by Richard Denniss
[Originally publishged on the Guardian Australia, 07 July 2020]
Only 16 weeks ago, prime minister Scott Morrison told a bemused Australian public that he was off to the footy to see his beloved Sharks play, and only 15 weeks ago, the same prime minister berated those who went to Bondi Beach for “not taking this seriously”. It’s not just Covid-19 that moves fast.
Last year, Morrison was busy talking up the importance of delivering a budget surplus and talking down Australia’s ability to “afford” to spend more money on reducing greenhouse gas emissions, helping women fleeing domestic violence or addressing Indigenous disadvantage.
Since then, the Coalition government has announced hundreds of billions in new spending measures, which is good, because when you are wrong about something it’s better to change your mind than to close it. But after 25 years of governments pretending they couldn’t “afford” to increase unemployment payments, Australians have now discovered that – even in the midst of the biggest recession in modern history – we can afford to. Knowledge is power.
This calendar year’s commonwealth budget deficit is heading for around $140bn, and the only noises coming from the business community suggest they’re worried the government isn’t spending enough. Big business and small business both want to see jobkeeper extended, the tourism and entertainment industries want billions of dollars of targeted support, and just as night follows day, the big business community is adamant that now is a great time for expensive cuts to the company tax rate. It is a truism of Australian politics that it’s always a good time for a company tax cut and never a good time to lift the minimum wage.
But while Covid-19 has destroyed the idea that there’s anything the Australian government “can’t afford” to do, the debate about what it ought to do is thriving. As it should.
Despite the collapse in government revenue and the record budget deficit, last week the prime minister announced a $270bn expansion of Australia’s defence equipment. Not one of the conservative parliamentarians or commentariat who usually feign concern over the cost of fighting climate change or Indigenous disadvantage have made a peep about the “affordability” – or likely success – of a shooting war with China or any other foreign power. Just as a country as rich as Australia can spend $550m on Abrams battle tanks that will almost certainly never fire a shot in anger, Australia can easily afford to spend $800m on 200 new long-range missiles we will likely never fire as well.
Just as there is no right amount of money to spend on battle tanks or batteries for our wind turbines, there is no “right” amount of effort to put into lockdowns designed to protect the public from the worst pandemic in 100 years.
Back in February there were a lot of conservative commentators, in Australia and the United States, arguing either that Covid-19 was no worse than the seasonal flu, that the costs of lockdowns to prevent its spread were greater than the benefit, or both. While some of the “let it rip” voices have stuck to their guns, most have gently backed away from their earlier confidence which, given what is happening in Florida and Melbourne, is hardly surprising.
Only seven weeks ago, the Republican governor of Florida, Ron DeSantis, was mocking journalists who questioned whether his refusal to lockdown Florida would come at an enormous human cost. “You’ve got a lot of people in your profession who waxed poetically for weeks and weeks about how Florida was going to be like New York,” said DeSantis, going on to gloat that “people just don’t want to recognise [our success] because it challenges their narrative, it challenges their assumption.”
On Monday, new cases of Covid-19 in Florida rose by more than 10,000, making it one of the worst-hit states in the US. But despite the predictable surge, the Florida governor is not for turning. State-wide there is no hard lockdown and no compulsory masks.
Melbourne provides the starkest possible contrast to Miami, but demonstrates clear evidence of the risks of Covid-19 nonetheless. Victorian premier Daniel Andrews acted early in response to the outbreak, was at pains to ensure that public health was prioritised over economic activity, and has responded to the threat of a second wave far more vigorously (although brutally) than his conservative counterpart in New South Wales did with the Ruby Princess.
But whether it’s criticising the laissez-faire approach to Covid-19 seen in Florida or the interventionist approach in Melbourne, one trend that’s becoming clear is that almost no one in Australia is still arguing that Covid-19 is just like the flu, that the sooner everyone gets it the quicker we can get back to business as usual or that we are better off with a smaller post-coronavirus population than a bigger budget deficit.
Since January almost three million US citizens have contracted the virus, more than 130,000 of whom have already died. On Tuesday there were about 60,000 new cases, compared with the first wave peak in March of “only” 40,000. Not only is the US on track for more than 200,000 deaths, but its economy has shed almost 20m jobs during the same period.
There is perhaps no more a conservative value than the belief that an ounce of prevention is worth a pound of cure. Such an approach has underpinned enormous expenditure on defence, policing and immunisations in countries like Australia and the US for the past century. But in recent times, when it comes to health and environmental threats, many conservatives have become quite radical in their approach to risk.
But as Covid-19 continues to tear through the economies of those countries that “let it rip”, the number of conservatives demanding we put the health of GDP ahead of the health of the community is falling as fast as Donald Trump’s approval ratings. As painful as it is for them to admit, conservatives know that Andrews’ response to Covid-19 is better than DeSantis’. Worse still for the conservative commentariat, they know leaders like Jacinda Ardern have done a much better job of managing the crisis than Donald Trump.
In 16 weeks’ time, Australians will be looking forward in excitement to the footy finals and returning to the beaches. They will also be looking forward in trepidation to what another scorching hot summer will bring. And while we don’t yet know whether crowds will be filling the stands and beaches by October, we do know that the treasurer will have handed down the Coalition’s eighth budget deficit on the trot.
Managing the budget is important, but it pales in comparison to managing the Australian economy or protecting Australians’ health. While no one knows the “right” way to manage the combined crises Australia is now facing, America provides the clearest evidence of what the wrong way looks like.
Richard Denniss is chief economist at independent think tank The Australia Institute @RDNS_TAI