Last week’s numbers brought us the bad news we were expecting: Australia has fallen into the worst recession in nearly a century.
But now for the worse news: it is now clear that the recession has collapsed into a full-scale depression, three consecutive quarters of what the economists euphemistically call negative growth, with the likelihood of a fourth to follow.
The official figure was a fall of seven per cent in the June quarter, catastrophic enough. But the human cost is still direr.
Whatever jiggery-pokery our Treasurer can devise, unemployment will go into double figures by Christmas – unhappily, the latest date Prime Minister Scott Morrison has fixed on for his wildly optimistic turnaround. And it will be months, possibly years, before they subside to an acceptable level.
Confidence at all levels is at rock bottom: both consumer spending and business investment have plummeted. And with much of the government support that has had the survivors hanging by their fingernails about to be reduced or removed entirely, the chances of a revival in hope are slim indeed.
Morrison’s plan, if it can be dignified with such a name, is, as usual, tax cuts for the medium-to-rich, cutting red tape, tweaking industrial laws. At least, that is what the well-informed leaks are telling us will underpin the budget next month.
But this formula has been tried before, numerous times, without success, and in any case has been so well trumpeted that the likely response will be indifference at best and at worst disappointment. Infrastructure programs already in the pipeline may help in the medium to long term and starting new ones will always be welcome, but will be no panacea.
What Morrison needs – what we all need – is a big jolt; shock treatment to bring our timorous and torpid economy to some semblance of life. If Morrison and his indefatigable Treasurer Josh Frydenberg have the electrodes in their kit bag, they have kept them securely hidden.
They are, however, still determined to look on the sunny side; things may be tough here, but you should see the rest of the world. Not all of it, perhaps, but with a little judicious cherry-picking we can find a few countries in an even more parlous position.
And sure, there has been, is, and still will be, a huge price to be paid, but Australia has got through the COVID-19 pandemic better than almost anyone. Our rates of infections and deaths are surely something to be celebrated. Well, they certainly were. But unfortunately, those days have come and gone; we are now back in the pack, even if we only consider the developed world.
The advantage Australia had was that we were always a bit behind; as the virus raged around the northern hemisphere, it paused at the equator and Australia was able to learn from the depredations and profit from the experience of others.
Hence, we closed our borders, implemented lockdowns, refined social distancing rules and brought the public, horrified by the figures in places like Italy and the United States, largely on board. So we came through the first wave better than most and all governments and their agencies deserve considerable credit.
But then, in spite of all the warnings, complacency crept in. The feds failed to heed the vulnerability of aged care, Victoria was negligent over quarantine, the public decided that it wasn’t really too bad and now it was just about over. So when the second wave broke, as it was always going to, Australia was reduced to playing catch up.
And the disillusionment spilt through into a widespread resentment: why haven’t the authorities fixed it by now – as they had promised? Why have we missed out on the curve flattening, snapbacks and the return to normal? Trust was broken and an unintended (certainly from Morrison) consequence was that so was confidence. Restoring it will be far harder the second time around.
So the budget cannot be just more of the same. There will have to be a genuine circuit breaker and perhaps – just perhaps – this might mean jumping outside the square, devising a new, exciting, even visionary approach. Anyone for a real energy policy?
After about 20 failed attempts, it is obviously time for one and as the consensus moves inevitably away from coal, and towards renewables, there just may be an opportunity now that gas, once the remedy for the transition, is being shown not to be a saviour but a Trojan horse.
It has always been argued that gas, while not a squeaky clean fuel, is at least a better bet than coal. But now it turns out that it may be even dirtier, because methane leaks that cannot be contained will probably nullify any advantages over the emissions of coal.
Methane is a far more damaging greenhouse gas than carbon dioxide, so just a little can be a big problem. Add in the damage wreaked on agricultural land and, crucially, water supplies and gas looks a lot less attractive than its proponents claim.
It has, however, one big plus; unlike coal power or renewables, gas can easily be turned on and off. But with the advances in batteries, this last advantage is becoming obsolete. As former government Chief Scientist, Penny Sackett points out, that ship has sailed.
The current Chief Scientist, Alan Finkel, is still a gas pusher, but he is becoming increasingly isolated; not just the environmentalists, but business and agriculture are jumping aboard the renewables bandwagon. And if it is not already, renewables are rapidly becoming not just the cleanest, safest and most acceptable option available, but also the cheapest.
Many in the Coalition ranks will never be persuaded. But the evidence is irrefutable. And what a coup it would be for Morrison if, on top of stellar polling, he could bring this one-off – forget bothering with feasibility studies and inquiries to try to justify throwing taxpayer money at his bankers in the mining industry – and embrace the science, engineering and even the economics he constantly invokes.
Of course, it won’t happen. But he needs to do something and quickly. He is already the leader who gave us the second depression in a century. If he is to salve his legacy, nothing less than another of his miracles will suffice.
Mungo MacCallum is a veteran journalist who worked for many years in the Canberra Press Gallery.
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