Federal Labor has done a good job by pointing to holes in the Coalition’s coronavirus economic package.
The communique today from Anthony Albanese to ALP members stated:
“Parliament has just passed a wage subsidy – something Labor has spent weeks calling for. Support is on the way for millions of Australians – and as a result, millions of Australians will stay in work and out of Centrelink.
I know this package isn’t perfect. I’m disappointed that the Government didn’t accept our practical suggestions to improve it – to protect casuals, visa holders and other vulnerable workers. Labor won’t stop fighting for them.”
Kristina Keneally made an important speech in the Senate pointing out that the 1.6 million temporary visa holders in Australia that the PM has said should go home cannot necessarily do so due to border closures or unavailability of affordable flights. They are effectively stuck here for the duration of the crisis. 1.1 million of them are not eligible for government financial support.
Senator Keneally points out that the virus does not discriminate in relation to visa status as to who it may infect. Without government support, temporary visa holders are at risk of homelessness which will render them unable to practice social distancing. A Unions NSW survey shows that 70% of them are now unemployed and 48% report having skipped meals since the onset of the crisis.
Despite these criticisms of the Coalition package, Federal Labor has refrained from more fundamental criticisms of the package such as emanated from Per Capita think tank director Emma Dawson:
“The larger problem is that, in the face of a massive demand-side shock to our economy, the bulk of the government’s response is targeted to supply, and won’t support consumption. Business support is outsourced to the banking system through the provision of liquidity to provide loans. These will likely be skewed towards big corporations to which the banks can advance cash with lower risk than would be involved in lending to small businesses with no customers. Tax relief for small businesses doesn’t adequately ensure the continuation of employment for staff, and won’t be forthcoming for over a month. In all, it’s a poorly targeted solution that won’t work quickly enough to curtail mass unemployment and economic collapse.”
The Opposition has also refrained from criticizing the absence of any Rudd style infrastructure projects in the package- the school buildings program, increased provision of social housing and the household insulation scheme. These projects were vital in saving Australias from recession in 2008.
In an Australia Institute forum today Wayne Swan pointed out the need for such projects. Swan said he had been unable to detect any enthusiasm within the Coalition for such an approach. The Government had not even expanded Centrelink in preparation for the increased demand that would be placed upon it by the pandemic. While it appears they have abandoned the ideology of small government spending, they have not abandoned the idea of small government in terms of the role of the public sector.
But for the moment the Federal Parliamentary Party seems to be refraining from criticizing the absence of any such initiative from the Coalition.
Jim Chalmers wrote an article in ‘The Guardian’ stating it was not too early to start thinking about Australia after the crisis. The article set out some general theoretical principles but did not call for Rudd style infrastructure projects.
The Federal Party’s approach in not calling for Rudd style projects is likely to be deliberate. The political analysis may be that making this type of criticism at the current time would not be seen positively by the electorate because at times of crisis people are not looking for excessive criticism but hope to unify in fighting the threat. Thus criticism needs to be highly selective. Also, the continuing existence of the virus limits the ability to deliver such projects.
So it may be premature to call for such projects at this time. An alternative view might be that Labor should be relying on its record in staving off recession in Australia in the 2008 GFC as early as it can.
While job preservation is an important goal, the reality is that not all of those businesses whose employees are eligible for job keeper support are going to survive the forthcoming recession.
Businesses exposed to travel, entertainment, hospitality, and discretionary retail will find it difficult to survive. Those with high exposure to everyday needs, home delivery, and essential services have a better chance. Businesses that rely on people to deliver services in close proximity to customers will find it harder than those that can rely upon e-commerce platforms that can generate cash flow. Businesses with low debt and reliable payers as customers are better placed. But corporate debt has escalated globally since the 2008 crisis due in part to the prolonged period of low-interest rates.
We are likely to emerge from the health crisis associated with the virus long before we emerge from the significant economic problems that were present even before the virus hit and which have been exposed and aggravated by it.
There will be a need for new job creation and private sector confidence is likely to lag. Governments will have to play a central role not only in seeking to preserve existing jobs but in creating projects that will generate new work, hopefully with an emphasis on preventing an even more serious threat than the virus- catastrophic climate change. Eventually, Labor will surely adopt this narrative.