OPINION

Budget 2021: Coalition's shapeshift is the starkest of our post-war politics

If this government's luck keeps going, Morrison will be eyeing a V-shaped election result. Picture: Sitthixay Ditthavong
If this government's luck keeps going, Morrison will be eyeing a V-shaped election result. Picture: Sitthixay Ditthavong

Scott Morrison is one very lucky Prime Minister.

He muffed the bushfire crisis in the summer of 2019-20, only for that career-ending affair to be superseded by an astonishing new emergency, a global pandemic.

Right when he needed to rebuild his battered stock, the country needed him to step up and lead. And right when he needed to prove he would take science more seriously, the pandemic gave him no choice but to do so.

Fifteen months later, his luck is holding up remarkably well as pandemic uncertainty frames the government's thinking and that of voters too.

The Coalition finds itself on the fertile delta between the two great streams of politics and economy - or, if you prefer, of electoral self-interest and the broader national interest.

Normally, governments have to pretend these different currents are the same thing. This time, they're exquisitely aligned.

Paul Keating once talked of a "beautiful set of numbers". Morrison and his equally pragmatic Treasurer, Josh "Jobs" Frydenberg, might quietly note their beautiful confluence.

Continued stimulus is not only right for the economy, it's popular, too. It might even be transformative.

The pair have eschewed decades of low-tax, low-spending, small government, anti-deficit dogma - the lingua franca of conservatives since Thatcher and Reagan - in favour of a debt-fuelled, jobs-first strategy.

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How big is this shapeshift? Well, I challenge you to name one starker in Australian post-war politics.

From the arid dividends of trickle-down economics, to the electoral bounty of state-funded growth, this is nothing less than an admission that in the real world, governments do matter. Exogenous shocks come along and governments must borrow. Markets fail. People suffer. Economies collapse. Deficits are the answer.

Remember, this is the same outfit that in 2014 boasted of ripping $80 billion out of schools and hospitals, insisting that a post-GFC debt-to-GDP ratio of 14 per cent was ipso facto, ruinous, literally a "debt and defecit disaster".

But that was then. Net debt is now running at 30 per cent of GDP, peaking just shy of $1 trillion in four years at $980.6 billion, or 40.9 per cent of GDP. And the deficit, debt's evil twin, buoyed by a booming jobs market and a sky high iron ore price, will still be $161 billion this year and a stubborn $57 billion in 2025.

Combined deficits over four years to 2025 will total $342.4 billion, with more to come.

Yet for all this red ink, of the five elections held in Australia in the Covid era, all have returned the incumbent governments.

In WA, the Liberal opposition officially ceased to exist. With the exception of the ACT perhaps, these elections turned substantially on populist, even xenophobic politics in which borders were slammed shut. The longer the better.

This is nothing less than an admission that in the real world, governments do matter.

It's a lesson Morrison and his government, who chided states for their illiberalism at the time, have now absorbed.

Witness the Australians trapped in India who were threatened with huge fines and jail terms for trying to escape danger by coming home.

Witness also the current signalling about the international border remaining closed until well into 2022.

Between the incumbency advantage, and the fact that the Coalition has basically shifted holus-bolus onto Labor's ground, the opposition led by Anthony Albanese faces a diabolical task even being noticed. For voters, changing the Prime Minister might seem like just one more uncertainty with which to grapple.

Besides, not all of what the government has done is dumb luck or the referred kudos from state government actions. JobKeeper, the biggest single-year program spend of any Australian government in the nation's history, performed extraordinarily. While Morrison et al derided wage subsidies when put up by Labor, to their credit they changed course quite quickly.

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It was one of a series of strategic retreats in which neoliberal market cant has yielded to the greater good in the face of Covid - or, to borrow Barack Obama's phrase, against "the fierce urgency of now".

Even so, Frydenberg insisted that JobKeeper be wound up by the end of March, prompting dire warnings of a tsunami of job losses and business failures. So far neither has materialised.

As the Canberra economist Chris Richardson rightly notes, the cheapest stimulus in the end is confidence, and the government, and Frydenberg in particular, has done a thorough-going job of keeping it high, and supporting it with the public purse.

He and Morrison also talked a lot about snap-back in the early days, predicting a V-shaped recovery. They were pilloried as naive, and criticised for underestimating the depth of the economic trench.

While that public pressure probably increased the stimulus quantum in the end, they have been vindicated.

This is a budget of big spends, and more than a few concessions to past intransigence - on women, on climate, on the vaccine, on quarantine, on childcare, and on aged care.

But it must be said, the recovery looks decidely V-shaped right now - and if their luck keeps going, Morrison will be eyeing a V-shaped election result to go with it.

  • Mark Kenny is a professor at the ANU's Australian Studies Institute and host of the Democracy Sausage podcast.
This story Coalition's budget shapeshift is the starkest of our post-war politics first appeared on The Canberra Times.

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