Features Australia

It’s not the virus killing our economy. It’s governments.

The billions borrowed will have to be repaid

26 September 2020

9:00 AM

26 September 2020

9:00 AM

Six months after hibernations, lockdowns and furloughs in response to the coronavirus began hacking chunks out of Australia’s economy, the damage is becoming apparent: these are not short-term shocks for the public good, but are driving a savage contraction that will take years or decades to fix.Hundreds of thousands of jobs are gone. Livelihoods have been destroyed. Many ‘zombie’ businesses will fold once handouts and rent waivers are withdrawn.

Add the mess Labor has made in Victoria, where millions remain in near-total lockdown (that began in early July) until 27 October – with state and federal economies being trashed to aright the errors of an incompetent government that refuses to apologise or admit fault – and the malaise compounds. Even with borrowed federal money saving some of the furniture, the hangover will be intense.

The ABS measured national GDP for 2019 at $1.9 trillion; if Covid-19 triggers a 10 per cent contraction (which probably understates it) it’ll take three consecutive years of almost 5 per cent growth just to restore 2019 levels. Weak, recovering businesses meeting hiring, onboarding and training costs will stymie that growth.

This sobering scenario, with public debt at post-war highs above $1 trillion, means Australia will be forced to live within its means for the first time in decades. Its tourism and hospitality industries, and a large slice of the retail sector – in turn, a huge chunk of Australia’s small business backbone – are dead or moribund. 28 recession-free years lured Australians under 50 to believe the dangerous fallacy of the ‘miracle economy’. Indestructible Australia – rich (on paper), growing (off mining and migration) and immune to the world’s ills – had money to throw at anything and everything. Such thinking was always folly.

In seeking the US presidency in 1992, Bill Clinton’s mantra was ‘it’s the economy, stupid’. When some semblance of normality returns to Australia, its national mission could not be better stated.

Alleged ‘moral challenges’ have vanished faster than ice in the desert in the Age of Corona; when recovery comes, this idiocy must stay buried in the past. Extravagances airily justified on the basis of Australia’s wealth must be abandoned. And funding do-gooder causes from a misplaced sense of noblesse oblige must stop.

How much do you hear now about climate change? Even Euro-brat Greta Thunberg has cut her losses and gone back to school. Human rights? White privilege? Misogyny? Sexism? You hear about ‘racism’, for the pack that screeches about it howls down any attempt to hold China accountable for the virus as ‘racist’.

They don’t protest in China; doing so would literally be fatal. Even as fellow travellers, they’re terrified of the Communist party. This hypocrisy pales beside the silence of those who bellow fashionable causes are our moral challenges, shaking a finger on one hand while swilling chardonnay from a glass in the other.

If activists or purported community groups want to peddle agendas they should hold tin rattles, not insist taxpayers foot the bill. Billions spent on ‘not for profits’ spewing ideology, or tribunals policing thought and speech, are insidious indulgences we can no longer afford.

However you view government action to ‘hibernate’ it, the economy would’ve been better placed to weather Covid-19 had that money not been squandered. It’s why unshackling the economy and removing government from things it should never have meddled in are crucial.

Our business and personal taxes are among the world’s highest, driving investment abroad, and many of our best and brightest with it; our IR system, quaintly billed as ‘modern’, is inflexible and impermeable, with the world’s highest minimum wages. Some awards contain hundreds of ways to pay similar workers; many feature loadings, allowances and bonuses for doing menial work. It’s an unproductive disgrace.

No government can spruik ‘technology-agnostic energy’ while prohibiting nuclear power, or while billions of dollars subsidise Ponzi schemes like wind and solar. Yet mining has become a money tree for revenue-guzzling states, or (in Victoria) banned altogether, causing energy shortages and high prices.

Speaking of the states, what point do they serve? Playing each other off against Canberra? Their initially sound handling of Covid-19 has given way to parochialism and feckless posturing. The Victorian fiasco – with an inept state government now sabotaging Australia’s economy – fuels buck-passing and blame games.

Meanwhile, the Western Australian government refuses to open its border, presumably until its re-election is secure. Similar pre-election grandstanding in Queensland led to the death of an unborn child last month. It is impossible to divine what use these keystone regimes serve in modern Australia.

Forget the lefty nirvana of a republic: abolishing the states and dividing responsibilities between Canberra and local authorities would be a better referendum goal, unlocking billions of dollars by ending duplication. As for climate change and other left-wing zealotry, the economic decimation taking shape as the corona virus episode runs its course means genuine reform simply must override fashionable frippery. Meaningful reform ground to a halt 15 years ago: John Howard’s WorkChoices misadventure scared later governments off real change. Ongoing reform may have better positioned us to meet the Covid crisis.

Not all of this falls to government; business shares blame. Companies that put ‘corporate social responsibility’ before their customers and shareholders must prioritise them instead of mollifying activists. And spare a thought for ‘influencers’: for these vermin – ticket-clipping parasites – the gravy train must stop.

After weathering the Asian Financial Crisis and the GFC, Australia now finds it isn’t invincible at all. Covid-19 has shattered the myth of the miracle economy. There’s one certainty: there will be a next time. If some future pandemic is truly lethal – like a variant of Ebola, which kills 50 per cent of its victims – no shutdown or posturing will stop it.

Instead of taking fortune for granted, obsessing over fancies predicated on inconsequential symbolism, as Australia recovers it must prioritise a robust economy over progressive dogma – and not drop the ball again. Budget repair and a free economy should be national watchwords, not concepts pilloried by the belligerent Left and abandoned by everyone else under the force of the onslaught.

And despite rhetoric about expertise in health, Labor – which has run Victoria for 17 of the past 21 years – has unwittingly demonstrated how unready Australia really is to deal with a crisis.

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