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Coalition's eye-watering debt yields underwhelming results

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(Cartoon by Mark David | @MDavidCartoons)

The Morrison Government's eye-watering stimulus package has little to show in the way of long-term benefit for the majority of Australians. Tarric Brooker reports.

AS THE BULK of the Morrison Government’s coronavirus stimulus package draws to a close, one can’t help but be reminded of a quote from wartime British Prime Minister Winston Churchill:

“Never let a good crisis go to waste.”

But as we survey our nation before us and the path the Morrison Government has chosen to take with its stimulus package, it’s clear that the crisis has more or less completely gone to waste.

Aside from a paltry $3.47 a day increase in the rate of the JobSeeker allowance, unfortunately very little long term positive change has emerged from the Morrison Government since the crisis began.

While the COVID19 pandemic will be remembered as an extremely challenging time for many Australians, it also represented an enormous opportunity to use the can-do political atmosphere to enact lasting positive policies for all Australians.

As a result of the crisis, the government cost for borrowing money fell to its lowest level on record. With the Commonwealth being able to borrow, for 30 years at one point, at an interest rate of just 1.11%.

With rates at such incredibly low levels at the peak of the crisis, the Morrison Government had an opportunity to borrow at well below inflation interest rates, to do anything from nation-building infrastructure to revitalising key government services in the bush.

In reality, the Government’s stimulus response wasn’t nearly as imaginative. It placed a heavy focus on its JobKeeper program, which provided businesses with a wage subsidy in order to keep their employees on the payroll.

However, thanks to the generally highly impressive management of the virus by state and territory governments, an enormous proportion of JobKeeper funds weren’t actually needed to save jobs.

Instead, they often flowed into record business profits, shareholder dividends and six-figure executive bonuses.

Now as the world surveys the damage from the pandemic to the global economy and the stimulus to government coffers, borrowing costs have begun to skyrocket. And with all that extra debt, there will no doubt be a drive by the Morrison Government and others around the world to now attempt to move toward a balanced budget.

Since hitting a low of 1.11% in March last year, Australia’s 30-year borrowing cost has almost tripled, rising to a high of 3% on Friday. This represents the highest interest rate payable on the Australian 30-year bond since December 2018.

There is now speculation among market analysts that government borrowing costs may have bottomed out after 40 years of falling and that the only way for rates is up from here.

Though this is still a matter of hotly contested debate, if this assertion proves to be correct, the Morrison Government may have wasted Australia’s best chance to borrow cheaply and build a better Australia for everyone.

In total, the Morrison Government committed to a $507 billion stimulus package. To put that into perspective, this is 4% greater than the entire expenditure of the 2018-2019 Federal Budget, which happens to be the last financial year not impacted by the pandemic.

For less than 4% of the stimulus committed, every single one of the 116,000 homeless Australians could have been housed in new social housing.

For 0.00072% of the stimulus commitment, Australia could have had 50 large 737 water bombers for a national firefighting fleet, capable of being deployed to wherever in the country they were needed during bushfire season.

Instead of profound and transformative change that could have done anything – from getting rough sleepers off the street for good to protecting millions of homes from bushfires – we have little lasting benefit to show for the enormous level of expenditure.

While it’s clear that government support was required in order to prevent mass job losses due to lockdowns, it’s equally clear that JobKeeper could have covered far more workers such as casuals and those from the education sector, if it solely targeted businesses definitively impacted by the pandemic on an ongoing basis.

Now, as taxes begin to rise in other parts of the Western world to pay for the enormous level of stimulus expenditure, we are told by the Prime Minister that clawing back these tens of billions in wasted taxpayer dollars is “the politics of envy”.

The coronavirus crisis could have had a silver lining that could have benefitted Australians for decades to come through cleverly targeted government stimulus spending.

Instead, the Australian people may one day look back on this crisis as a painful reminder of a missed opportunity, which could have transformed Australia for the better for decades to come.

Tarric Brooker is an IA columnist, freelance journalist and political commentator. You can follow Tarric on Twitter @AvidCommentator.

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