Flat White

Josh Frydenberg defends the indefensible with JobKeeper

11 September 2021

1:54 PM

11 September 2021

1:54 PM

How do you defend the indefensible? You give a politician a pen and some newspaper column centimetres. 

I tend not to read farce or fiction so did not read Josh Frydenberg’s opinion piece in the Australian yesterday, but a wise legal scholar asked me my thoughts so I just cast my eye. 

Treasurer Frydenberg’s piece sought to justify the extravagant waste in JobKeeper program – JobKeeper did the job it was meant to do, and quickly.   

I was immediately minded to the words of Thomas Sowell who wrote that “[T]he first lesson of economics is the management of scarcity. The first lesson of politics is to forget the first lesson of economics”.

Should one be surprised that when Treasury reviewed their design of JobKeeper, their conclusion was that that they were right all along?  Perhaps it was the public service medal-winning Treasury executive who reviewed her own advice?  Yes.  That JobKeeper scheme that pissed away somewhere between $15-$25 billion of taxes to be paid by our children and grandchildren; multiples of the Rudd government waste.  Can you imagine how many useless car parks or gold plated regional sporting field toilets could have been built for this kind of money?

But as a political argument, it’s pretty pathetic also. It’s like government claiming that, even though they set your house on fire, they called the fire department and held a hose. 

As a rhetorical argument, this is particularly poor from the Treasurer, the nation’s chief bean counter: 

Introducing a mechanism to require businesses to pay back JobKeeper would have reduced the program’s take-up, weakened its impact on confidence, withdrawn support from the economy and lessened the broader macro­economic effect of the policy. 

Only people who have never run a business or scrounged for capital to meet a payroll would say such nonsense. It is utter ignorance written by people who have no idea how business works.   

Again, using a fire metaphor, if your house is on fire, you don’t ask the firefighters for their preferred gender pronouns before you beg them to help put the fire out. You put out the fire and work out the rest later. 

There is no rational reason, other than to mask incompetence, to suggest that given hindsight, they would not have built in a clawback mechanism.   

But Treasurer Frydenberg’s argument is not really an economic argument but a political one. If you believe in Keynesian fairies, as do all the Treasury and RBA officials, then you can make an economic case for not having a clawback. Hey, if you believe in Keynesian fairies, you can make an economic case for printing money. Both would be terrible arguments, but they could be made. 

However, longer-term, what Frydenberg has done is to blow up any semblance of fiscal credibility of the “Liberal” party for a long, long time. Perhaps the Treasurer and wife should get a Knight and Dame for services to economic management to compliment the Public Service Medal awarded to the scheme’s designer. 

The key conclusion that can be taken from Frydenberg’s opinion piece is that the Liberal Party is philosophically, intellectually and capability dead. The only hope for this nation is for something new, and this is a very slim hope.   

Got something to add? Join the discussion and comment below.

Show comments