The Coalition has long styled itself as a superior economic manager, a claim which ironically gained currency after Labor's stewardship of the economy through the global financial crisis. It contributed to the government's retention of office in 2019. Tony Abbott swept into office in 2013 claiming Australia was beset by a so-called "debt and deficit disaster".
Yet after seven years of Coalition rule, the economy is in poor shape. Headline figures paint a worrying picture: weak economic growth, flat wages, sky-high underemployment, declining business investment and productivity, below-average consumer confidence, and record household debt. Net debt has doubled.
During the 2019 campaign Scott Morrison boasted of his government's fiscal rectitude. Yet the Coalition has not delivered a budget surplus in six attempts. It has, Morrison says, achieved a projected a budget surplus of $7 billion, to be delivered the year after. That Orwellian achievement now looks less likely to materialise.
Already Morrison's government has begun to prepare the public for the inconvenient truth awaiting us come May. The budget, we are told, has been hit by a devastating one-two punch. A catastrophic bushfire season - which experts warned the government to prepare for in April, 2019 - and a coronavirus outbreak, which has forced down GDP forecasts, hit projected budget revenues and imperilled any surplus.
This is spin to make the most skilful whirling dervish blush. The budget surplus that never was is the direct result of a seven-year-long record of mediocre economic management, an absence of any meaningful reform agenda or infrastructure plan and a dodging of hard decisions to achieve real, structural budget repair.
Granted, we should be careful not to fetishise budget surpluses. After all, the doyen of the Liberal Party, former prime minister Robert Menzies, ran budget deficits in his last nine budgets between 1958-59 and 1966-67.
Yet the government has only itself to blame. If the GFC wasn't a legitimate enough reason to go into budget deficit, saving hundreds of thousands of jobs and preventing the economy going into recession like other developed economies, why are current events unique?
Economic growth has been fragile for years now. The government chose not to act by administering a dose of prudent, targeted stimulus, paired with an over-the-horizon nation-building infrastructure program. Instead we got the so-called "sports rorts" affair. The government was warned about the disastrous fire season. It chose to ignore those warnings, which will cost billions.
The government has been warned about the perils of flat (and stolen) wages growth, of the risk posed by cutting penalty rates, and the damaging effects of insecure work and underemployment. It chose to ignore these trends, instead boasting of casual and part-time employment creation.
Last Thursday's ABS jobs data was disastrous news for working Australians and the economy. Unemployment is up to 5.3 per cent, or 725,900 jobless Australians. Monthly hours worked in all jobs decreased by 8.1 million hours. The underemployment rate is up to 8.6 per cent, and underutilisation sits at a scandalous 13.9 per cent.
This data is feeding into our wages growth emergency, which in turn is hurting the budget bottom line. ABS data released last Wednesday is damning. Wages growth flatlined in the December 2019 quarter, expanding by just 0.5 per cent - the same result as in the September quarter. To his credit, Finance Minister Mathias Cormann is honest about the government's approach to wages policy: in March 2019 he declared low wages growth to be "a deliberate design feature" of the government's "economic architecture".
Perhaps Treasurer Josh Frydenberg will produce a surplus in May. Yet it is likely to be a case of "five minutes of budgetary sunshine". Why? The government is bereft of a serious plan to resuscitate the economy and is not attuned to long-term markers of budgetary health, such as wages. There is no room to move on monetary policy.
It is time the Morrison government took off the ideological blinkers. As business figure Mark Carnegie wrote last week: "Right-leaning governments in the US and Britain abandoned the religion of austerity long ago and are going all out to get their economies moving, even though they are growing faster than ours."
It is time for a measured stimulus program. Pump-priming the economy will not in itself suffice. It is time to invest in long-term reform efforts to fix our broken institutions. It is time to fix an outdated, ineffective enterprise bargaining system which is suppressing wages. It is time to reform a corporate governance model which excludes employees as stakeholders and is too focused on short-term profits over long-term growth.
It is time to fix a housing market which isn't delivering on its basic purpose of home ownership, and related taxation distortions threatening the budget bottom line. It is time to increase Newstart, which would have an immediate stimulatory effect. And it is time to view energy and climate policy as serious nation-building tools which can fuel a new blue-collar jobs boom, revive the TAFE sector, create blue-green infrastructure, boost wages and help return Australia to a genuine state of full employment.
The alternative, government by perpetual spin, is scarcely worth contemplating.
- Nick Dyrenfurth is the executive director of the John Curtin Research Centre.