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Two visions for an economy on the edge

Lachlan Maddock
— 1 minute read

This week’s budget and Labor’s reply lay two economic pathways out of the COVID-19 crisis – but only time will tell which one was right.

When the dynamic duo of Josh Frydenberg and Scott Morrison unveiled Australia’s first pandemic budget on Tuesday night, the general consensus was that it was “the budget we had to have” – not particularly innovative, but the right policies at the right time to get the economy moving and people back into jobs. 

It’s difficult to fault the government’s spend on key areas like an investment allowance and hiring subsidies – but lacking are the long-term reforms. A stronger climate policy framework could have brought more superannuation investment home, while a boost to Newstart – a policy backed by the vast majority of respondents to a pre-budget Economic Society of Australia survey – was also dropped in favour of a mostly untested policy aimed at getting people off it.  

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The general view is that the budget will get us back to where we were at the end of last year – not quite the economic doldrums, but headed that way. It’s difficult to ask that it do anything else. 

Anthony Albanese’s budget reply, by contrast, was clear-eyed and far-sighted – the benefits of not having to actually deliver anything in the near-term. At the centre of it was a childcare subsidy designed to get women back into the workplace – a combative policy meant to take Mr Morrison to the mat over accusations that he concocted a “blue budget for a pink recession”. Also on the agenda are repairs for around 100,000 social housing units, the construction of a centre for disease control, and a plan to turn Australia into a “renewable energy superpower” by rebuilding the energy grid for a green recovery. 

But at the end of the day, it’s the Morrison budget that will have to do the heavy lifting – and true reform will have to wait. The government enjoys record approval in the here and now and will aim to keep that through measures designed to boost employment immediately rather than five or six years down the track. But if those measures fail then generations of Australians will question why they’re left with the bill for a budget that didn’t do what it said on the box.

 

Two visions for an economy on the edge
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