Covid 19 has hit the Australian economy hard. By some estimates the Australian economy will shrink by approximately 7 per cent in 2020. Maybe more. That's a virtually unprecedented recession.
Shutting down workplaces: hospitality and tourism, higher education and some manufacturing: comes at an enormous cost.
We can't put a price on peoples' lives and peoples' health. But many people will need to sacrifice to 'spread the burden' of funding recovery.
Some have suggested a 'HECS-style loan' for those unemployed as a consequence of this crisis.
Because this discriminates, it is unfair. Richard Denniss – speaking on ABC radio – is correct about this. Though I think he is wrong about HECS more broadly. Income contingent loans to pay for government support of individuals during the crisis would mean a veritable 'labour market lottery' as to who was left with debt. Denniss agrees with this much. But also 'income contingent loans' have a longer history of losing their progressivity as governments reduce thresholds to help pay for other endeavours – such as ubiquitous corporate welfare.
Also will the government temporarily increase corporate tax during the recovery period to service debts incurred supporting the private sector during the crisis?
The government's stimulus has provided a lifeline for many and should not be withdrawn prematurely.
But one rational assumption is that the economy won't simply 'snap back' at the end of a six month period ; and as a consequence the government cannot afford to 'step back' and just let the private sector 'fill the breach'. The real economy doesn't work like this.
In hospitality and tourism the structural effects on the economy could last quite some time. We don't know whether there will be a 'second wave' or whether we will 'break the back' of the spread in this country. But global travel will take years to 'get back to normal', and the US and the UK are still deep in crisis. The ACT and Northern Territory also understandably want to reap the benefits of wiping out the virus, and don't want it reintroduced from interstate.
On the other hand the crisis provides an opportunity to broaden and deepen the public sector to create the 'economic infrastructure' around which recovery will occur. Make strategic infrastructure investments, as well as structural improvements in public services ; unemployment services ; in Health, Aged care and disability services ; in welfare, transport, communications, arts. The NDIS needs to be more accessible, with 'consumers' interests protected more vigorously. The CES (or 'Centrelink' these days) should be refunded as a 'one stop shop' for job-seekers - but without the usual harassment and humiliation. Homelessness could be addressed 'head on' with a big investment in public housing. Fix the NBN with 'fibre-to-the-home'. A big public investment in renewables. And coming out of the crisis: Have an active industry policy which strategically supports and invests in high wage manufacturing.
This is also an ideal opportunity to progressively reform welfare across the board ; and lift job-seekers out of poverty.
On ABC radio high speed rail was inferred as perhaps a 'dubious investment'. But it could drive growth in the regions, with a flow on of jobs and affordable housing. As well as containment of urban sprawl and the transport crises that ensue from that.
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.
24 posts so far.