Post-Covid reality for conservative governments

Scott Morrison greets ADF quarantine worker Christopher Oakes before they both receive their second and final COVID-19 vaccination shot at the Castle Hill Medical Centre, in Sydney. Picture: NCA NewsWire/Bianca De Marchi

Conservative government is facing its biggest test in decades. The COVID pandemic has broken the classical liberal model of the limited state. The promise of small government is gone for at least a generation. At the end of the month, the government’s COVID support packages that kept businesses afloat and consumers spending are due to come to a close. But conservatives are facing an uphill battle as the taxpayer-funded media and public sector make alliances with businesses on the edge to fight against fiscal restraint. Reality is about to bite and it will hurt like hell.

Two years ago, Treasurer Josh Frydenberg sent what would become an email best forgotten. The subject line read “Back in the black”. He declared triumphantly that for the first time in a decade, the government would deliver a budget surplus. Frydenberg wrote: “This means we can start repaying Labor’s debt and remove this burden within a decade.” Less than a year later, the coronavirus pandemic that began in China and spread into the world shattered reality. We are yet to grasp the full measure of its devastation. But within weeks of government-imposed COVID lockdowns, the dream of a debt-free Australia was dead.

The promise of fiscal repair and budget surpluses gave the Coalition a competitive edge at the last election, but COVID killed the debt-free dream. Politicians joined businesses and banks to urge more spending, more loans, more credit and deferred accountability. In the October budget, the Treasurer reported that the government had committed $507bn for economic support during the COVID pandemic, including $257bn in direct support measures. There was $184bn dedicated to a range of economic responses, including $101bn for the JobKeeper wage subsidy program. The Treasurer defended the big-spending budget, saying unemployment would have risen to 12 per cent without government intervention.

The Parliamentary Budget Office reported that the COVID economic support packages of federal, state and territory governments would be $327bn over the five years to 2024. The combined net debt burden will be nearly $1.3 trillion. Household debt is also at record levels, but experts contend that low interest rates will save the nation from economic disaster.

Despite consistently demanding more spending money from government, the ABC baulks at the big debt burden. On the 7.30 program in October, host Leigh Sales criticised the Coalition’s COVID debt and questioned its economic credentials. The Treasurer responded by saying the times were unprecedented, Australia was performing well compared with other developed states and that net debt to GDP would peak at 44 per cent.

The ABC’s apparent concern about COVID debt is inconsistent with its aversion to fiscal restraint and the policy of austerity. When the Treasurer appeared on 7.30 last week, Sales reprimanded him for upholding the government’s commitment to wind back COVID welfare payments at the end of March. She landed a low blow when raising questionable allegations made against politicians including the Attorney-General, and said: “How good does it feel to be a minister in the Morrison government knowing that no matter what questions arise over your conduct, your job is safe?”

Frydenberg reapplies for his job by putting it to a public vote every three years or so. Does Sales?

When parliament resumes, hostilities will run high. Labor and the Greens will try to steer the government away from core issues of economic management, industrial relations and long-term pandemic recovery to whatever dross passes for trending news on Twitter. Morrison’s immediate challenge is how to manage the inevitable logistical complications arising from the most complex vaccination program in recent history. Labor is doing what parties in opposition do and draining political capital from the government whenever it can. And medical lobby groups have begun to ask for more government money to vaccinate Australians by the end of October. In The Australian on Friday, GP Alliance deputy chairman Mukesh Haikerwal worried that, “Once it is known in the community that a vaccine is available, the phones will literally melt in front of us”. Literally?

It is not yet clear how the extended leave periods of Defence Minister Linda Reynolds and Attorney-General Christian Porter will affect government performance. At any time, two ministers missing in action would pose a challenge. But given the defection of Craig Kelly, their timely return is vital to government stability and numbers in the House.

While there is widespread sympathy for Reynolds’ heart condition, there will come a reckoning with reality. A Defence Minister who demands cultural change of military men but calls a former female staffer a “lying cow” will face questions about hypocrisy and civility. Reynolds could return to her role with the support of the PM but will face difficulties in commanding the respect required to perform her duties to a good standard. Andrew Hastie only stepped into the role of Assistant Defence Minister in December, but is widely regarded as reliable and consistent. The government could do worse than to parachute a former SAS captain of high repute into the political battlefield.

As one of the Pentecostal faithful, the PM is taught to find the silver lining of a dark cloud. He usually withstands the storm by waiting it out. But his team is wallowing in despair. Duty must triumph over pity. There can be no more tears over Twitter, no surrender to slander. Onward march.