Flat White

The Morrison government is in a bind as base gets restless – and that’s before we get to climate

12 August 2021

12:24 PM

12 August 2021

12:24 PM

At the outset of the pandemic, there were those hoping it would be the spark for their versions of economic “reform”. On the right, there was an anticipation of supply-side economic policies, with the by-product that there would be a reduction of focus on fashionable social causes by big corporates. On the left, there were calls to fund nation-building projects, address climate change and invest in social services, with the underlying aim of addressing inequality.  

What transpired was the centre-right Morrison government rolling out stimulus spending that dwarfed the Rudd government’s GFC response. In the first quarter of 2021, with the nation emerging from lockdowns, and with better than forecast employment and budget numbers, the government seemed well placed. Furthermore, there was a widespread view that the government’s fiscal largess had constrained the ALP politically. But the pace of the vaccine rollout, not helped by controversy over the Astra Zeneca vaccine, has overshadowed the government’s economic “comeback” story. 

Unlike the mid-1980s, when the Hawke government undertook serious fiscal reform, Australia during the pandemic has not faced a balance of payments crisis nor inflationary pressures. Australia’s iron ore exports to China have held up and high inflation hasn’t existed since the early 1990s recession. Both may change. 

Like the early 1990s recession, Victoria has so far been the most affected, not yet fully apparent in economic data, but certainly in terms of mental health and private sector morale. The “circuit breaker” lockdowns of 2021 have compounded the social and economic loss of the protracted lockdowns of 2020. Notwithstanding the emergence of the Delta strain, aspiring to “Covid zero”, rather than “flattening the curve”, continues to incur significant human costs. A growing concern is that “holistic health”, once fashionable, appears to have been cast aside in favour of political and health KPIs revolving around Covid-19 case numbers. 

In the west, legacies of the 20th-century world wars were declines in inequality, a growing middle class and greater political power for workers. In Communist China, its leadership embarked on five-year plans, blaming the people when they failed, and doubling down on the misery.  

In this crisis, the political power of the super-rich has increased, notably in big tech, aided by low interest rates. Meanwhile, it has been well documented that white-collar executives in big corporations and the public sector have fared considerably better than private sector workers and tradespeople. In other words, it is Prime Minister Morrison’s “quiet Australians” that are bearing a disproportionate cost of lockdowns. And the blame is increasingly being attributed to Morrison.  

Libertarian and small government types are restless. Grievances include lack of comprehensive cost-benefit analyses of lockdowns, perceived excessive deference to public health officials, worries that state governments are calling the shots in National Cabinet, and unease at the extent of federal government spending. There is unhappiness at the federal government for not drawing a line in the sand and backing the New South Wales Premier Gladys Berejeklian’s originally more balanced, targeted approach. That the Premier has now adopted lockdowns, and lauded the toughness of the restrictions, is viewed by some as a capitulation to the Victorian government. Once the Liberals’ jewel in the crown, Victoria is a Labor stronghold with a formidable political machine that permeates the bureaucracy, business and NGO sector. 

As for the Coalition, its unity will be further tested as the November UN Climate Conference approaches. As well as Morrison, NSW Liberal figures that will influence Australia’s position are former Prime Minister Turnbull and his friend, Ambassador to the US Arthur Sinodinos. 

Mick McNeill has worked with the Australian and US governments and is now a private sector consultant. 

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