Coronavirus: States must lift their game, says Scott Morrison
Scott Morrison has ramped up pressure on states and territories to lift their economic response to the COVID-19 crisis.
Scott Morrison has ramped up pressure on states and territories to lift their economic response to the COVID-19 crisis after laying responsibility for the second-wave outbreak in Victoria at the feet of the Andrews government.
After revealing the federal government’s emergency response had risen to $314bn, the Prime Minister on Friday made pointed reference to the combined contribution from the states of nearly $45bn. Frustration is emerging within the Morrison government that despite strong balance sheets, state and territory leaders have shown a reluctance to commit to direct fiscal intervention.
It is understood the issue was raised at the national cabinet meeting on Friday.
Spending by the states had reached just 2 per cent of gross state product, a measure of their economic output, compared to almost 16 per cent of GDP provided by the federal government.
Queensland and NSW have each spent 2.4 per cent of GSP on COVID measures, compared to 2.2 per cent in Victoria, 2.1 per cent in Western Australia and 1.3 per cent in South Australia.
Tasmania has been the biggest spender as a proportion of its economy, at 3.6 per cent of GSP.
With monetary policy now all but exhausted and the national gross debt rising from $636bn to $850bn in response to the crisis, pressure will shift to the states and territories to lift their contribution, with their combined assistance in terms of debt amounting to just $1bn.
“The commonwealth has come to the rescue,” Mr Morrison said after the national cabinet. “The overall commitment of the commonwealth now in the various measures … particularly in direct fiscal measures, is well over $300bn. At a state and territory level combined that investment is just over $40bn. We spoke today about the importance of continuing to work together to provide … support to the economy.”
With rising anger over Victoria’s quarantine failures, which have led to the most draconian lockdown laws in the country, Mr Morrison sought to distance the federal government from the disaster while making it clear the Andrews government was responsible for the quarantine fiasco and the aged-care crisis.
Frustrated federal cabinet ministers have blamed Victorian Premier Daniel Andrews for the state’s health and economic disaster. While refusing to directly criticise him, Mr Morrison said the Premier needed to be accountable for the quarantine failures.
He backed Josh Frydenberg’s calls for Mr Andrews to be held to account.
“I am so devastated about what has transpired in my state,” the federal Treasurer said. “It should have never gotten to this. But I’m not serving Australians or Victorians by engaging in a blaming match. My support goes to the Victorian people.
“The emotional toll on Victorian families, on young women who are trying to care for their kids and hold down a job at the same time, on grandparents, on businesses who have to close their doors, with millions of people uncertain about their job future.
“I’ll let Daniel Andrews explain what happened on quarantine, that’s for him to explain, that’s for him to account for.”
Reserve Bank of Australia assistant governor Luci Ellis said the Australian economy would “take several years” to return to its pre-pandemic path. The RBA’s latest quarterly economic outlook, released on Friday, predicted the cost of Victoria’s second wave of infections and associated lockdown would reduce growth in national real GDP by two percentage points over the September quarter, compared to Treasury’s preliminary estimate of 2.5-percentage-point hit.
The Prime Minister re-enforced the federal fiscal intervention, the largest in the nation’s history, saying the government had “a very clear and strong” plan to emerge from the crisis.
“While we are in these again very dark times, places we’re not unfamiliar with through this pandemic … governments are working together,” he said. “The federal government has a very clear and strong plan for the road out to ensure that Australia will emerge strongly.”
Mr Frydenberg also signalled that while the federal government was doing the heavy lifting on fiscal stimulus, the states would need to lift their game and leverage their strong balance sheets to help rescue their economies. “The Morrison government is pulling out all stops, doing whatever we can to support Australians through the crisis to maintain that formal connection between employers and employees to help businesses and workers get to the other side,” he said.
National cabinet also endorsed a national freight movement code to allow the efficient transportation of goods across borders. The code, backed by health officials, will offer consistency on border controls and testing requirements for freight operators.
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