The Axeman Commeth

In an earlier blog this year (Morrison’s Chickens, 22 May) I pointed out that the Morrison government had a tough path to tread. They had first to ease the death rattle of an economy on a terminal path to the grave and then administer the spark that would jump start the patient back into a semblance of normal life. The main problem facing them was the lack of any experience, in or out of government, that would guide rational policy on the second part of the task. The first part was ‘easy’ in the sense that when any recession appears on the horizon, treasuries and central banks rediscover Keynes and pump liquidity into the hands of businesses and households. This is what happened late in the first quarter of the year when the enormity of the avalanche hurtling down the hill towards us became clear. Acting against every free-market fibre of their bodies, Treasurer Josh and #Scotty-from-marketing doubled the poverty-level dole and gave employers a large subsidy to keep their employees off the official unemployment queue. They, Treasury and the ATO acted quickly, as they had to, since to tarry and argue over the old ideologies would have been courting disaster on a scale not seen since the Great Depression. So, the government held its collective nose, closed its eyes and jumped.

This manoeuvre was not undertaken with a smile, more a grimace. It was not prompted by a Damascene conversion to active fiscal intervention. The goad was more prosaic and visual – the sight of long queues outside Centerlink offices throughout the land and television news footage of fights over toilet rolls in the supermarket aisles. For a marketing man, this was not a good look. The policies clearly had an effect. The panic, along with the queues subsided and eventually the toilet paper suppliers caught up with an anxious public locked down for what we all hoped was a month or so. The third quarter squeaked in at a small fall in GDP but promised a much bigger dive in the second quarter, the results of which we await with trepidation.

It took a while for state governments to coordinate with their federal counterparts and get the procedures for testing, isolating and tracing up and running, not smoothly but good enough – we thought. Cruise ships, tick. Quarantine arrangements, tick. Testing, tick. Personal protective gear, well, sort of. Computer tracing app, next question please. But overall, not too bad – until the great Victorian break out. A second surge or wave was predictable; we all thought it likely. And it could have happened anywhere, and probably will again until a vaccine arrives at scale. Closing state borders and a second Melbourne lockdown will help control this cluster outbreak and those to come, as they pop up unexpectedly and in unexpected places. It is dawning on all but the hopelessly optimistic that this is not a short war. We won’t all be home for Christmas. Well, we will but not as victors, more as hostages. This second lockdown reminds us all that the virus is not dead, buried and cremated. To the prosaic worries of lost livelihoods, this realisation is adding the mental strain of chronic anxiety and depression, further taxing our under-resourced mental health systems. As a society, we are collectively paying for decades of depreciation of the public sector, of progressive real cuts to the provision of services and infrastructure that we now find is vital to fighting back against Covid. We are not alone. As borders close around the world, Globalisation appears as remote as it did during World War II. Autarchy has never looked so good – or close at hand.

The current Victorian outbreak couldn’t have been more poorly timed for the Prime Minister. He had been cautiously touting the Trumpian line of opening up the economy. Cafes, pubs and sporting events were beginning to reappear in people’s lives. The more cautious state premiers were even edging towards opening their borders as they racked up day after day of virus free counts. Tourist operators and businesses were glimpsing the first rays of the sun. The hard right of the federal government began coming out of hiding and making noises about winding back subsidies. Ex-Prime Ministers resumed their sniping from the sidelines.

Then, bang, the shutters came down again as border openings were put back and Melbournians went back into their homes, apart from the homeless and precariously housed. This time, however, fear was ratcheting up. It wasn’t simply the reappearance of panic buying but the prospect of the September cliff that is now concentrating the mind of businesses and the public. We’ll know in a couple of weeks – probably – what the government will do after the planned cessation of jobkeeper and jobseeker. The banks have already jumped ahead of the government by indicating that borrowers suffering financial hardship can continue to halt or reduce their repayments. This is not an unmitigated blessing, as those who avail themselves of the option will find out in future months and years as the remorseless logic of compound interest blows out their repayments. You might remember the havoc caused in 2008-09 when the sucker mortgages advanced to unemployed and low-income Americans re-set and sparked the global financial crisis. The people who lose out in this way will be the most vulnerable, those living close to the financial edge, burdened down by mortgage debt or consumer loans taken on in the heady days of the ‘endless boom’. These are precisely the people who are most likely to have tapped their superannuation balances to get by to this point, thereby copping a double hit to their future security. Even more at risk are those casually employed and temporary residents who missed out on jobkeeper the first time around. The expanded ranks of the unemployed are already experiencing third world lifestyles.

The austerity-peddlers in government are ominously perched at the shoulder of the Prime Minister, who has shown a surprisingly pragmatic flexibility to date in resisting the siren-call of the neolibs. He and his treasurer know that they will have to extend out the subsidies, probably until well into next year. He is canny enough to manage this in stages and make it look like a well-considered taper to zero. He has a dual public to convince, us the voters and the hard nuts in his party room. We are easy meat. Morrison, having finessed electoral victory in 2019 is confident in his ability to do it again. It is his colleagues he must guard against, as his previous four predecessors know well. They have not changed their rusted-on ideology and maintain cosy relations with the mainstream commercial media. As long as Rupert remains faithful and the ABC can be bludgeoned into line, their anti-intellectual populist agenda will be held in check but will also constrain how far and for how long Morrison’s pragmatic approach can be maintained. If Rupert and the shock jocks desert the government, under the influence of powerful industry interests unhappy with the destruction of their balance sheets, the government will falter, and the National Cabinet disintegrate.

It seems crazy for sectional conflicts to flare up when ‘we are all in this together’. But the sad truth is that some of us are more in it than others. Like all disasters, the fallout is uneven. Affluent, older homeowners and retirees sitting on large stashes of wealth in financial and other forms are not immune from the virus but can ride out the economic storm for a long time. Many tenants, young people, low income earners and the unemployed are a few days away from real destitution, if government supports are ripped away too quickly. They are also at high risk of contracting and transmitting the disease, since the prospect of starvation and/or eviction may drive them to engage in risky behaviour and hide symptoms of the disease. This is why the government’s much-hyped ‘home builder’ scheme seems so far off target. It is aimed at the wrong target, unless you accept that the target is well-off homeowners up for a bit of renovation and the building industry lobby always hungry for a sugar hit. Building houses does create lots of jobs. So, why not focus homebuilder on boosting the supply of social affordable housing to reduce homelessness and also renovate the woefully undermaintained public housing stock, including the high-rise towers that have figured as the locus and whipping boy of Melbourne’s current outbreak? That would still employ Michaelia’s tradies and fill up their utes with building supplies, getting people back to work while also reducing the most extreme hardships of high-risk groups.

I know, I know. I’m being hopelessly optimistic. This is a government that is a long way out of its trickle-down comfort zone, searching for every opportunity to roll back federal spending. The forces of austerity are lining up to wield the axe. This will leave state governments with the task of quickly identifying and dealing with recurrent virus breakouts. We can expect a seesaw of lockdown-opening-lockdown-opening-etc. for the foreseeable future. We can only hope that familiarity breeds efficiency, that the States and Territories improve and refine their responses as the country and the world waits for a vaccine (the morally reprehensible ambush of public tenants locked in Melbourne’s high-rise towers must never be repeated). In the teeth-grinding interim, ‘we are all Melbournians now’.