A new discussion paper from The Australia Institute has outlined how Australia could emerge from the COVID-19 crisis as one of the richest countries in the world while gaining long-lasting benefits from economic stimulus projects and a renewed faith in the effectiveness of democratic governance.
“The response to COVID-19 will cost hundreds of billions of dollars and such spending has the potential to not just create jobs, but to create a new Australia, if we want it to,” said Dr. Richard Denniss, chief economist at The Australia Institute.
“There is no doubt among economists that, in the midst of the biggest recession ever recorded in Australia, attempts to reduce the size of the budget deficit will simply result in higher unemployment and lower rates of economic growth. In this climate, debt is not a sign of recklessness, it’s a sign that governments understand the depth of the hole our economy is now in.
“The question of ‘should government spend more money?’ is now irrelevant and has been replaced with ‘how should government spend more money?’ With interest rates at record lows, unemployment high and Australia’s energy, transport, housing and health infrastructure stretched to capacity there has literally never been a better time to build more of the things that Australia needs more of.
“During the Great Depression governments around Australia borrowed to build the Sydney Harbour Bridge, the Great Ocean Road and the Art Deco ocean baths that dot our coastline. While all government spending will create some jobs, government spending on things we need more of will still be creating economic growth and individual joy decades after it has ceased creating jobs.
“If our elected representatives put people first when they are managing the health, economic and budgetary consequences of COVID-19, then Australia will come out of this crisis not just as one of the richest countries in the world, but with a populace whose faith in the effectiveness of democracy and government has been restored.”
The “Reconstruction Memorandum: Building Back Better or Just Bigger?” launch video can be viewed here.