This week, we received the backward-looking data for our economic growth in the June quarter - a 7 per cent fall - giving us some guidance on the impact of COVID-19 and the government's response by way of border closures, lockdowns and social distancing.
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It's been offset to some extent by the considerable government support in the form of handouts and cash injections, and delayed mortgage and other loan and rent payments by banks and landlords.
No matter how hard the government tries to spin it, with claims that it is not as bad as it could have been, this - together with the 0.3 per cent fall in the March quarter - represents the first recession in nearly 30 years and, on one comparison, the biggest collapse in our growth since 1931.
Moreover, headline growth comparisons can be deceiving and need to be interpreted in the context of the extent of government and other support that worked to reduce the impact of the COVID policies - and also against longer-term trends.
On the basis of longer-term data our economic growth has been trending down since at least mid-2018, before taking this deep dive in the June quarter.
I also said, "backward-looking" - meaning that we are already more than two thirds of the way through the September quarter. Victoria is still in stage 4 lockdowns, key internal borders remain closed and there's the prospect that our external border will probably remain shut until an effective vaccine is developed and deployed. Obviously, more bad growth (and unemployment) numbers are to come.
To be frank, although Treasury and the Reserve Bank have released their economic assessments on a number of occasions this year - revising previous views on each occasion - they have really only been "learning by doing", as indeed have the medical experts when it comes to understanding and predicting the hopeful control of the virus.
Against this, it is brave, bordering on irresponsible, to claim the virus is under control. Or to predict that our economy can, in any way, snap or bounce back as the "temporary and reversible" support is removed. While these were initial hopes, they were oversold. Global evidence, as well as near-home evidence from Victoria and New Zealand, suggests that multiple waves are possible.
Our economic growth has been trending down since at least mid-2018, before taking this deep dive in the June quarter.
Our governments are also learning, painfully, that it will be difficult to phase down financial and other support. This will be complicated by intransigent unemployment, and the delayed reactions on mortgage, loan and rent repayments, "zombie" business failures and bankruptcies.
Big structural challenges were becoming evident as our economy trended down pre-COVID - flat wages, record household debts, significant corporate debts, flat productivity, mounting job insecurity, the majority facing cost of living pressures and climbing carbon emissions. Also, the neglect of the inadequacies of aged care, vocational training, tax, research and development, health insurance, banking and financial services and many more.
These challenges won't just go away, but are likely to reemerge with even greater intensity post-COVID. This will further compound economic management that will be significantly strapped with very large budget deficits and mounting debt.
Unfortunately, our government can't and clearly doesn't want to face these realities. It is so used to getting by with spin and hubris, working on the assumption that these tough times will ultimately pass and that we will be able to, in its words, "get back to normal". Clearly, this is nonsense - grossly irresponsible, even immoral - especially given the compromise of future generations.
The task for government is to imagine a new Australia, say 10-20 years out, to seize the opportunity, indeed imperative, of a COVID recovery strategy. It must lead our economy and society down an achievable path to deliver on that imagination.
The response to COVID so far has, in many ways, been a dress rehearsal as to just how decisively and quickly society can react when it accepts the magnitude and urgency of the challenge. We have digitalised so much, we have changed the way we live, work, travel and so on, individually and collaboratively.
This should give our government hope and encouragement, driven by evidence and science, to boldly lead us as we reasonably expect - and as they were elected to do.
John Hewson is a former Liberal opposition leader.
