Wren's Week: Liberal Party has no chance of leading us out of a recession

As history has shown us, Liberal Party policies are far from what Australia needs to save our economy, writes John Wren.

THIS WEEK SAW a number of important issues bubble to the surface of Australian politics, the most important being Federal Treasurer Josh Frydenberg’s Budget update where he announced the deficit will be $86 billion last financial year with a forecast of $184 billion for the current year. It’s the biggest deficit we’ve had since WW2 and a far cry from the gleeful “Back in Black” announcements of 2019.

At the pre-election time of the Back in Black announcement, most pundits, including myself, saw it as an election year ploy. The surplus had not been delivered. What was being announced was a forecast of a surplus to boost the Coalition’s election prospects.

As the financial year progressed we saw many ramifications of the announcement — shifts of payments from one year to the next, savage cuts to IPA-targeted institutions such as the ABC, promises of spending not kept, all so the Government could somehow deliver the budget surplus they had promised.

This is not a recession Australia had to have

Australia has now entered its first recession in 29 years — Scott Morrison’s legacy as Treasurer and PM deteriorates with each economic update.

However, even with Frydenberg and Finance Minister Mathias Cormann’s massaging of the books and creative accounting, by February it was already looking increasingly unlikely that they would be able to deliver their much-vaunted surplus. Then COVID-19 hit and they had no chance — but politically, Morrison had an excuse. Nobody could have predicted the pandemic, except those who did, of course. Watch them milk the pandemic.

What was perhaps more disconcerting about Frydenberg’s announcements was his narrative that deregulation and more flexible industrial arrangements would be central to the Government’s [recovery] jobs plan. This is Liberal Party ideology 101. Like dogs returning to their own vomit, the Government is planning to unconscionably attack workers' rights and job security. They plan to use the excuse of the pandemic to raise John Howard's hated Workchoices from its grave.

What makes this such a profoundly regressive move is that the pandemic has exposed the folly of a heavily casualised workforce that has no sick pay or other leave provisions. In Victoria, the pandemic’s resurgence has been largely powered by casual employees working across multiple workplaces and working while sick, because if they don’t work they don’t get paid and they can’t pay their rent or put food on the table.

Nursing and aged-care homes have been badly hit by this, as have abattoirs — both rely heavily on casual staff from labour-hire companies. Even the security guards at the quarantine hotels were casual employees.

From day one of the pandemic, the message has gone out in every state that if you feel unwell, get yourself tested and do not go to work, remain in isolation until you have a negative test result. Predictably, this has not been followed as financial pressures have driven non-compliant behaviour and it has powered the resurgence.

Morrison Government taking $1.3 billion from the poor and unemployed

The announcement of extensions to the COVID-19 supplement payments comes with the usual fine print we expect from the Government.

Sally McManus and the union movement identified this early and have been calling for pandemic leave to address it, yet the message has fallen on the deaf ears of the Liberal Government as giving casual workers sick leave is a direct challenge to their neoliberal ideology. It could even be said that this twisted ideology has, in effect, powered the second wave.

In the absence of federal leadership on this issue, the Victorian State Government, ably led by Daniel Andrews, has stepped in this week and filled the gap, offering those tested $300 if they test negative and do not go to work while waiting for their test result and a $1,500 payment if they test positive and have to isolate for two weeks while they recover. This is only in Victoria, of course. As the resurgence gathers apace in NSW, it remains an issue that I doubt Liberal Premier Gladys Berejiklian will have the political clout or enthusiasm to do what Victoria has.

The other point of Frydenberg’s presentation is that like conservative political parties across the world, the Liberal Party’s ideology sees austerity as a path out of recession. Wherever it has been implemented, austerity has actually prolonged recessions and made the suffering worse.

U.S. President Roosevelt led the USA out of the Great Depression with his New Deal that focused government spending on job creation. It was the opposite of austerity. Academic analyses of the post-depression era in the USA also demonstrated conclusively that states that invested emerged stronger and sooner than those that did not. There are also other examples — the Marshall Plan that resuscitated the German post-war economy is another.

In Australia during the Great Depression, Australia was fortunate to have installed the great Labor PM James Scullin to lead it through its travails. The Wall Street crash actually happened two days after his swearing-in. He did, however, win a landslide election in 1929 after the conservative PM Stanley Bruce tried to issue in draconian workplace laws. It’s history repeating.

Economy needs a kickstart to avoid perfect storm

Raising the Newstart rate is one possible step towards preparing our economy for chaos brought on by factors such as COVID-19.

For Australia to emerge strongly from its recession – and please remember the entire Western world is in similar or worse straits – we do not need austerity. We need focused government spending on industries that employ people. This needs to be the Government’s focus — jobs. Not empty Liberal Party “Jobs and Growth” slogans but real tangible action and investment.

Australia has also been exposed by the pandemic as being too reliant on manufactured goods from overseas (China mainly). We need to bring back manufacturing. It provides jobs, training and security. We need that manufacturing in jobs of the future — renewable energy, electric vehicles, pharmaceutical and vaccine manufacture.

We need secure employment for all — not casual labour, but secure jobs that allow people to have reliable steady incomes that allow them to invest, buy homes and raise families. Note, we have a conservative “pro-family” religious PM who is enacting policies that have a real adverse effect on families.

We also need tax reform. Negative gearing and cash refunds for franking credits must end. We also need to make the big end of town and multinationals pay their fair share. Tax cuts flagged by Frydenberg have no benefit to people without jobs and tax cuts to corporates only benefit shareholders when demand is flat.

Unfortunately for Australia, Scott Morrison's Liberal Government is not ideologically, psychologically or mentally equipped to lead Australia out of recession. Whenever Australia has faced a crisis such as the one we are now in, it has turned to the Labor Party to lead it out. Nothing has changed.