians in every corner of the country. That’s what “mission accomplished” really looks like.

Jim Chalmers is the opposition Treasury spokesman.