Perhaps three decades of economic growth lulled our country into believing the devastation of recession was safely past. If so, this illusion is now shattered.
It’s clearer than ever that our people and our economy cannot endure after COVID-19 like we did before. We need to surge forward to new thinking, new ideas and a new, more prosperous and inclusive economy, one built on a new honesty about the flaws and failings of the pre-COVID economy—not ‘snap back’ to neoliberalism, protectionism or nativism.
Let’s begin by recognising that this crisis has not affected us all equally. It may have been a global pandemic, but its consequences were far from universal. COVID-19 was no ‘great leveller’, and the consequences of recession will not be indiscriminate. They never are.
Those who began 2020 in a position of comfort and security may well recall this with a mix of guilt and irritation as a time of unusual inconvenience. Some have even prospered from changes in the way we work, socialise and shop, and taken the opportunity to innovate in their own operations. But millions of Australians will remember life-changing turmoil. Those who started with the least have lost the most.
Commentators may hope for refreshing new perspectives after months of shutdown and shut in, but old vistas remain. The pandemic has entrenched the disadvantages of age, geography and education, and exposed problems with Australia’s industrial framework: the working life of casualisation, job insecurity, stagnant wages and financial pressure, and structural weaknesses in growth, investment, dynamism and productivity.
Even before times got this tough, getting ahead was hard and the system wasn’t working the way it should for enough Australians. In some ways, the struggles of working people in 2020 are similar to what they were in 2019. What’s different is the scale, the pace and the stakes, the prominence, and the public, real-time decimation of the truthfulness of conservatives’ slogans about ‘aspiration’ and a ‘strong economy’.
This crisis has revealed just how many Australians live in a world where their job is precarious, their income is inadequate and too many of their basic conditions have been taken away. Yet these are the same people who we counted on to carry our economy while we stayed home: truck drivers who kept the wheels turning, people stacking shelves in our supermarkets, ward staff cleaning hospitals, carers, farmers, teachers and small business owners. Our communities already understood their value, even if the government didn’t.
The crisis also exposed the conservative prejudice that sees every Australian in need of welfare as either a bludger or a fraud, and laid bare the systematic hollowing-out of the human services people rely on in tough times.
Any plan that doesn’t begin by recognising the real and fundamental challenges our economy and millions of Australians were facing before this crisis is nothing more than a marketing exercise, and one doomed to fail.
So the first step to a comprehensive economic plan is admitting that these problems existed long before the crisis began, and that the solutions need to endure after it is over. The dangerous alternative is what we have seen too much of so far: every government action framed as a short-term response to an impossible-to-predict emergency, every idea caveated as a desperate measure for a desperate time, all the while squandering the chance to dig deep and find big answers to big questions, with lasting benefits. The risk of this approach is that its only legacy could be hundreds of billions of dollars in new debt paying for a return to the inertia of the past.
The pandemic has reminded us that economics isn’t some academic abstraction or a meaningless numerical exercise. Economics is about people, their lives and loved ones, and the jobs that support them. It’s about different choices, and different values, that the government can bring to bear at different times in the crisis—or not.
Over the past seven years, we’ve been steadily removing human-made and natural buffers that provide resilience and protection when big systems—be they ecological, geopolitical or financial—get stressed. Witness the attacks on Medicare or higher education or the aged pension; the challenge to multilateral institutions or the stalling of global reforms in areas such as tax, intellectual property, data; or the most grievous: climate change. We’ve been recklessly removing these buffers due to an obsession with short-term efficiency, or without thinking at all, not realising how essential they are to the right kind of growth. As Gautam Mukunda, the author of Indispensable: When Leaders Really Matter, has noted:
When you steadily remove their buffers, backup capacities and surge protectors in pursuit of short-term efficiency or just greed, you ensure that these systems are not only less resistant to shocks, but that we spread those shocks everywhere.
Neoliberalism has failed to deliver for too many people, but what comes next? Where will we start again?
In Upheaval: How Nations Cope with Crisis and Change, Jared Diamond makes the important point that ‘the challenge, for nations as for individuals in crisis, is to figure out which parts of their identities are already functioning well and don’t need changing, and which parts are no longer working and do need changing’. To do that, he writes, ‘they need the courage to recognize what must be changed in order to deal with the new situation. That requires the individuals or nations to find new solutions compatible with their abilities and with the rest of their being’.
This pandemic isn’t World War II; our nation is fundamentally different and so is the crisis facing us. It’s about saving lives and jobs, not sinking ships. But there are useful parallels.
Stuart Macintyre’s masterpiece, Australia’s Boldest Experiment, chronicles the vision and foresight of John Curtin and Ben Chifley’s plan for ‘victory in war, victory in peace’ in a country that becomes ‘a mighty fellowship in which the happiness of each will be assured by the effort of all’. What might we learn, then, from this ‘mighty fellowship’?
When Curtin established the Department of Post-War Reconstruction, it was almost Christmas in 1942, and when Chifley was made minister by the start of 1943, most of Europe was still occupied by the Nazis and Japanese bombs were still falling on northern Australia. The war may have been turning in our favour, but two more years of courage and the sacrifice of many more young people would be required before victory. Curtin and Chifley knew that if Australia were to prosper after the war it needed to rewrite the social contract during the war, and that for the contract to be meaningful, full employment needed to be at the core of it. They understood the duty government owed to the citizens whose sacrifice had kept their nation free, the responsibility Australia had to prove worthy of its people’s courage.
Today we need to muster and modernise that spirit, focused on the holy trinity of jobs, wages and living standards. We must deal with the most pressing near-term aspects of this crisis at the same time as we contemplate post-virus reconstruction in Australia. We need to recognise that this will be a generation-defining challenge that demands a generation-defining change in our approach. Progress may take decades and won’t be confined to budget cycles or the politics-as-usual that has dominated—if not contaminated—the approach so far.
We must prevent long-term unemployment cascading through the generations and create new, secure and well-paid work. That means bolstering the recovery until private investment and demand returns, and locating new sources of growth without abandoning traditional strengths, to set the country and its economy up for the future.
As we emerge from the health crisis, the best policy responses need a broader perspective and a longer-term view beyond the causes and immediate impact of the pandemic.
An essential component of this is tackling the current jobs crisis and getting Australia on the path towards full employment. Even before the virus, unemployment was well above the Reserve Bank’s estimate of full employment, and underemployment was at record highs. With unemployment expected to stay higher for longer, we need to be smart about how we get as many people back to work as quickly as possible, how we address the looming threat of long-term unemployment and prevent the scars that come with it, and how we create new sources of growth to create good new jobs.
Part of the immediate solution must be to support demand and provide targeted support to groups of people and regions affected by the crisis. But even as we go about this, we need to make sure our approach to jobs and work is forward-looking and takes account of the megatrends bearing down on our economy. Today’s jobs crisis has, in part, been caused by intentional policies in response to an unexpected health crisis. But tomorrow’s jobs crisis is likely to be caused by an absence of policy in response to avoidable crises.
We need to be better prepared for ‘black elephants’, a term coined by the environmentalist Adam Sweidan. A black elephant is a cross between ‘a black swan’, or an unlikely, unexpected event with enormous ramifications, and the ‘elephant in the room’—a looming disaster that is visible to everyone yet that no one wants to address.
Australia’s energy policy paralysis is just one example. The lack of an energy policy framework continues to undermine business investment not only in renewable energy itself, with investment in large-scale projects down by around 50 per cent in 2019, but across the entire economy. Coal-fired power stations face disorderly closures on the current trajectory, without frameworks to support workers or invest in replacement generation. Meanwhile, Australia continues to pass up a historic opportunity to create tens of thousands of jobs by becoming a clean energy superpower and revitalising our industrial base with cheaper, cleaner energy.
We can choose a different energy future, one in which our choices help workers and communities survive today and become more prosperous and resilient into the future. There are noregrets options: settling a sensible energy policy framework; a clear roadmap to help different sectors like transport, agriculture, manufacturing and mining take advantage of cheaper, cleaner renewable energy and storage; co-investments in emerging industries and technologies where Australia can succeed; encouraging households and businesses to become more energy efficient; ensuring our education system is building the skills we need for a sustainable future; and a compact for workers to ensure change is safe, livelihoods are secure and retraining is possible.
Done well, this will boost jobs, cut energy bills and improve the competitiveness of industries, all while cutting emissions and making our economy more resilient to future shocks.
Our decisions today also need to take account of many other big forces set to play out over years and decades: rapid changes to technology and digital innovation, the longer lives of our population, and the shifting economics and geopolitics of Asia’s rise. We can’t pretend that necessary changes can be made overnight or that all the damage done by conservative governments can be immediately fixed. Australians will understand and accept big things done slowly, but not big things done quickly or small things done slowly.
At a time of substantial personal, national and economic anxiety, we need a government prepared to move deliberately and purposefully and to imagine a role for itself as a constructive, creative and strategic enabler of good jobs, shared growth and future opportunity.
We have a chance to embark on a fundamental, transformational reimagining of our country, every bit the equal of the reconstruction Curtin and Chifley envisioned after World War II, or the Hawke and Keating reforms that opened Australia to our region and the world. A Treasury white paper on the post-pandemic economy with input from all parts of the parliament and all parts of the country would be a good place to start.
Neil Irwin has written that the last twelve years felt as if the world was reliving the period of 1918 to 1939, but as if told by a forgetful student who was getting the events out of order. That era a century ago also featured a global financial collapse, a rise of authoritarian governments, the emergence of a new economic superpower (the United States then, China now) and a pandemic, though not in that sequence. It is all strangely familiar, just at the edge of living memory. And for all the talk of ‘unprecedented’ times, it’s the economic problems that preceded this crisis that will weigh heaviest on our capacity to grow out of it.
Diamond’s idea that crises are more likely to be averted or dealt with successfully by countries with the ‘ego strength’ that comes from knowing who and what they are, and that gives them the confidence to deal with the next crisis or opportunity, applies to us now. But this is a truth Australia has lived for a long time. In adversity, we don’t abandon our values—we live up to them.
Whatever the mechanisms, we must aim for so much better than going back to the way things were. This is not the time to snap back to the problems of the past: it’s an opportunity to surge forward to the new, more modern, inclusive, sustainable economy of the future, one capable of creating more secure work for more of our people.