Coronavirus: The PM takes a punt on a snap back to health and prosperity

Scott Morrison has shown leadership for the times but there is no guarantee of success.

Morrison and Frydenberg celebrate the passing of the government’s wage subsidy package. Picture: Getty Images

“Today we act to protect our ­nation’s sovereignty. When ­Australian lives and livelihoods are threatened, when they are under attack, our nation’s sovereignty is put at risk and we must ­respond. As a government, as a parliament, as a nation, together.”

— Scott Morrison at Parliament House, Wednesday

Just a few hours after this declaration, the parliament passed the Prime Minister’s record-breaking $130bn payment to six million Australians forced out of work by the COVID-19 pandemic. The aim of the colossal spend is to head off a depression and keep workers connected to their jobs and employers for as long as possible.

The JobKeeper allowance took the commonwealth’s economic fight to more than $200bn and followed unprecedented restrictions on personal movement and border closures to limit the spread of the virus, which has infected more than 1.6 million people globally and killed more than 95,700 — more than 50 in Australia.

These decisions, along with the new national cabinet’s complementary state and territory measures, have set the course and style of Australia’s response to the immediate threat of deaths and the longer-term prospect of national economic collapse.

In just three weeks the norms of social gathering, business, work, industry, education, healthcare and politics have been swept aside as Morrison has worked with all premiers and chief ministers in the common cause to “save lives and livelihoods”. For Morrison the die is cast. As Prime Minister and a Liberal leader he has decided on two essential strategies: first, fight the virus by limiting its spread and stopping spikes that overwhelm the health system to buy time until the infection curve “flattens”; and second, keep businesses going for as long as possible to restrict job losses and make recovery quicker.

“Today is about defending and protecting Australia’s national sovereignty. It will be a fight. It will be a fight we will win. But it won’t be a fight without costs, or without loss. Protecting our sovereignty has always come at a great cost, regardless of what form that threat takes. And today will be no different,” Morrison told parliament on Wednesday. “So today, we will agree to pay that price, through the important measures we will legislate today. But today, as a government, I want to commit to all Australians as Prime Minister that once we have overcome these threats — and we will — we will rebuild and restore whatever the battle takes from us.”

On these words and actions Morrison will come to be judged. Even with the hopeful signs of a drastic slowing in Australia’s COVID-19 infection rate and a low death rate by global standards, it’s far too early to say whether the health crisis has been addressed and whether different measures would have been better.

It’s certainly too early to tell if the huge counterintuitive spending of a Liberal leader, the business support and the idea of funding “hibernation” to allow a quick recovery will work.

On the health front, Morrison has faced criticism that there wasn’t enough testing for the virus; that he should have shut the borders earlier; that the Australian Border Force bungled the disembarkation of Ruby Princess passengers in Sydney; that there weren’t enough masks and protective clothing for frontline workers; and that he should have treated the health crisis as a priority.

His response in parliament on the health side was to thank everyone for their co-operation: “Together, we have now established the key baseline supports and protections that have bought us much-needed time in this crisis, to get us through … But there is a long way to go in this fight.”

Despite the criticisms, the Newspoll survey on Monday showed a record jump for Morrison’s personal support. His satisfaction went to a record 61 per cent and his rating as preferred prime minister jumped 11 percentage points to 53 per cent, compared with Labor leader Anthony Albanese’s 29 per cent after a fall of nine points. Primary vote support for the Coalition rose to 42 per cent and Labor’s fell to 34 per cent — the levels at the election last year.

More important, the public, across all political allegiances, overwhelmingly endorsed the government’s information supply on the coronavirus, preparations for the health system and the size and manner of the JobKeeper allowance.

As Morrison and Health Minister Greg Hunt have continued to rely on the expert medical advice, with Chief Medical Officer Brendan Murphy as the point man, the continued “flattening of the curve” tends to vindicate their position. Federal Labor had demanded more testing beyond the recommended protocols, accused the national cabinet of a failure of process over the Ruby Princess cruise ship, rejected the “twin crisis” approach and demanded priority for health.

The criticism on the health front has generally subsided and the federal Labor rhetoric on more widespread testing and health priority has all but disappeared.

If Australia emerges from the crisis with an internationally low rate of infection and death it will be hard to argue that some “go early, go hard” policy on lockdowns or an unconscionable and apparently faulty policy of “herd immunity” should have been adopted.

Morrison told parliament: “We do stand in a place, today, far better than most nations around the world because of the efforts of all Australians. Flattening the curve. Buying more time. Time other countries haven’t had, and we’ve seen the devastating effects on those nations and their people.”

But the real test of policy and politics for Morrison will come over the economy: the size of the debt, the jobless rate, the rate of growth, revival of business, industry and trade, and, most important, the ability to achieve his “snap back” of the unprecedented billions in payments and market interventions.

Morrison has not only handed over $130bn in wage subsidies for people to keep in touch with their jobs during the next six months, he also has spent billions on healthcare as well as providing childcare subsidies, bank support and business loans. He also has blocked landlords from evicting tenants, supported airlines and given funds to domestic violence and disability services.

As chairman of the national cabinet, he has always maintained that there are “no reds or blues” among the Liberal and Labor leaders, but when he said in parliament they had “checked ideology at the door” he could have been talking about his own party’s ideology. Morrison has come at the risk of depression from the left — supporting the jobless, subsidising wages, keeping businesses afloat and pouring billions into the existing welfare safety net.

The Opposition Leader acknowledged as much on Wednesday when he said: “I recognise that many of the measures being advanced by this government to intervene in the economy stand in direct contravention of their rhetorical position over many years.

“Australians can feel comfort that the government has been prepared to act in a way which I’m sure makes it feel uncomfortable.”

And he’s right. There are many within the Liberal Party who feel Morrison has gone too far, repudiated Liberal values and sown the seeds for an economic failure that can never been paid for.

Wage subsidies themselves, the size of the welfare payments, support for childcare and telling landlords they can’t evict tenants who don’t pay the rent are causing heartburn within the Coalition and conservative supporters, but complaints are not yet surfacing.

Paradoxically, it is Albanese who is voicing these concerns and building a platform to attack Morrison “down the track”.

Morrison’s snap back is a huge challenge, and in an age of expectation and entitlement it becomes almost impossible to withdraw assistance once it is made — there can be no losers.

Look at Tony Abbott’s successful withdrawal of the carbon tax: it cut power prices, yet he had to leave in carbon-tax compensation for welfare recipients as the price for passage through the Senate. Compensation was paid for a burden that no longer existed.

Albanese is unafraid to voice some of these concerns.

“The scale of this expenditure that we’ll consider today is without equal in our nation’s history. We are headed for a trillion-dollar debt. It is a bill that will saddle a generation,” he told parliament.

While Morrison has his eyes on the immediate health threat and economic threats with a view towards an economic revival in six months, perhaps, there is nothing he can say about debt except that it is the “price we have to pay”.

“This has been our road in. We will now lead the country on the road through. And then the road out and beyond,” he said.

But revelling in being in a Snap Back to the Future II, Albanese and opposition Treasury spokesman Jim Chalmers are talking about debt, the experience of the global financial crisis and the need to extend stimulus well beyond Morrison’s horizons.

“I await with interest the government’s rhetorical position down the track. Because the government, of course, have said, frankly, some absolute nonsense at various times,” Albanese said on Thursday.

“They’ve doubled the debt before the bushfires and before this current crisis. They doubled the debt. So, let’s not have any position that the debt that has been run up is just because of this crisis.

“The gap between the rhetoric and the reality of this government has been extraordinary … I think that the government will be held to account for their failure. Their failure prior to this crisis,” Albanese added, after pointing out that Labor supported the JobKeeper allowance although it felt the legislation was flawed and one million more people should be covered.

“I just hope the government takes the thought process that they’ve had on presenting this package and translates it to other issues as well. Have we really solved the issues of childcare, of welfare, of the economy, of micro-economic reform, of productivity, of our manufacturing sector, of science and technology, of research?”

Chalmers, who was treasurer Wayne Swan’s principal adviser during the GFC, argued that the snap back could stop the recovery “dead in its tracks” if Morrison acted too quickly and that while the measures should be temporary, they should not be withdrawn in haste in six months.

“What we learned during the GFC is that the business of stabilisation and recovery of an economy is a very delicate undertaking. It’s not only a technical policy issue but also one of confidence,” he told parliament. “We can deal with this crisis decisively, urgently and intelligently. We can reimagine the Australian economy, not just revive it. We can renew our society, not just resuscitate it.”

All these factors — the internal conservative concerns, the sheer scale of the spending and the political positioning of Labor to launch an attack on Morrison after declaring the need for a “different path”, a “different way” and labelling legislation “flawed” — are significant. They mean a successful exit from the health crisis will be mired and lost in the political debate over the economic recovery, which will take longer and will be more complex and ripe for exploitation.

Morrison has set his path, and Albanese is preparing his ambush.