Close observers of Tuesday's federal budget will no doubt have their eyes out for evidence of the usual political chicanery towards political donors, lobbyists and friendly interests, as well as mates, cronies and relatives of senior members of government, mostly in the transfer of public goods to private interests, this time in the alleged cause of stimulating demand and picking winners in the post-COVID economy.
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That eye is more necessary than ever before, if only because government has become more shameless, with less and less respect for evidence, proper process and transparency. But it is not the main game. This time about, however, there is a risk more serious than of government shovelling money towards its friends and cronies. It is that it will be doing too little, too conservatively, and with too little imagination and open mind, with the result that economic and social recovery will be delayed. Those who will suffer most from this timidity will be disproportionately the usual suspects: low-paid workers, casual workers and people in part-time work, pensioners and welfare beneficiaries - including the young, the aged, the disabled, Indigenous Australians and many temporary workers, including overseas students. But the fabled little capitalist in "small business" - the people that the Coalition pretends it is all about - will probably suffer more than most as well.
There will be a record deficit. And if the government is reducing the level of benefits going to people and businesses dislocated by the coronavirus pandemic, there will be a good deal of extra money going towards economic activity, particularly in areas favoured by government winner-picking. This will, presumably, be in the way of small grants, subsidies, tax breaks, loans and a myriad of ways designed to persuade businesses to invest, to increase aggregate demand, to increase business and consumer confidence, and, quickly it is to be hoped, to sop up existing underemployment and to create new employment. Never before in Australian history will so much public money have been spent in trying to kick-start the Australian economy again, to create growth and jobs, and to take us again firmly back on a path to growth. Never before will so much have been offered to those willing to have a go.
In this sense, those who express disappointment and some disgust will be under immediate counter-attack. What we will be seeing will not be the work of a party immediately focused on debt and deficits, on containing public expenditure, or greatly over-worried about limits beyond which responsible governments cannot go. This is a government that has faced unprecedented circumstances, and that has responded with measures that might once have seemed ideological anathema. The precepts of Milton Friedman and his political acolytes Margaret Thatcher, Ronald Reagan and Augusto Pinochet have been cast aside for a return to an interventionist Keynesianism on a scale that might have amazed Keynes himself. Neoliberal tenets of free markets as the best allocators of resources in an economy, about achieving minimal levels of government intervention so as to maximise the opportunities for prosperity have been put on hold.
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A party that pretended to disdain protectionism, and industry policies designed to give an inside sheltered run to the government's pet industries has moved into market intervention. We may end up with five-year plans. Some Coalition mischief-makers have become given to suggesting that the Premier of Victoria, Daniel Andrews, has become some sort of power-mad communist dictator, but in truth Liberal premiers, and even Liberal prime ministers and ministers, have become increasingly addicted to government by fiat, government behind closed doors, government with cronies and vested interests sitting at the table as fellow-decision makers, and a marked increase of use of the coercive power of the states. Political parties have not forgotten their ideologies, their convictions, or their predilections for the interests of their friends. But there were never so few constraints on the exercise of power, or on the use of power and incumbency to keep one's side in power.
It is worth stressing this, because a survey of what the government of Scott Morrison and Treasurer Josh Frydenberg will not be announcing on Tuesday night is as instructive as an enumeration of what it will be doing. It will not have made the choices that it has because these are necessarily the most efficient ways of creating jobs, increasing production, fostering demand or creating that sort of business confidence that inspires entrepreneurs to borrow and invest in new equipment, or consumer confidence that promotes spending, travel, and increased use of services.
This government was creative - as were similar governments all around the world - in devising schemes of pretending that jobs were still in existence, or in helping the newly unemployed to keep their heads above water. But it was obvious from the start that this sudden generosity with public money for people and businesses in trouble would be extended only to the Coalition's friends - not towards sectors they had come to think of as enemies. Thus, the squeeze went heavily on to universities - whose revenues were hard hit by the loss of foreign students thanks to the suspension of foreign travel. Now they are to face additional costs from changes to funding arrangements for undergraduate courses, and, probably, the suspension of international cooperative arrangements with other public universities. Several years before, governments were urging such arrangements upon universities. To underline the government's point, university staff who lost their jobs as a direct result of economic changes caused by the pandemic were refused access to schemes opened to others, including clergy. Also excluded were a good many people employed in the arts, in entertainment, and the ABC. By contrast, commercial media organisations, including News.com, have received direct subsidies.
The tourism, accommodation, airlines and hospitality sectors have been severely affected by lockdowns and closed borders (more so from the closure of international borders than from the state border wars). Help for those sectors has been patchy, apart from massive tranches of cash paid to the big businesses. Help for the quintessential small businesses has been less generous. Payments directed at the futures of workers caught in these problems has not been as conspicuous or focused as for people out of work in other areas, now including some fields of manufacturing, as well as construction, home-building and the ever-burgeoning national security industry.
We need jobs that improve the Australian quality of life
The past week has seen yet another report from the royal commission into aged care, again pointing out the sub-standard services provided at Rolls-Royce prices by entrepreneurs making enormous profits, as well as the low standards being set for the non-profit sector. Aged Australians in nursing homes have been receiving insufficient professional medical care, and, often, inferior food and, critically for the pandemic, an acute absence of infection controls. The result has been a very high COVID-19 mortality among residents of aged persons homes, aggravated by nursing staff shortages and movements between different nursing homes. Despite earlier fervent denials, it is now accepted that the Commonwealth, which has the major (although not the exclusive) public duties in relation to care of the aged, did not have in place plans, strategies or resources to help homes deal with the problems, even when the need was evident. By the end of the pandemic, epidemiologists will be assessing the "overburden of deaths" among particular sectors and groups of Australians - that is to say deaths that should have been avoidable, even in a pandemic. It seems clear that many of the deaths will be attributed to negligence or inadequate attention to duty by Commonwealth officials. (Others will be baying for actions against Victorian officials over hotel guards, and for offending News.com, and News Ltd; against NSW for cruise-ship contagion, and Border Force, for airport contagion. )
The budget will give some extra funding for nursing homes, as well as reorganization of regulatory structures, in line with recommendations made by the royal commission into nursing homes. That's good, but it ought only be a starting point, because the recommendations are much more focused on dealing with the obvious inadequacies exposed by the pandemic than on a major systemic improvement of the quality of care in all nursing homes. The fact is that the overwhelming majority of Australian nursing homes are well below the standards expected and required around most of the industrialised world - even in countries, such as the United States which have a markedly inferior social security system. Yet the costs to taxpayers, and to most nursing homes residents are high by international standards. And so are the profits going to the big operators - most of whom (surprise, surprise) are big political donors with big professional lobbying outfits behind them. As with similar problems in the disability care sector, it is almost impossible to avoid the suspicion that the poor regulatory regimes, the lack of prosecutions, the lack of focus on quality care and patient rights have been in response to political demands for "light-touch" regulation, without disincentives against inferior service. It's also clear that in these areas, as with the banks, one reason why the markets are not operating effectively is because of the sheer greed of the players.
Now the point about this is not to separate off aged care, or disability care, as problems of government that ought to be addressed while we are trying to re-start the economy and get Australians back in jobs. It is that they could be the same problem - the solution representing a major step forward in improving the quality of life of elderly Australians, one creating new permanent and long-term skilled employment opportunities for people displaced by the pandemic. Likewise with improvements in childcare, and pre-schooling - where again there are challenges in meeting international standards, and where the general community stands to benefit from more effective and more efficient systems. Major public re-investments in this area also create new opportunities for leadership of such programs. That need not necessarily represent public control, at least by old systems. But the evidence and experience of private sector provision would suggest that we need new and stronger levels of public supervision of quality, and innovative ways of involving the families of the consumer. This is not a problem likely to be solved by handing over more money and bigger profits to providers.
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If we need more resources going into aged care services (in the community, and with low-level care as much as in intensive nursing homes), with child care, with disability care, and with services focused at Aboriginal Australians, migrants and other vulnerable people, we ought necessarily be requiring more training places for the men and women who will have to be providing such services. Whether in the vocational training sector, or in universities, a new public investment must be creating new jobs. And contrary to the assumption sometimes seeming to be made by the diminishing numbers of capitalists who "make things" rather than provide services, these are jobs that add to the national wealth, cause economic growth and improve our measurable standard of living. Just as do jobs involved in improving health (which might be jobs for engineers, sewer workers and waste collectors as much as for doctors, nurses and public health workers), or reinvesting in infrastructure fit for the next 40 years, and the facilities (including access to the internet and modern communications) and workforce able to constantly improve it.
Investment in such sectors, including the quality of facilities, improving the breadth and depth of staff, and preparing for the post-pandemic economy should not be regarded as a dispensation, given with surliness because it is seen to take money away from a "proper nation-building" project such as a road or rail program, some belated recognition that we need a quality rather than an inferior broadband, or some special favours for folk and friends in the water and energy sectors. New jobs making Australians healthier, better educated, better trained are rather more the winning industries of the future, rather than the relatively few jobs able to be created in capital-intensive physical industries. Despite the Prime Minister's assertion that Australia has a comparative advantage in the fields he has selected for extra care, extra investment, and extra protection from external competition, it is by no means certain that any of them will play much of a role in Australia's future. Particularly if some of the logical consequences of Australia's current foreign policy, particularly in relation to China, are realised.
Economic recovery by Australia does not depend only on the economic decisions made by the federal government, or even by the national cabinet, or at least so much of that as can be said to have survived the experience of the pandemic. It also depends on a recovery in world growth and world trade, as well as skilful management, by other countries as much as by Australia, of resurgences and second, third and fourth waves of the virus in the community. As with the right time to open borders, external and internal, these cannot be successfully incorporated in appropriation bills. Yet there could be few countries on earth better situated for a smooth recovery, if one a good deal more bumpy than originally expected. Some skill and some luck, and some learning from mistakes, has kept infection rates, and death rates (even in Victoria) at a fraction of the levels of many other countries, including Britain and the United States, as well as India.
On the face of it, however, three of the nations best positioned for a recovery, in terms of current economic activity are China, Australia and the United States, and several of our other major trading partners, such as Japan, South Korea, and many of the islands and nations of ASEAN are picking up faster than others. Even so, one can expect that the way out will be slower, more bumpy and more subject to regional and local variations than anyone had expected. But even if Australia gets to growth and economic activity rates similar to those of 2019 (a weak state, to be sure, but a milepost to pass) it would not prove that the government's strategy was completely right. It will have recreated an economy and a society fit for the 20th century. Time to be creating the 21st century nation of tomorrow. With a cleaner environment. A healthier, better-educated citizenry. More fair, more just and more politically stable than before, and one considerably more kind to its most vulnerable, and to those of neighbouring countries, on whose stability we depend.
- Jack Waterford is a former editor of The Canberra Times
- jwaterfordcanberra@gmail.com