In the end, choice to jettison target was the only path

Scott Morrison and Josh Frydenberg speak during House of Representatives question time at Parliament House on Thursday. Picture: AAP

Scott Morrison and Josh Frydenberg have made an economic and political decision to jettison the budget surplus.

In the end they had no choice.

The argument that avoiding a deficit was a greater political imperative than avoiding a recession is no longer a consideration.

This is a shoulder-to-the-wheel moment for the Prime Minister. And the state and territory governments should be equally tasked with throwing their lot in.

The world has changed. And with it, the priorities of government have shifted.

The government now concedes that this is a crisis that may exceed the global financial crisis in its impact.

The foundations may be fundamentally different, but the fallout may be more profound. The virtues of a balanced budget have now been replaced with the necessity of a maintenance of the economic realities. Jobs are at risk. And with it is the lifestyle to which we are accustomed.

The Prime Minister’s dilemma is in the messaging. On one hand he is asking people not to panic. On the other, he is poised to roll out an immediate-term assistance package in response to the reality that the economy is in freefall.

The economic narrative has shifted profoundly but the short to medium-term impacts could well be worse.

Morrison’s challenge will be to convince people that the government has a fix on where this is all going.

Labor’s position on this will also now be tested.

While it has argued since last year for a stimulus package — including bringing forward stage 2 tax cuts — as the economy began showing signs of weakening, a week ago Anthony Albanese was arguing that a GFC-style stimulus package in response to coronavirus was not needed.

Economic recovery will be contingent on confidence. The immediate shock of supply is being compounded with the fear of a collapse in domestic demand.

If the bushfire crisis was a challenge for the government, coronavirus is now the defining issue for Morrison’s claim to stability and competency of government.