Budget 2020: Global state of flux means nothing is assured at home

It’s as if the health threat from corona­virus has disappeared, the emergency $507bn spending for job and business support has done its job, and it’s all done and dusted.

COVID-19 has not gone away, of course, nor has the need for continued emergency job support and the bringing forward of tax cuts, but the central political ­debate is now about the economic recovery into the next year. And, of course, the next election.

How quickly Australia can recover­, how high is unemployment next year, how much does business invest and what permanent reforms and changes can be made are the questions now being addressed.

After early criticisms of Scott Morrison for a lack of medical prepared­ness and quarantine restrictions­, and then attacks on the timing and extent of emergency measures such as JobKeeper and JobSeeker, the focus is now on the economic recovery.

The government’s budget forecasts for growth and recovery are based on the assumption that there will be a generally available COVID-19 vaccine in Australia next year, so the planning at this stage is to taper job support and switch to policies that create jobs and investment in the long term. It assumes progressive reopening of state borders, gradual returns of international students, an uplift in consumer confidence and retail sales, and no interest rate rises.

Even Anthony Albanese is turning his attention to long-term issues and reforms arising from the pandemic and opportunities to propose Labor alternatives to the Prime Minister’s private ­sector-driven recovery with tax cuts and business incentives.

Rhetorically the nexus between the “twin crises” of fatal health and economic recession has been broken at a federal level because of Morrison’s success in dealing with the coronavirus and breathtaking financial support for workers and businesses.

Josh Frydenberg used the budget as a platform to launch a more permanent economic response to the global pandemic, after almost a year of phased, temporary and emergency payouts.

The Treasurer also set out a number of ambitious and optimistic economic forecasts about growth, cutting unemployment and business investment. On the assumption of a vaccine next year, the Coalition is proceeding with a strategy of tapering emergency payments and ultimately getting people back to work without governme­nt support.

Labor seems to accept that assumption as the Opposition Leader and Treasury spokesman Jim Chalmers shift their focus from extending temporary measures such as JobSeeker to permanently raising unemployment benefits.

Albanese used his first budget reply speech to outline major economic and social policies, including­ productivity reforms aimed at repairing skills short­ages, childcare support for working women and appeal to blue-collar and older workers.

His theme is “No one left behind, and no one held back’’, while attacking Morrison for “leaving behind” women and workers older than 35.

Morrison is turning his attention to the Labor leader’s “in­experience” and “inconsistency”.

“The Leader of the Opposition has an each-way bet on everything. He would go for a win and a place in a two-horse race,” he told parliament as he sought to tarnish Albanese’s budget response even before he delivered it.

That’s where the debate is now, but it can still be derailed because coronavirus hasn’t gone away.