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Is criticism of Australia's liberal democratic response to the coronavirus disaster justified?

By Chris Lewis - posted Monday, 30 March 2020


Surprise, surprise. There are prominent individuals of the left once again berating Australia's government policy choices, now in response to the coronavirus disaster.

This is despite the difficult task that Australian governments have with regard to the coronavirus response, as indicated by the debate between those who urge health considerations to be put first through a full lockdown, and those who believe in a gradual tightening of the screws to keep economic activity going as long as possible.

For example, Richard Denniss, inspired by the interventionist approach of China which closed down its economy hard, argues that if Australia had a bigger public sector today (including health and social welfare), "we would be better prepared to weather the health and economic crises triggered by the coronavirus".

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While Denniss also notes that the current extensive social security response to the coronavirus is at odds with past decades given Australians were told of the need to rein in government spending (as a "cost" to the economy), the current extension of social welfare measures is in line with being a modern liberal democracy.

The Morrison government has not abandoned its centre-right philosophical approach that is more liberal in terms of societal and economic leadership when compared to Labor's more interventionist centre-left policy approach.

After all, there are always sound reasons for any nation to balance its public expenditure with revenue, particularly in times of high economic growth, a reality downplayed by those who nearly always urge greater government intervention.

Rather, given that there are strengths and weaknesses in both the centre-left and centre-right policy perspectives with regard to the extent of government financial assistance in line with the particular context of the day, the demands created by the coronavirus disaster simply demand much greater government intervention.

Contrary to Denniss's assertions, Australia (like many other liberal democracies), despite promoting the private sector and freer trade much more in recent decades, has maintained levels of public social welfare expenditure while including reform such as mutual obligation requirements which have been relaxed in response to the coronavirus disaster.

In fact, it is debatable whether Australia would even have the same level of social welfare services today if it had not made the necessary economic reforms from the 1980s, a period which Denniss argues "allowed powerful groups in society to dress up their personal preferences as national goals".

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While policy trends are never perfect, and create new policy problems, it is an undeniable fact that the loss of domestic manufacturing industries has been compensated by vastly cheaper manufactured goods via imports while allowing Australia to prosper from greater mining, agricultural and education exports as global aggregate economic demand has increased.

In response to the coronavirus disaster, the Morrison government has announced several one-off $750 payments for eligible welfare and pension recipients, along with an additional $550 payment per fortnight (from late April 2020) for the unemployed (existing and new) and those receiving student payments.

While it is argued by some that government should be subsidising a large proportion of workers' wages to keep companies afloat, as is the case in the UK where its government has indicated it will cover 80 per cent of salaries up to a ceiling £2,500 a month as long as employers keep workers on their books, the Morrison government's initial approach was astute enough to know that many businesses will not hold on to workers simply because they may already be heavily indebted and/or have no work as customers turn away.

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About the Author

Chris Lewis has an interest in all economic, social and environmental issues, but believes that the struggle for the ‘right’ policy mix remains an elusive goal in such a complex and competitive world.

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