A way forward to COVID-19 economic recovery

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Article by Joe Zabar, as published in Eureka Street

When a global pandemic cast a mighty shadow across Australia, the Prime Minister, premiers and chief ministers rightly recognised that their duty was to prioritise the health and safety of their people.

But as some of the health concerns ease and our national, state and territory leaders begin to turn their minds to easing isolation measures, the focus will soon shift to the challenges of our economic recovery.

The recently released report from the Grattan Institute on unemployment in a post-pandemic Australia makes for sobering reading — especially for those in the eye of storm who have already lost their jobs.

Much of the heavy lifting in terms of formulating policy for Australia’s economic recovery will fall to the Morrison government. The path it takes will either make or break their political fortunes.

The government’s success in managing the COVID-19 pandemic in Australia was, in part, due to strong collective leadership, a focus on the common good and the abandonment of ideology or at least curtailing it. Prime Minister Morrison could do well to continue down this path as he prepares the government’s work on Australia’s economic recovery.

To date, most of the Morrison government’s economic packages could best be described as ‘economic welfare’. They are measures designed to limit the impact on the economy of the COVID-19 pandemic. The recovery phase will very much need to be about stimulating the Australian economy.

‘The parameters for reform cannot simply be traditional economic ones. Instead, they must include consideration of the common good, so to ensure that the path forward doesn’t simply continue to perpetuate a society of haves and have nots.’

The business community is already lobbying for company tax cuts and rumours abound that ‘other revenue measures’ needed to provide government revenue should include an increase to the rate or a broadening of the GST. These are legitimate policy options for debate, but they must be considered in the context of a broader economic plan.

That plan cannot simply be one where Australia strives to ‘snap back’ to what we had before the pandemic: a time of insecure employment, high rates of underutilised labour, low wage and economic growth. Going back to what we had before the pandemic should not be the goal; we deserve much better than that.

The government will need to resist its conservative urges to do a rerun of its 2014 Budget play book of debt and deficit reduction. Austerity measures harmed many economies in Europe after the Global Financial Crisis and heaped significant social and financial pain on their citizens.

Instead, the government should consider an interventionist approach — one where it sets an ambitious economic growth target for the Australian economy that is supported by a strategy focused on social and economic policies that will drive innovation, productivity and a broadening of the Australian economy.

In his recent Economic and Financial Update, Reserve Bank Governor Philip Lowe suggested the best way forward for Australia is to ‘reinvigorate the country’s growth and productivity agenda’. He went on to say that ‘there is an opportunity to build on the cooperative spirit that is now serving us so well to push forward with reforms that would move us out of the shadows cast by the crisis’.

‘A strong focus on making Australia a great place for businesses to expand, invest, innovate and hire people is the best way of extending the recovery into a new period of strong and sustainable growth and rising living standards for all Australians,’ Dr Lowe said.

The Morrison government must now focus on how best to grow the economy, building on our economic strengths while at the same time broadening our economic base. The way forward, much like the response to the pandemic, will require collaboration and cooperation between governments, unions, business and civil society.

The parameters for reform cannot simply be traditional economic ones. Instead, they must include consideration of the common good, so to ensure that the path forward doesn’t simply continue to perpetuate a society of haves and have nots.
The path ahead will require some tax reform, but not necessarily tax cuts. It will require industrial relations reform, but not reduced working conditions and job security under the guise of increased flexibility. Most importantly, it will require leadership that can imagine an Australia where we have full employment and a standard of living that is the envy of others.

A new economic vision for Australia is within reach. We must not miss the chance to reshape the Australian economy — one which builds on our national strengths and drives innovation and growth for a fairer and more sustainable country.

Related policy paper: Strong Economy, Stronger Australia

Joe Zabar
Joe Zabar is the former Deputy CEO of Catholic Social Services Australia.

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