The government’s massive fiscal intervention in the Australian economy, entirely justified by the gravity of the COVID-19 crisis, will change centre-right politics in this country forever.
You cannot make the need for small government, free markets and less state intervention your chief political narrative if you have just used government on a scale never before imagined to rescue the nation from a desperate health emergency.
Federal and state governments are introducing immense changes to the way Australians are governed in this warlike mobilisation. Many of them, such as restrictions on civil liberties, will surely be strictly temporary. They must be.
But some will linger.
The Morrison government, like centre-right governments around the world, has to work out what kind of society, what kind of economy, it wants to emerge from this crisis. The centre-right will need to craft a new narrative on the role of government.
It needs to find a way to use the immense authority and power government will accrue to shape a society with values and practices that accord with its own philosophy, and that work for Australians in the long term.
The $130bn wage subsidy scheme is the biggest fiscal intervention in Australian history. It takes the three economic support packages, as the government deftly labelled them, to $214bn. When you add fiscal and monetary support together, you get to $320bn, or more than 16 per cent of GDP.
If coming out of the crisis in a few months’ time the government simply says these were wartime-like emergency measures so now we go back to our mantra about small government, they risk repeating exactly the post-war political transition that took place in Britain in 1945.
A grateful nation thanked Winston Churchill and the Conservatives Party for getting them through World War II. Then they elected Clement Attlee’s Labour Party, which they saw as the natural heirs of big government, the folks who would use the new powers of government to improve their lives.
A strong government to build a strong nation need not mean anything like socialism.
But that is a danger.
A real possibility, if we come out of this crisis intact, is we end up with an Australian version of Eurosclerosis — an affluent nation crippled by debt, big welfare and transfer programs, wide government involvement in the economy, yet still low on productive capacity.
Inevitably there will be competing narratives as this crisis one day ebbs.
One big narrative will centre on: is our health system adequate?
Another will pivot on a different question: how do we get Australia moving again economically?
The purity of free-market doctrines on aspects of trade and industry policy will have to give way to central considerations of national capacity.
South Australian Premier Steve Marshall is right to insist that we must have the ability to manufacture surgical masks and all elements of protective medical gear in Australia.
For there is no reason to think that COVID-19 is the last or only pandemic we will ever face.
It is surely scandalous that as the 13th-largest economy in the world, and one of the richest societies, even now, four months into the coronavirus crisis, we cannot manufacture ventilators.
Australians will want these critical shortfalls addressed.
They will be addressed either by a pro-growth centre-right government or a pro-redistribution centre-left government.
Saddled as we will be with such debt, there will be a huge imperative for government to find creative ways to finance key infrastructure and other projects.
You can neither leave it all to the market nor leave it all to the federal Treasury.
This will be even more challenging, given the necessity of diversifying away from our trade, services and supply line over dependency on China.
Consider this: in three weeks, the Morrison government could mobilise more than $320bn for a national crisis but it took the Adani group eight years to get a licence for a coalmine that both sides of federal politics always believed served the national economic and security interest.
Across the government, key ministers are identifying priority projects and priority reforms needed to get the economy into recovery.
This involves infrastructure such as dams, roads, resources projects and much else. Senior ministers are determined to cut through “green lawfare” that has paralysed so much development.
These projects will have to involve the private sector as the government will not have enough money, although one big danger will be people drawing the wrong conclusion that government money is limitless if you really need it.
There will be serious opportunities for Australian super funds with their trillions of dollars under management.
Right now, the priority is rightly entirely on dealing with the health crisis. But a shattered economy, and a stressed society, will need rebuilding. It’s not too early to think seriously about the shape that rebuilding takes.