Yesterday Scott Morrison caved in and agreed to provide support for Victorians affected by lockdown with a $500-a-week payment. The decision is being described by journalists as an ingenious political tactic to pressure premiers into only locking down on his terms. More accurately, it represents a recognition by Morrison that the narrative pushed by Labor — both at the federal and state levels — that this is “Morrison’s lockdown” has worked. Having stuffed up quarantine, aged care and the vaccination rollout, the government had little choice but to bow to demands to help Victorians.
This is a return to a narrative that predominated for the second half of last year and this year until the WA state election — in which Labor state leaders were “bedwetters” too ready to harm the economy by shutting down at the first cough and too ready to run up debt to cover the cost while Scott Morrison and Gladys Berejiklian understood the need to keep the economy open.
That idea — to the extent it was ever true — went west, quite literally, when Mark McGowan reduced his opponents in WA to a duo. Morrison’s international border closure suddenly extended off into 2022 and beyond, and the budget significantly increased the size of Australian government for the foreseeable future.
Voters, it seems, like life “under the doona”, as Morrison once derided it. Lockdowns are enormously disruptive when they occur but many people prefer working from home if they can. Closed borders are very popular, despite the cost they inflict on major industries like tourism and higher education. The complaints from sectors dependent on temporary migrant labour get an uncritical run in the pages of the Financial Review but no one else particularly cares. Closed borders have tapped into Australians’ barely-hidden dislike of high immigration (even among recent arrivals) and the negatives that they experience as a result — congestion, high housing costs, low wages growth.
As economist Saul Eslake explained in a recent piece, the economic effect of closed borders has been economically positive in terms of spending — with Australians prevented from travelling, they have spent more locally than we have lost from international tourism — and in terms of employment, with lower migration reducing the number of new jobs needed to keep unemployment falling. Eslake noted
Australia has some ‘form’ when it comes to forcing its citizens to spend on domestically-produced goods money that they would have preferred, if allowed, to have spent on foreign-produced goods (and services). We used to call it ‘protection’. We did it for almost 90 years, from federation until the late 1980s, when it finally dawned on us that the short-term gains from creating jobs in manufacturing were outweighed by the longer-term erosion of our living standards, relative to those in other countries which chose different economic development strategies.
On top of that is actual protectionism, with both sides of politics now moving to onshore parts of manufacturing deemed vital to Australia, as a new form of “security” has been identified as necessary: health security.
Nor is there a high level of concern about the astonishing debt we are racking up. With net debt forecast to reach nearly $1 trillion, support for the idea that the government should start paying down debt is negligible, with strong support for the idea that Australia should spend whatever it takes to help the economy recover.
That is, Australians have, fairly rapidly, abandoned two economic shibboleths of the last three decades — that being open to the world, in the long run, makes us wealthier than if we’re closed off, and that permanent deficits are not a viable fiscal strategy.
As Eslake notes, the short-term attractions of being a hermit kingdom are considerable. And Australians’ politics are shorter-term than ever.
But the cost might not just be in terms of putting off hard decisions until after the next election (or two). The cost might be in having to re-convince the electorate all over again about the benefits of economic liberalism and fiscal discipline.
It took a whole generation of politicians to establish what seemed to be a permanent political framework for economic liberalism in Australia. Not just Hawke and Keating, but politicians, economists and public servants of all kinds who argued the merits of economic reform from the 1960s onward — convincing the public of the sometimes counter-intuitive lessons of free trade, open markets and fiscal discipline.
It won’t be any easier to do the second time round, and not only or particularly because there’s no one of the calibre of Labor’s giants in politics.
This time around voters are wise to the pitfalls of economic liberalism — especially the inequality and unfairness that comes along with greater wealth. In net terms, some benefit a great deal from liberalisation, most benefit a little, and some lose out. Voters are also aware of how large corporations have worked hard to seize the benefits of liberalisation while lumping them with the costs, and how the power of corporations has grown in recent decades at their expense.
And this time around there are no international examples — no Thatcher, and no Reagan, though Reagan was more a corporate puppet with no fiscal discipline than a genuine neoliberal. In fact, neoliberalism is in retreat globally; Joe Biden has proven far more economically progressive than anticipated and Boris Johnson is profoundly profligate. Other than in the padded cell of the AFR‘s editorial office, no one is arguing for a return to neoliberalism.
For many, a retreat to the economic thinking that we last encountered during the Fraser years might be a welcome alternative to the last 30 years (especially amongst voters old enough to have once hated Fraser with all the passion they could muster). But not all that glistened in neoliberalism was dross; not every benefit only accrued to shareholders and corporate executives. Eslake is correct that at some point we’ll have to re-engage with the world. Who wants to tell voters — and assure them it will be done on fairer terms?
“The decision is being described by journalists as an ingenious political tactic.” Really, is there no backflip, no humiliating backdown that the msm can’t spin into another victory for this arch genius of a PM?
As for neoliberalism and fiscal discipline, the case for both has been wrung dry, there is very little that either doctrine hold for the masses. That trillion dollar debt, well, $400B is owed to the RBA, so you can take that off the number, and the RBA could siphon off the rest over time IF the money was spent wisely on productive assets. If it’s just sprayed up against the wall it will likely lead to other problems.
Yes, hard to believe, but closing off our borders has actually created pressures that neoliberalism wanted to banish for all time. Wanton abuse of the working visa program, used to ensure that you could get someone to work for bottom dollar, even in less skilled professions. Getting rid of that is a social good.
The old economic shibboleths have been shown up as lacking connection to reality, to lived experience. The economics profession is looking more moribund than Dad’s Army. Economic theories need to be junked en masse.
We keep doing the same thing without realising there are other possibilities. The TINA principle prevents the poor thinkers from ‘thinking outside the box’ (oh how I hate that expression). We thought our western governance was somewhere in the middle, centrist policies. Hopefully we will wake up to realise we are way out on some far right tangent and before it is too late to find ‘centre’ again.
And the outsourcing of vaccinations to the private sector rather than being run by the public sector has really shown up the weaknesses of the small government policy being pursued the Feds.
Before now, there was no time where MMT could be raised by a pollie without them being labelled a loonie…but now that both sides of politics have done the big deficit spend, and it’s worked beautifully, it should be the perfect opportunity for everyone to come clean, explain why it worked, and how the economy doesn’t operate like a household budget and all those scare tactics of debt and disaster in the past were lies. We finally have a once in a lifetime chance to usher in a new dawn of enlightened budgets, and more enlightened economic debates.
However….the “surplus good/deficit bad” myth is so potent….so simple, so seemingly right while being so totally wrong….would either side want to lose such a killer weapon?
Would the ALP, for instance, want to shine the light of truth on deficit spending, knowing that in doing so, they would lose their chance to batter the Libs with the exact same club they’ve been bashed with for the last few decades?
On the one side, truth. Knowledge. A chance to evolve as a society.
But on the other hand….A BIG DEBT!!! Big debt SCARY! Big debt BAD! And how big is the national debt under the Morrison government?
I can see it on a giant billboard …”ONE TRILLION DOLLARS!!” .
Just the novelty of being able to use the word “trillion” for the first time is another one of those once in a lifetime opportunities too hard to resist.
In times like these, I ask myself, “What would the Libs do if the situation was reversed?”
Hmmm.
Maybe the economic truth needs to stay in that closet a little bit longer, until after the next election.
Prepare that billboard.
In my experience mention oh MMT amongst my friends is a sure fire conversation stopper. It would be a brave opposition who could bring it up to the electorate, let alone argue for it convincingly. Our poor Labor party is neither brave or convincing…
And arid abacuses like Andrew Leigh, lawyer and former professor of economics – the two least creditable and most deleterious delusions currently ravaging society – there is no chance.
In a 2002 book, co-edited David Burchell, The Prince’s New Clothes: Why Do Australians Dislike Their Politicians? he suggested a more aggressive media were largely responsible for politicians’ falling stocks.
Nothing to do with their mendacity, duplicity or venality.
I like him, he seems genuine unlike most others like lnp.
…err, he is ‘Labor’.
Once PM Gillard’s economic advisor.
I agree. Andrew Leigh is very genuine and a very diligent HoR member. He was my MP before the 2019 redistribution of electoral boundaries and kept in contact when I was overseas as an AusAID volunteer. He is articulate – not an arid abacus at all – and has written some very interesting books. It is good to have someone with a brain rather than a motor mouth in the HoR. Unfortunately he is unaligned so never gets the positions he could add some brain power to.
3,706,752 people have been killed by covid-19, as of today. That’s what shut our borders. Nothing to do with migration or anything else. Self preservation only. I clearly remember Morrison wanting to open all borders. We would certainly have had thousands dead if it had been up to him. Many of those who have died did so because of quarantine failures. Quarantine is a Federal responsibility, surely. As for the trillion dollar debt, only history will eventually reveal the wisdom, or otherwise, of that. At the moment it comes to 5 billion tons of iron ore, about five years worth of our exports.
What an astonishingly naive and weak analysis this is from someone who supposedly has expertise in politics and economics. Neoliberalism is far from in retreat. It is and always was a political project, with huge differences between the theory and practice. Differences as large as those between Trump’s populist talk and the reality of the US economics. Keane and Eslake talk about Neoliberalism, as if it is merely a set of preferences for tax, reduced public spending, open markets and competition, and that, with free spending right wing populism, It is now in retreat. It was never really about that. The proportion of government spending over the time of Thatcher stayed steady. Many of the points that Keane in other articles makes nicely about australia, public life, loss of faith in institutions, this and the other corruption, are part of the political aim of neoliberalism, its hollowing out of our quasi democracy and the destruction of our better institutions. God save us if our more intelligent commentators are swallowing and regurgitating the stuff in this Crikey piece.
Notwithstanding what I’ve said above, Nim, nothing takes away from the reality of neoliberalism really being about the junking of western political norms, particularly that the government of the day might actually govern, or worst of all, govern for the people.
The problems with mass immigration, inexorably linked to border reopening, have been well characterised.
So thinly spread are the benefits that most of us are lucky to see an extra cup of coffee per week.
And that’s the upside.
The objections are nothing to do with racism or any other silly “ism”.
It’s a numbers game.
And if third world population growth is your answer you have to wonder what the question is.
Australia does not have ‘mass immigration’ but moderate permanent migration and a more significant temporary churn over of students etc. with the latter being net financial contributors to budgets. Not sure who would want a return to ’70s Australia…..
Most of current migration is ‘temporary-permanent’. People enter on temporary visas and stay for years expecting/hoping sometime to become permanent.
Interesting opinion, but have you a definition of ‘temporary-permanent’, a source for data or actual numbers and evidence of correlation/causation with negative outcomes or issues of supposed ‘third world population growth’?
The NOM is dominated by churnover of international students, 2nd year backpackers, NZ’ers and past year returning Australians. Outside of Kiwis, only a minority of foreigners are eligible under the cap for permanent residency via skilled program etc. while significant numbers are eligible to apply onshore, then govt. processes with applicants waiting on bridging visas; this then leads to delays due to significantly under resourced Home Affairs immigration processing.
A soft form of ‘hostile environment’ to discourage potential ‘immigrants’ and anyone else coming to Australia expecting a warm welcome; adds to our excellent reputation for fair go and diversity.
I just used this term to describe a group of people who have come in as temporary workers and keep extending their stay in the hope of gaining permanent residence. My information on this practice is quite out-date but Peter Mares wrote a book about it several years ago, Not Quite Permanent. However cases crop up from time to time of people who come up against an issue which gains them publicity and who have been in Australia working for 8-10 years on temporary visas, so I assume the incidence of this happening has not gone away.
Try the ABS – the numbers are perfectly clear and differentiate between legal, 110-155 visa, migration, tourist visas (776) and the scam series, 457 and student which even the, for profit, diploma mills admit are used primarily as get-arounds for thse who would not qualify as migrants.
The subject that you are deliberately trying to obfuscate is permanent migration.
It has a specific meaning which does not include tourists, backpackers or the short term, specific purpose (HA!) 457s.
Over the last 25 years, immigration has averaged 200,000 pa – that does not include the inevitable dependents – 5M or 20% of the current population.
That is not moderate permanent migration.
Add to that an unknown number of visa scams and overstayers who, by definition must work without awards or conditions and then talk about stagnant wages, insecurity, the gig economy and housing.
The annual permanent migration cap is presently 160k p.a., has been higher, so average could be 200K, one thinks you are mistakenly conflating permanent migration with NOM Net Overseas Migration which both fluctuates and spikes population numbers, but there is no direct relationship between the two?
As a proportion of the population, post WWII immigration was significantly higher than nowadays, when mostly permanent migration but little temporary churn over of temporary residents we observe nowadays. Further, you make several subjective statements without any support e.g. suggesting scams, overstays etc. and blaming the same for ‘stagnant wages, insecurity, the gig economy and housing’; evidence apart from media scare stories?
The latter criticisms are simply old Anglosphere white nativist conservative tropes used by elites, politicians, employers and media to deflect and avoid e.g. increasing wages and implementing more robust robust environmental regulation; house prices have been rising without any significant immigration……
Headline numbers are popular in media and politics but offer neither an informed nor grounded picture of any empirical field, inlcuding ‘immigration’.
One of the, many, major differences between post WWII migration and now is that they were eager to give the flick to their countries of origin – as demonstrably failed states – and commit to Australia.
They did not crowd into already overcrowded, overpriced cities but spread out, going where they were needed or as directed from the resettlement & orientation camps.
The MIA & Snowy Hydro could not have been achieved without the many thousands who worked there, learning a new language – the only common language many had on arrival was German, imagine how keen many mittel-europaesichen were to use that – and left with a new sense of belonging, a nest egg and a fervent belief that this was now their country.
I often wonder whether Morrison’s and other politicians limited lockdown experience has warped their collective perception of how most Australian’s feel about lockdowns. There stuck in a neoliberal dream where people are desperately in love with the 1 hour commute to work at a job they hate, where the cold reality is that it has been a broadly positive experience with individual tragedies being the stand out negatives.
Also, the MSM simping over Morrison doing anything will never stop being tiring. Will anything ever be a humiliating backdown?