Saved from an economic crisis
The Morrison government addressed the Covid-19 crisis with speed and determination. Morrison and Treasurer Frydenberg worked well with Treasury and the Reserve Bank. Brave decisions were made, vast amounts of money were sent into the economy to keep people at work, all in contradiction of standard Liberal 'tight fiscal policy'. And suprise, surprise the economy picked itself up and began to offer hope to many Australians.
Paul Kelly's 'Inside story' explains how this came about, with 'a degree of almost inconceivable nine months ago when the pandemic looked its bleakest'. He quotes Professor Warren Hogan saying 'It was a degree of coordination we haven't seen before'. And Chris Richardson 'we landed the plane on the Hudson.' High praise from two of our best economists.
Given the current runaway increase of infections in the USA, UK and Europe, a growing death rate in those major nations, and our relatively low number of both statistics, we indeed need to thank the Reserve Bank, Treasury and other regulators and the superb management of Messrs Morrison and Frydenberg. A warning is due at this point. Some returning Aussies and others wishing to come 'down under' will bring the Covid freshly to our shores. Evidence suggests that those who have not lived through tough times to good effect are not equally likely to obey the rules.
Individuals coming into Australia either fail to observe quarantine or believe they are superior to the Aussie battlers who meekly obey rules. And when winter arrives there will be increased opportunity for the virus to produce further damage unless extreme diligence is maintained. The much admired vaccines will help of course, but not everyone will agree to accept a vaccine.
It is worth quoting some numbers. Paul Kelly again: This year's budget deficit of 11 percent of GDP and total deficits across the next four years of $480 Billion, or almost half a Trillion.
On March 16, the sharemarket plunged by 10! On April 16 Treasury warned that the rate of unemployment could reach 15 %. By May 5 the Treasurer was still warning the economy would contract by 10 % and unemployment would reach 10 % in the June quarter. Now Treasury are saying that unemployment will reach 7.5 %.
In conclusion, Paul Kelly asks whether Morrison and Frydenberg: 'Will they have the courage, or have they been seduced by the politics of cash handouts, emergency relief or debt tolerance?'
Here is a link in case you have not read the full discussion. How we slayed the threat of the coronavirus.
And Fiona Prior – complete with mask – gets to the most visited art event in the world, ‘Van Gogh Alive’. More here.