Ideas@TheCentre brings you ammunition for conversations around the table. 3 short articles from CIS researchers emailed every Friday on the issues of the week.
These are deeply troubling times for Australia and the world. With nations locking down borders and cities, gatherings of 100 or more banned, stock markets falling, a new era of economic turbulence looms. That’s not to mention the deaths and illnesses that the coronavirus contagion has caused.
Watch my video on the challenges we face ahead, and how CIS will focus on policy to help Australia emerge stronger.
My CIS colleagues and I wish you all the very best wishes during these dark days. Although we are working from home, please rest assured we are here to help understand and navigate through this crisis and help Australia get back on track. Although we have had to cancel our March and April events (the BBC’s legendary broadcaster Andrew Neil, Thatcher biographer Charles Moore, US climate economist Jerry Taylor, among other guest speakers), we remain committed to producing sound evidence-based public policy research.
COVID-19 has not just damaged our China-exposed education and tourism sectors, as CIS research forewarned. The pandemic threatens to push Australia into a very serious recession. However, a crisis can force the political class to really shake things up – and make the country stronger and more prosperous.
At CIS, we’ve long supported policies to improve our nation’s economy and prosperity. And COVID-19, as I pointed out in the Australian Financial Review earlier this week, is an opportunity for our leaders to do the big things our nation has postponed for too long.
Beyond addressing short-term hardship and calming the panic, our leaders can try to boost business and public confidence with a wide-ranging structural reform agenda to improve the investment climate and liberate risk-taking: lower taxes, slash excessive regulatory red tape, reduce adversarial workplace regulation, loosen infrastructure bottlenecks, teach children basic skills essential for higher learning, fix the state-based payroll tax duties and stamp duties on property.
Why not, for a trial period, end our compulsory retirement savings system? Voluntary super would give individuals far more choice, independence and the option of spending their upfront wages, which would boost economic growth.
Such reforms would meet stiff political and public resistance. But they would improve the incentives to work, lift productivity, spur a revival in business confidence and competitiveness and strengthen long-term growth and living standards.
At CIS, we promote policies that will spur a revival in business confidence, fire up entrepreneurial energy, help the economy rebound, and drive investment for tomorrow’s growth and prosperity. We will help Australia emerge from this crisis in a stronger position.
Watch our event on coronavirus in China, the epicentre of the virus.
Australian governments are working hard to manage the economic impact of COVID-19 and to ensure health care is there for all who need it. But the virus is taking its toll in other ways.
We do not appear to be doing well under the strain of what the American writer Walter Russell Mead has described as “a Jet Age pandemic” racing through the global economy.
Earlier this week, some of our leading grocery stores took full page advertisements in newspapers asking us all, in effect, to cool it.
Panic buying, aggressive behaviour towards shop workers, and even shoppers coming to blows over toilet paper are all revealing an ugly side of our Aussie temperament.
We are not the only ones feeling the strain, of course. Plenty of fraudsters are exploiting fear by pedlling quack remedies and potions claiming to ward off, or even cure, the virus.
And where there are fake remedies, there are also conspiracy theories that purport to explain and blame what is happening around the world, as Daniel Pipes notes.
But in the rush to save ourselves, we are in danger of losing sight of the needs of our neighbours, many of whom are more vulnerable and less able to fend for themselves.
And faced with scarce health resources and mounting demand, how is it, asks theologian Ephraim Radner, that a person’s value has reduced to the triage calculation of medical costs.
It’s time to take a leaf out of the Baby Boomers’ book to get a grip, and keep things in perspective. Following government advice and taking all sensible precautions is essential.
Travel bans, self-quarantines, and a heightened public health awareness are all important and. They will make a difference in the effort to slow down progress of the virus.
But as the Daily Telegraph’s Warren Brown reminds us, we also need to keep our sense of humour. We’ve faced tough times before. Sticking together will see us all through this crisis.
There is a lot we still do not know about COVID-19. Scientists are researching a vaccine, but circumventing adequate clinical trials in a rush to use is unwise and dangerous.
Politicians framing guidelines for us are, themselves, heavily dependent on medical advice which is, itself, changing all the time and often amounts to a highly educated guess.
Social isolation, disrupted routines, and the likelihood of economic hardship for all of us are bound to take their toll on our physical and mental health in coming months.
In the face of such uncertainty, how are we to live? First, we must recognise there is a lot we don’t know about COVID-19. Second, we must resist the urge to panic.
Whilst not being complacent about the virus, and being sure to observe public health guidelines, we also need to check the fear that arises from speculation and rumour.
As Victor Davis Hanson has urged, “humility, certainty – and much less accusation and panic – should be the order of the day.”
We need to cultivate the capacity to live calmly in the face of what we do not know. It’s one of our national traits that makes Australia the envy of so many other countries.
Admired for our egalitarian spirit of optimism and a reluctance to take ourselves too seriously, now is the time – like no other – for us to hold fast to our sense of mateship.
Despite just announcing a $17.6 billion stimulus package, the supposedly economically rational Liberals are preparing an even bigger stimulus soon.
The first package focused mostly on short term ‘holding’ measures aimed at propping up aggregate demand. In other words, their sole purpose is to try and maintain the status quo in the face of uncertainty. The second package seems likely to involve similar propping up for businesses.
There is precious little longer-term thinking involved in this.
Supporters of stimulus may argue that the short-term approach is precisely the point: this is about maintaining demand in the economy until it recovers under its own steam.
But there are problems with this. First, we have not even really begun to feel the effects of the virus across the broader economy. We simply don’t know how bad it might get, or for how long. This continuing hit on confidence will sap the effectiveness of any stimulus package aimed at maintaining the status quo. The first package was a $17 billion stab in the dark and already looks like it wasn’t enough. How many $17b stabs can we afford?
Finally, if the government is going to spend money in preparation for an economic downturn, it should do so in a way that will also generate longer-term benefits in case the stimulus effect doesn’t work. Bringing forward already legislated tax cuts would be one way of doing this, which may have a short-term stimulatory effect but also improve productivity longer term.
The 2020 budget was supposed to be the one that finally turned off the taps Rudd and Swan opened in 2009. Swan tried and failed to deliver a surplus in 2012, famously announcing four years of surpluses that turned rapidly into deficits.
Morrison and Frydenberg too announced that we were back in the black. Instead, we are headed in the other direction once again.