Now we will see them in full bloom. No, not my iceberg roses, although they look spectacular at the moment. No, now we are seeing our brilliant, supposedly better economic managers in action, the ones a majority of the country think are superior to Labor.
Here we are, facing an unexpected hit to the budget bottom line, an economic disaster, never mind that peoples’ health is threatened, a time of unprecedented calamity, a true test of our leaders’ economic credentials and who is in charge?
Imagine briefly, if you will, that Labor won the election last May and were facing the same circumstances today. The economy was already in a slump, however, an increase to Newstart would probably have been introduced. Thus, all else being equal, the December GDP quarterly increase of 0.5% would likely have been marginally higher.
The bushfire crisis, however, would have prompted a Labor government to commit funds to generate economic activity, probably in the tens of billions, money actually spent, smashing the budget bottom line, committing the nation to more borrowing (quelle horreur) and most importantly, saving jobs.
Already, we would have heard the cries of reckless spending and higher debt burdens to come, from the feckless opposition. God save our poor grandchildren from their diminished lifestyle. Deja vu, I hear you cry.
But no, this time we have the rare opportunity to see the oh, so highly regarded, superior economic credentials of the conservative side of politics in action. And what have we seen thus far? Nothing! Zip! Rien!
But this week, an economic package will be unveiled, estimated to be in the order of $10 billion. Wow! How generous is that? This will be the conservatives’ response to a crisis. And who will be the main recipients of this spending?
Pensioners possibly, in the form of a lower deeming rate, likely to put one or two more dollars into their fortnightly pension. Perhaps even an advertising campaign targeting the tourism industry. Small business will get something, likely to be in the form of wage subsidies to encourage them to retain staff.
The problem with that though, is that if there is no work for them to do, a wage subsidy won’t be much of an incentive for a builder, a plumber or an electrical firm to hang on to staff. They would want to see activity, the kind that creates work.
The issue we are facing today is a double whammy. We are facing both a demand and supply shock to our economy. The demand shock is reflected in peoples’ unwillingness to spend. That’s been the case now for nearly a year.
A supply shock is reflected in the unavailability of goods, even if people did want to spend. The coronavirus has restricted the movement of said goods worldwide. That means hundreds of thousands of workers losing their jobs.
But we must remember that our present leaders are the superior economic managers. They will manage this emergency. I mean, how good is Josh Frydenberg? His latest comment, “The Australian economy is very resilient,” should reassure us all.
All of which means, a recession looms large and with it, a serious test of the economic credentials of the conservative side of politics. That’s something we haven’t seen since Malcolm Fraser was Prime Minister and John Howard was treasurer, in the early 1980s.
And I can still remember how well that turned out.
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