Josh Frydenberg was bananas to ignore the Keating playbook

Illustration: Eric Lobbecke

The suspension of politics as usual, as leaders followed the uniform advice of health experts, has been instrumental in helping win the medical war against the coronavirus. But that phase is drawing to a close. As it must.

Getting the economic recovery right, even just getting it started, given all the differing prescriptions, with record billions going out the door every day, with more than a million people unemployed, and thousands of businesses and chunks of our way of life disappearing forever, means disagreements are not only inevit­able, they are essential.

Apart from some notable outbreaks, including the rebellion of the premiers led by Daniel ­Andrews and Gladys Berejiklian, first to force Scott Morrison into a lockdown, then to resist his attempts­ to lift it prematurely by reopening schools, it seemed for a time that critical faculties had also been suspended, put into hibern­ation along with the economy.

Tuesday’s resumption of ­parliament began the big thaw. Josh Frydenberg’s wildly understated statement described the economic data as sobering. A shorter, sharper ­S-word sprang more readily to mind.

In a way, you can understand why the Treasurer tried to keep his demeanour so low-key, before it was spectacularly undermined by his coughing fit, thankfully not COVID-inspired. Treasurers often baulk at unveiling the full horror because they are frightened it might frighten people. God knows what might happen then.

Actually we do know what can happen. Exactly 34 years ago, on May 14, 1986, Paul Keating warned that if Australia didn’t change its ways, if it didn’t stop ­living beyond its means, it would become a banana republic. He said it first at the improbably named ­Kismet Park Reception Centre in Sunbury, outside Melbourne, at a breakfast organised by newbie Labor backbencher Neil O’Keefe, coincidentally the day after the worst trade figures on ­record had been released.

When he arrived, Keating told O’Keefe Treasury was worried about the falling dollar, so he was going to change his script. Unfazed­, O’Keefe told him: “No problem. They want to hear you tell it like it is.”

That day is seared in O’Keefe’s brain. He recalls the speech as if it was yesterday. The 150 guests burst out laughing when Keating said ­banana republic, then gave him a standing ovation when he ­finished.

Keating was chuffed. He told O’Keefe he thought it went really well. So well that he used the line again in a radio interview with John Laws that he did from the Kismet’s kitchen while the staff glared at him for getting in their way. “If in the final analysis ­Australia is so undisciplined, so disinterested in its salvation and its economic wellbeing … we will just end up being a third-rate economy. You are a banana republi­c,” he told Laws.

In the pre-mobile phone era, on the way to another function, Keating stopped at one of those old red public phone boxes to call the office to see if there had been any reaction to the interview. All hell had broken loose. “They’re saying I said Australia is a f..king banana republic,” Keating fumed when he got back in the car. Which is sort of what he said.

Bob Hawke rang O’Keefe that night from Tokyo, where he was on an official visit, to ask: “What the f..k did Paul say?”. The prime minister had begun by trying­ to dismiss it as a nothing-to-see-here moment back home, then on the flight to China, as members of the travelling press pack threatened to fly back to where the real action was, he changed tack.

Soon after arriving in Beijing Hawke gave an extraordinary background briefing to journalists designed to put Keating in his place, saying he had told deputy Labor leader Lionel Bowen to take charge until he got back.

It didn’t work. Keating ridiculed Hawke’s travelling Manchu court, then used the crisis he had created single-handedly — in one moment, with a few words — to force policy changes which deliv­ere­d a surplusthe following year.

Faced with a bigger and dead­lier crisis, Frydenberg sort of tried to tell it like it was on Tuesday, but he missed an opportunity to create such a moment or capitalise on it.

The Treasurer could have done this with his Prime Minister’s blessing, nay, at his ­insistence. Not as a path to a future surplus. Forget that. It is never going to happen for Frydenberg, although he will be the first ­treasurer since Keating to preside over a recession — a ­recession if he is lucky, much worse if he isn’t.

The opportunity was there for a moment of truth, the whole truth and nothing but, to fully outline the gravity of it all and explain what needs to be done, and in the ­process galvanise or engage his audience.

Instead, there was a sleep-­inducing promise to focus on “practical solutions to the most significant challenges which will be front and centre in the post-­crisis world. Reskilling and upskilling the workforce, maintaining our $100bn, 10-year infrastructure pipeline, cutting red tape to reduce the cost burden on businesses and the economy, and tax and industrial relations reform as a means of increasing our competitiveness.”

He recited the numbers: 10 per cent fall in growth, 18 per cent drop in business investment, 16 per cent drop in household spending, unemployment up to 10 per cent and the deficit soaring to … well, if the government knows, it won’t say. No snapback as initially foreshadowed by the Prime Minister, that’s for sure. No V lines, more likely a U curve, which was apparent from the ­beginning.

There is not a lot of time to get it right, and it will not get one little bit easier. Not with China’s bullying on trade, not while the US and Britain remain incapable of gettin­g a grip on COVID-19.

Labor has a different emphasis on China. It will diverge on the US to emphasise its support for the ­alliance but not for Donald Trump, and it can afford to wait before announcing its economic policies. The government doesn’t have that luxury.

Its very failure before and after the election to outline an economic agenda beyond the surplus, despite signs that the economy was flattening, should have left it free to go for broke. It should have been liberating. Yet they appeared tentative, even a little smug. Bushfires and then COVID wiped away the smugness and obliterated the surplus. The hesitation lingers.