Coronavirus: ‘Whatever it takes’ must be our motto

COVID-19 has delivered humanity a brutal reminder of the biblical axiom ‘pride comes before a fall’.

Prime Minister Scott Morrison, right, with Treasurer Josh Frydenberg during a press conference at Parliament House in Canberra. Picture Gary Ramage

The assault by COVID-19 shocks our contemporary assumptions — that humanity through reason and technology has mastered the universe to guarantee increases in life and prosperity, a reminder of the biblical injunction that pride comes before the fall.

Many cherished nostrums will be called into question from a pandemic probably unmatched for 100 years. Australia is reverting towards a command-and-control economy, just temporary, but inconceivable a few weeks ago. Post-crisis, our economy will be left with a recession headache of high unemployment, high debt, wealth destruction, easy cash, household insecurity and the risk of a more government-dependent culture. The idea of normal will change for most Australians.

More immediately, the cult of individual narcissism goes on trial with mutual social support now a survival imperative. Scott Morrison’s strategy to combat the virus is that “you can defeat it by slowing it down and that is how we save lives”. He appeals to everybody to “do the right thing”, self-isolate if required and observe social distancing.

Not just a test for Morrison

The entire strategy depends upon Australians having a high and disciplined sense of public duty. If individuals fail to honour this, they put the lives of their fellow Australians at risk. This is not just a test for Morrison. It is a test of the Australian character. If the people fail, he fails. And if he fails, they fail. Morrison, in effect, follows the principle that the rich and powerful — banks and landlords — must commit to the social good. If the public cannot discern this, terrible trouble will follow.

Despite the border shutdowns, globalisation will survive in our ­interdependent world. Indeed, without globalisation the world would face a crippling depression and Australians would be left far worse off. But the trend is obvious: nation state sovereignty, border security and nationalism will be elevated with some economic risks. The concept of national security will be vastly widened to incorporate responses to health, biological, climate and nuclear risks, with more domestic production of essential protective equipment.

The propaganda of techno-optimists will take a hit from this black swan event that should generate a new realism. It is overdue since the digital age has failed to produce the increase in either living standards or productivity promised so relentlessly. Meanwhile, people became infatuated with their devices, saw a decline in social capital, a fraying in the cultural foundation that constitutes the good life and were misled by predictions about a productivity revival.

The community now faces the immediate loss of jobs, incomes and investment security. The psychological strain and mental health issues will be immense. Community pessimism will surely linger in a public shocked at its vulnerability and the repeated false predictions of elites in finance, hi-tech and politics who for years have projected confidence but are devoid of historical wisdom.

The world never fully recovered from the global financial crisis of 12 years ago. The GFC and the COVID-19-induced recession, sure to be more damaging in its impact, are inexorably linked, creating a frightening economic challenge and legacy. The debate 10 days ago about whether Australia might avoid a technical recession is long gone. The only questions now about a recession are: how deep and how long? The global and domestic downturn cannot be calculated — it depends upon the battle against the virus — but it will be severe.

Morrison said: “Life is changing in Australia as it is changing all around the world.” The great unknown is how long the virus persists as a debilitating force. The longer it lasts, the greater the human, health and financial damage. Timing is everything. And the nation is at an early stage — Morrison knows a major challenge will be to maintain morale. He says people need to be prepared for a six-month struggle but it may be longer. We need to cross the bridge — but the other side of the bridge will be different to what we knew.

Geo-strategic rivalry will deepen, the focus being America and China. COVID-19 may shape the US election, helping to deliver Joe Biden the Democratic nomination, threatening Donald Trump’s presidency and giving Trump his “victimisation” excuse — blaming China for the virus. The narrative is already apparent. If Trump loses he, along with much of the populist right, will blame China for the defeat of his mission to “make America great again”, leaving a whirlpool of American confusion, hostility and international rancour.

Morrison offered strong and calm leadership this week. But this begs the ultimate question: have Morrison, his cabinet and the Chief Medical Officer, Brendan Murphy, got it right? Much of Australia’s fate, as well as Morrison’s future as PM, depends upon the answer that will emerge over the next three to four weeks in fighting the virus.

Australia is not a police state. It is neither China nor is it Singapore. Morrison said the aim was “to keep Australia functioning”. He dismisses any draconian “quick fix” or entire shutdown, at least so far, with Murphy saying there was “no way” Australia “could lock down society” by making everyone stay at home, the model in parts of Europe and some American states. Australia has closed its border with 70 to 80 per cent of infectious cases from or related to overseas travel.

Most significant was Morrison’s signal yesterday that a “hot spot” tactic was being discussed. That means tougher measures localised to where the virus is focused, possibly including school closures in those areas. But given the NSW situation, surely a “hot spot” strategy should already be implemented.

Josh Frydenberg calls this a “Team Australia moment” and task — with government, the Reserve Bank, the private banks and regulators uniting in a Thursday announcement of a $105bn package to try to save businesses and jobs and a Friday announcement by the banks to defer for six months small business repayments on loans worth $100bn.

Past norms are being destroyed. This is a test of our institutions, financial system and collective resilience. RBA governor Philip Lowe’s language and measures have no precedent. Lowe said people and markets faced “a rapidly changing situation that they have not seen before”. The central bank sought to build “a bridge to the time when recovery takes place”. It has two aims — to lower funding costs for the entire banking system to ease the cost of credit, and to provide incentive for lenders to lend.

The new 0.25 per cent cash rate “will remain at its current level for some years but not forever”. The bank now targets the benchmark three-year bond yield to stay at 0.25 per cent and, along with the government, is making $105bn available for cheaper cash to keep business alive and save jobs. Lowe said that without this bridge “there will be more damage, some of which will be permanent, to the economy and to people’s lives”. In short, this can be branded a “whatever it takes” moment.

The banks have a chance at redemption. They have responded positively to this Team Australia challenge. They had no choice. But having made this unqualified pledge — to help any small business with a loan — they must honour their commitment. It now becomes the absolute test of whether their claims post-royal commission about serving the ­social interest are genuine. It is critical, however, to realise that such actions are possible only because the Australian banks are strong and well capitalised.

Opening the lens wider, the notion of the liberal international order will sink further into obscurity. Protectionism will remain in the ascendant. This claim might be rendered false if Trump and China’s Xi Jinping settle their differences and ditch their trade war — but that seems unlikely. The fight against COVID-19 will inevitably become a test of the American and Chinese systems. This is a dangerous situation. The fear is that China’s ruthless authoritarianism, while integral to the outbreak, may outperform a democratic US in checking the virus and having fewer deaths, if anyone can believe the figures China will announce.

Global greenhouse gas emissions will fall dramatically as the world economy collapses but the pandemic will surely leave climate change at a crossroads. Will people, having touched death in this sudden 2020 emergency, become less agitated about the climate change emergency several decades off, or will the culture of a threatened planet — from whatever source — only entrench further the notion of apocalypse?

No journalist will write for some time that Morrison has no agenda. The insight here, contrary to the bushfire narrative and much of the beloved media critique, is that Morrison is emerging as an effective crisis manger — so far. The big judgments, of course, still lie ahead. Morrison is uncomfortable at initiating reform from a standing start. But those days are gone. The eruption of COVID-19 has given him a huge target to fight with all the resources of government and an opposition with no option but ­bipartisanship.

His response to the crisis in health, economic and financial terms will make or break Morrison as PM, with great potential on both the upside and downside. That is the nature of the situation. The politics of this parliamentary term are now transformed — and they will be transformed in most nations — with Morrison given an overriding mission: to check the virus, save as much of the economy as possible, and then to begin the long and arduous recovery strategy that will probably last a decade at least.

But the recovery legacy will be daunting for the Coalition. Having fought for seven years to return the budget to surplus and trying to avoid legislated increases in taxation as the solution, the Morrison government post-crisis will confront a huge deficit and debt, which it helped to create because this was the right response. But don’t for a moment think there won’t be critics within the conservative side bemoaning Morrison for succumbing to big government and high debts.

Pivotal to the decision-making has been the creation of the national cabinet involving the prime minister and premiers and the public elevation of Murphy and his deputy, Paul Kelly, as the public faces of medical advice. Again, that has been critical. Entering this crisis with an abject lack of trust between the public and the political class, it was imperative for Morrison to create an authoritative source of medical advice given the almost daily disputes over the national cabinet’s responses, the schools being the main example. Frankly, it would have been political bedlam without the medical ­officials.

The trust between Morrison and Frydenberg has been conspicuous. It is a defining feature of the government and the crisis. The economic response has been built on four rapidly created pillars — the $17.6bn first fiscal package, Lowe’s Thursday statement on the Reserve Bank’s radical monetary interventions, Friday’s statement by the private banks after negotiations with the Treasurer, and the expected Sunday announcement of the second fiscal package described by Morrison as designed “to cushion the blow over the next several months”.

Far larger than the first package, it will provide support to both business and individuals. The government hopes the combined impact will restore a degree of confidence. But, as Morrison said, no options are ruled out down the track.

This is a test not just of our political leaders but of our unity and resilience. After Australia’s 28-year recession-free cycle and the growth of polarisation and acrimony amid prosperity, how will the public manage adversity on a serious scale? The evidence, so far, is mixed. French President Emmanuel Macron, said: “We are at war.” Anyone remotely familiar with Australian history knows our home front in the two world wars was riddled with dissent and selfishness as well as marked by sacrifice and courage. Has anything changed?

Morrison has appealed to the public to halt the supermarket hoarding. He said yesterday the national cabinet made clear “there are extensive stocks and strong supply chains of food, groceries and medicines” and that “Australia produces enough food for 75 million people”. Police are now involved in stamping out violent and anti-social behaviour.

The national cabinet decided on Friday on advice for indoor gatherings — it should be one person per four square metres, or 25 people in a 100-square-metre room. Will this be followed? Will restaurants and other venues reduce seating capacity to meet the guidance? Indeed, and more important, are the required people self-isolating?

On Friday afternoon there were 854 confirmed cases in Australia, an increase of 162 in the previous day. The trouble spot is NSW with 382 cases, nearly half the total. Seven people have died and more than 100,000 have been tested despite the rigorous restrictions on testing.

The question is whether Australia is heading towards a dire European situation or whether the medical advice will be validated and the curve in this country will begin to flatten.

Australia has imposed the 500- and 100-person limit on outdoor and indoor meetings respectively, yet many academic experts believe tougher measures pointing to a full shutdown are necessary. Life is changing — no cinemas, no plays, few sporting events, restricted religious services.

This is when a strong inner life is essential, hardly the cultivation of our contemporary culture. Indeed, do people know what an inner life means? So, the question becomes: are we ready for the long night that lies ahead?

The New York Times journalist David Brooks in his 2015 book, The Road to Character, reflected on the Depression and World War II generation. Brooks said: “The more I looked into that period, the more I realised I was looking into a different moral country. I began to see a different view of human nature, a different attitude about what is important in life, a different formula for how to live a life of character and depth.”

This crisis over time will unleash a torrent of cultural and religious analysts probing for a deeper meaning. But it is impossible to overlook the obvious: at some point the idea of a God-­created morality was swept away in favour of another principle: that man, not God, is the centre of the universe and has the ability to control the fate of humanity.

This crisis will test that belief with the outcome unpredictable.