No one is talking snapback these days. Early on, there was a hope that Australia could quickly suppress this virus through a variety of means, including closing international borders, and businesses would quickly re-emerge from a short hibernation.
There was always wishful thinking in this. Any prospect of rapid and comprehensive economic recovery has disappeared in the wake of what has happened in Victoria.
To use the immortal phrase of Warren Buffett, “only when the tide goes out do you discover who’s been swimming naked” – recent months have revealed a lot about the way Victoria is governed as well as the state’s economy.
Victorians have tolerated the Andrews Labor government because it was seen to get things done. There were plenty of infrastructure projects going on, lots of cranes in the sky, rising house prices and employment growth.
What many didn’t realise is that the state economy has been based on the ultimate Ponzi trick of rapid population growth based on very high migrant intakes.
In the year to December, Victoria’s population grew by 1.9 per cent compared with the national figure of 1.4 per cent. By contrast, the population of NSW grew by 1.1 per cent. Net overseas migration made up more than 60 per cent of Victoria’s population growth.
Over a longer time frame, population growth has outstripped the national average, with most new residents living in Melbourne. Forecasts have Victoria’s population rising from 6.5 million in 2018 to 11.2 million in 2056, although these predate the pandemic. Still, Melbourne is expected to be larger than Sydney by then.
This population growth has meant that, in absolute terms, the growth of the Victorian economy has generally been stronger than other states. But in per capita terms, it’s much less impressive. The key drivers of economic growth in Victoria have been consumption, public spending and dwelling investment. The largest export sector in the state has been international education.
The outlook in the immediate and medium term is shaky because of the mishandling of the virus and diminished population growth from closed international borders. Expect multiple business failures, a shrinking higher education sector, soaring unemployment and falling property prices.
It’s unlikely Victoria’s government will be able to alter these outcomes. Indeed, the way the Andrews government has gone about fulfilling its roles and responsibilities are completely unsuited to a post-COVID world.
There are two strands to the method of governance implemented by the Andrews government: appeasing the trade unions, whose support is so important both in overall terms and to particular members, and implementing a woke, progressive agenda favoured in inner-city suburbs – think SafeSchools, a treaty with the Indigenous citizens of Victoria, the injecting room located in Richmond, support for multiculturalism and the like.
The Andrews government’s decision to pull out of the contract to build the East-West Link in Melbourne – it cost Victorian taxpayers more than $1bn – was partly motivated by a dispute about union coverage. The “wrong” union had been given the lead role in its construction.
There has also been the protracted and extremely messy process of altering the firefighting architecture in Victoria, including changing the role of the Country Fire Authority, which has been driven by the need to reward the powerful United Firefighters Union. More recently, the Andrews government has introduced draconian laws dealing with industrial manslaughter and wage theft, both measures demanded by the unions.
The industrial manslaughter laws became operational on July 1. A person found guilty of negligent conduct leading to the death of another person owed a duty of care can be jailed for up to 25 years and an organisation can be fined up to $16.5m. Charges of industrial manslaughter will not need to meet the normal standard of “beyond reasonable doubt” but rather the vague concept of common sense.
If the introduction of this law is not deterrent enough for employers taking on workers, particularly in risky situations, there are new wage theft laws in Victoria, again introduced this year.
The Victorian Attorney-General posted this boastful press release in June: “Victoria has become the first state in the country to pass laws establishing criminal penalties for employers who deliberately underpay or don’t pay their workers.”
It continued: “The new laws deliver on the Andrews Labor government’s commitment to establish new criminal offences targeting employers who deliberately withhold wages and other employee entitlements. Employers who dishonestly withhold wages, superannuation or other employee entitlements, will face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years’ jail.”
Under the legislation, the Wage Inspectorate of Victoria will be established as a statutory authority “with powers to investigate and prosecute wage theft offences”.
How all this fits in with the activities of the (federal) Fair Work Ombudsman is not clear. Will it mean Victorian employers are penalised twice? Will the Wage Inspectorate of Victoria go after the ABC, which was found guilty of systemic underpayment of staff and fined the largest amount under the federal legislation? Will the inspectorate seek to impose penalties on Victoria’s universities that have been found to have underpaid casual workers? Will we see a vice-chancellor or two in jail?
Just to emphasise how anti-employment Victoria is, the release of the recently commissioned report of the inquiry into the Victorian on-demand workforce – the gig economy – recommends costly intervention to deal with a development not favoured by the trade unions. Independent contractors don’t join unions.
Even though the report finds the extent of on-demand working is small and that most gig workers are satisfied with their employment, the carefully selected chair of the inquiry recommends new machinery to determine the status of workers – done today by the Australian Taxation Office – and for Victoria to go it alone if the federal government doesn’t play ball.
You have to laugh at the chair’s acknowledgment that “the post-COVID-19 labour market will demand agility and flexibility” when the thrust of the report is to impede these.
The tide is now completely out in Victoria and we are seeing the naked bodies all too well. A mangled response to COVID-19, particularly in terms of the management of quarantine, incompetent and tongue-tied ministers and a hostility to businesses and employers that bodes very badly for the future. Welcome to Victoria, the bungling state.
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