Australia is now in the grip of an economic panic and we have the least trusted government in our history trying desperately to respond. Something bigger than a stimulus package is needed — the government needs to reset its entire focus in order to restore calm and convince consumers, investors and workers that it is capable of leading the country.
Stock markets aren’t the real economy, by any stretch, but when the unmistakeable smell of panic starts wafting from them, it alerts citizens in the real world that something frightening is happening, something beyond a couple of dopes fighting in a supermarket over toilet paper.
The fact that the government’s mates and donors in big fossil fuel companies are among the most prominent victims of the ASX panic should drive home to the government that its efforts to instil a sense of calm and control so far have come to nought.
There's more to Crikey than you think.
Get more Crikey for just
That’s partly because Morrison has used the crisis to score political points off Labor. He falsely accused Anthony Albanese of refusing briefings from the Chief Medical Officer because he wanted “selfies with sports stars”. And the government was keener to distance itself from Labor’s financial crisis response — during which, we were reminded, the government sent cheques to dead people — than crafting a sensible package.
This ended up creating a trap for the government itself — notice the way the backgrounding on the stimulus package has shifted. It was going to be “modest”. Then “measured”. The talk was of $4-5 billion, which even then was woefully inadequate. It was going to be all directed at business and it certainly wasn’t going to Newstart recipients. Today the government’s media mates are saying that the package will target pensioners and Newstart recipients.
But the government is in no position to ask voters to have confidence in it after various scandals revealed outright corruption — rorted grants programs, the forged document scandal, dodgy water deals — on top of failures like the lack of bushfire recovery funds.
Will any of the money announced as part of the coronavirus stimulus package actually reach the intended recipients, or will it be siphoned off for the government’s own partisan interests and to its donors?
That’s why the government’s response not merely needs to build confidence in the economy on the part of consumers, investors and businesses, but build confidence in itself to give the economic dimension a chance of working. In other words, it needs a fundamental reset, under the cover of the coronavirus crisis.
What would a reset look like? It could have two components — an immediate stimulus package, then an early budget.
An immediate package, which should be announced this week, should focus on bolstering spending and encouraging businesses to retain workers. The willingness of employers to hold onto workers in 2008 and 2009 was important in preventing our unemployment rate from getting too far above 6%.
A permanent, rather than temporary, lift in Newstart will ensure recipients spend all of it, bolstering demand; an accelerated depreciation tax break would also drive spending by small businesses.
That package should act as a circuit-breaker until an early budget in mid-April. That could lay out a series of broader measures that would help to bolster the economy and confidence in the government — and government itself. These could include:
- allowing unemployed people, or those in the gig economy without work, to access their superannuation;
- announce a major bond issue — in the tens of billions — to take advantage of extraordinarily low bond rates and the demand for government bonds to fund the stimulus package and establish a treasure chest for further measures, if needed;
- announce the establishment and funding of a proper federal integrity and anti-corruption body based on the NSW ICAC model, which doesn’t exempt ministers or staffers from its remit and includes corrupt conduct rather than just criminal offences, and conducts hearings in public;
- announce curbs on political donations (in all forms) to a small level — say $1000 — with political parties able to access an increased amount of public funding;
- increase funding for the Australian National Audit Office from its current level of around $70 million a year to around $100 million a year, to enable it to audit a much wider range of programs and expand its “effectiveness audit” function that assesses whether programs actually achieve what politicians say they’re supposed to achieve;
- announce a 2050 net zero carbon target and a significantly expanded 2030 Renewable Energy Target, along with an overhaul of the sclerotic Australian Energy Market Operator, to remove major impediments to the one industry where we know business is desperate to invest — renewable energy.
That would send a strong message to voters that the government understands it has a serious integrity problem and is willing to put aside partisan self-interest in order to maximise the chances of its stimulus efforts keeping Australians in jobs.
Anything less risks letting panic continue to run rampant on stockmarkets and supermarket aisles alike.