The economic news last week was enough to make the depressed reach for an extra anti-depressant tablet or two. Yes, it was bad economic news, folks; as bad as I have ever heard in my lifetime.
Given that the economic and fiscal update was based on so many assumptions such as Victoria bringing its mess under control within a 6-week lockdown period, it seems more like pure guesswork.
With Victoria’s COVID-19 numbers still in the high hundreds each day, Treasurer Josh Frydenberg and Finance Minister Mathias Cormann are most certainly way off the mark.
The lockdown is now half way into its 6-week period and the amount of cases are showing no signs of abating; therefore is it time to say that the economic statement is just good intended bullshit at best, or incompetent guesswork at worst. In other words all a bit meaningless?
Before I move on allow me to quote the Finance Minister on debt and deficit. When at their joint press conference Senator Cormann was asked a question on the subject, he answered:
“What is the alternative? Are you suggesting that we should not have provided the support we did to boost our health system, to protect jobs, to protect livelihoods? I mean, in the circumstances what was the alternative.”
Greg Jericho, writing for The Guardian pointed out the hypocracy:
“It is an excellent point, and one dripping with as much hypocrisy as any statement that has ever been uttered by a finance minister in our history.
It is exactly the same reasoning that was behind the stimulus undertaken by the Labor government during the GFC.
What was Senator Cormann saying then?
In February 2009, he told the senate: “We have got this $42bn cash splash. What is this going to do? It is going to end up with us having $111bn worth of debt for starters, and even up to $200bn of debt, with a $9,500 debt for every Australian. This is absolute panic stuff.”
The problem with Cormann’s question of “what is the alternative” is not that is it wrong now, but that it was never wrong.
On Thursday, the Treasurer – with Cormann at his side – trumpeted that:
“Without the government’s economic support, unemployment would have been five percentage points higher.”
Back in 2009 Cormann told the Senate that:
“… governments cannot inject new money into the economy. All that governments can do is take money from taxpayers – either today’s taxpayers or, after borrowing money, tomorrow’s taxpayers.”
(I just needed to get that off my chest because just like that debt and deficit no longer really matter. Their hypocrisy is unforgivable.)
To get us out of this problem the government needs to adopt a Keynesian philosophy and borrow heaps of dollars, but in doing so have also to admit that their criticism of Labor for doing the same thing during the GFC (an approach that kept Australia out of recession) was all political bullshit and they were wrong.
This might be far too tempting for their collective egos but nonetheless it has to be admitted. We may even have to forgive them so that they may do the same.
So, how much wiser is the public with regards to the future?
Well they know that in Victoria COVID-19 continues on and 400 cases per day is much the new norm.
And come December there will be an unemployment figure of around 10 per cent or higher, youth unemployment will be around 14 per cent and women will also be worse off than a bad marriage.
Shane Wright’s article in The Age, ‘Long-term scarring’: Young people will suffer their entire working lives from COVID-19 offers a view of the current bleakness:
“Young people have suffered the largest increases in unemployment, and the biggest falls in jobs, since the advent of the pandemic”
In June, the jobless rate for those aged between 20 and 24 soared to 13.9 per cent, with almost 150,000 jobs disappearing since the start of the year. Among people aged 25 to 34, the unemployment rate has climbed by almost 3 percentage points to 7.5 per cent, with 164,000 jobs gone.”
Rather than being in the black – as the government said they would be before the last election – we will be in deficit by $86 billion for the 2019–20 financial years, and by $185 billion in 2020–21, and, writes Paddy Manning:
“Treasury predicts that Australia’s GDP will fall by 3.75 per cent in the 2020 calendar year, and then return to 2.5 per cent in 2021. So, amid the biggest shock since the Great Depression, the government expects the economy will grow at a faster rate next year than the two per cent it recorded before the pandemic in 2018–19.”
That is a brave assumption.
How convenient, neither Frydenberg nor Cormann would say how long it might take for us to have a budget surplus or to pay off the new debt.
It seems they didn’t know much about anything. They couldn’t say if the October budget, which usually includes four-year forward estimates, would include public service cuts.
When Shane Wright, Nine’s senior economics correspondent asked if the dreaded austerity principles of the Abbott years would be adopted, meaning that any new spending commitment in the budget would have to be offset by matching cuts elsewhere, Freydenberg answered “Clearly we’re in a very difficult and different time,” adding it called for a “different approach”.
The public know that there is no way of avoiding unemployment figures never before seen in this country.
The million or so unemployed at Christmas time will be suffering greatly. Some young will return to the family home, stripped of their independence and to yet again be supported by their parents.
In their misery others may choose suicide as a means of opting out.
Charitable organisations wont be able to cope with the masses on the dole.
Others will suffer because they are just too old to worry about.
The government could take from the $120 billion it provides to the rich and privileged in schemes that allow them to become richer but wont because their ideology prevents it.
The Prime Minister will continue to say that they will increase Newstart but not by as much as to discourage people from looking for a job even though there are 13 people looking for the same job.
If you thought that Snapback had disappeared … you would be wrong. It returned as a plan the government took to the last election.
Instead, writes Manning:
“Its JobMaker plan for the recovery included – IR reform, infrastructure investment, skills and training, and cutting red tape – and insisted the Coalition would remain the party of lower taxes.”
If that’s not a Snapback I don’t know what is. But it’s not really a plan. It sounds suspiciously like an economic philosophy.
By now after being inundated with bad news since before last Christmas the general public are well aware of the sadness that confronts them.
However, last week’s economic statement was missing the one vital ingredient necessary in the recipe for our recovery; assuming we overcome the pandemic that seems to have so far, to have confounded us.
Where is the plan, where is the blueprint that marries into the future our society with our economy?
Show me in this ‘plan’ the part that says:
- In the future there will be less empathises on ideology and more on the common good, equality, and fairness.
- A complete change in the purpose and application of money.
- Where in this presentation by the LNP are the daring innovative ideas that might redirect our thoughts for the future.
- A ministry for the future with greater recognition of science that accepts public submissions and more investment in education.
Could we get fair dinkum about renewable energy and create the many thousands of jobs we know are buried in its construction.
Show me the plans for an Australian electric motor vehicle. We have the expertise, the facilities, and the people. All we need is the will to give it a go.
The true test of a successful recovery will be in the jobs we create and the manner in which we create them.
Insist that private sector aged-care employ more people.
Free childcare for those women who have or are seeking work.
We badly need to hear what the government plans to do.
Those among us who remain vibrant and enthused about the future just need to see the big ideas even taking into account the Jurassic Park thinking of the Coalition.
My thought for the day
We live in a failed system. Capitalism doesn’t allow for an equitable flow of economic resources. With this system a small privileged few are rich beyond conscience and almost all others all the others are doomed to be poor at some level.
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