(Image: AAP/Lukas Coch)

It’s a measure of how rapidly we’ve descended into crisis that 11 days ago a stimulus package worth nearly $18 billion seemed like a good first step in supporting a virus-ridden economy, but yesterday’s announced $66 billion package looks inadequate.

The government did its best to hype the size of its second package, throwing in the Reserve Bank’s liquidity and credit funding measures as well as the first package to claim it was handing out $190 billion. Some press gallery journalists dutifully bought it. But the great bulk of it is additional loans or investment funds being made available for business if they can use it. Only about $60 billion is actual cash going to businesses or households, and much of that won’t reach businesses for at least four weeks.

And by last night, the package was being forgotten as the states and the federal government split over school closures, sundering the “national cabinet” model that has so far been an effective innovation by Scott Morrison (and, no, it doesn’t need Anthony Albanese on it, but that’s an argument for another day).

Morrison has been taking a graduated approach to dealing with the crisis, escalating both the health and economic responses as circumstances have worsened. All along, he’s been under pressure to dump that and embrace full-scale measures.

Public health experts and academics — who have the luxury of not having to ever be elected, and who don’t need to care about the consequences of a prolonged economic crisis — have been demanding Italy-style quarantining from the get-go. The pressure to shut schools from media commentators and worried parents has been enormous.

Morrison, acting on the basis that the benefits of schools staying open outweighed the costs, resisted those pressures both publicly and through the national cabinet. But yesterday the pressure became too much. Victorian Premier Daniel Andrews, backed by NSW Premier Gladys Berejiklian, basically pre-empted the national cabinet process and said Victorian schools would be shuttered from Tuesday. The ACT is following suit. Gladys Berejiklian this morning announced a weird kind of compromise in which school would be open but parents advised to keep their kids at home.

There are also claims Morrison resisted a push from NSW and Victoria for a shutdown of all non-essential businesses.

This is the problem of a federal system in the time of crisis. There are just 25 million Australians but, ludicrously, we have three tiers of governments funding and providing a jumble of different services, often simultaneously.

That produced last night’s ridiculous scenes in which Scott Morrison held a foul-tempered late-night media conference declaring that schools would be open while states and territories were announcing that no, they would not be. Even journalists paid to report on proceedings didn’t have a clue whether schools would be open, let alone parents.

The same graduated approach has informed the economic response. But that, too, is under pressure.

Business groups welcomed the package yesterday but said more was likely to be needed, and the money would be too slow to reach employers. By late yesterday, there were reports that a third package was already in development.

The government is resistant to the wage subsidies being implemented in Europe, but that will be the only way to keep people in some form of employment as thousands of companies (small, medium and large) hit the wall in coming weeks. Cheap unsecured loans are fine, but when no one knows how long the crisis will last, taking on more debt is a big ask.

There’s good reason for the government to try to play this by ear, to scale up its response as the situation worsens and more information becomes available. Ostensibly it’s the lower-risk, fewer-regrets approach. But it comes with the possibility that, in striving to strike a balance between competing priorities — health and the economy — we end up with the worst of outcomes for both.

Yesterday didn’t help. What was supposed to be a big splash of government assistance got lost in the battle over school closures. It was the last thing Morrison — and the rest of us — needed.

This is an extraordinarily challenging time to be in government, anywhere and at any level, with policy responses required that are even more complex than during the financial crisis. There is plenty of criticism of Morrison, but it’s not been his overall strategy that’s necessarily the problem — it’s that it’s been overwhelmed by the speed and size of this catastrophe.

Peter Fray

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