Deft diplomacy is often required by the Prime Minister when asked about his close ally and friend Donald Trump, especially when it comes to the President’s increasingly dangerous advice on how best to approach this global pandemic.
“Donald Trump doesn’t run Australia,” Scott Morrison pointed out to the ABC’s Lisa Millar. He then issued a rather delicate plea: “I’m sure Australians will look to the Australian Government and the state governments to take their directions from the health authorities here.”
In plainer language: please don’t listen to Trump.
Treasurer Josh Frydenberg was equally wary of provoking an angry tweet from the White House, but just as direct.
“We take COVID-19 very seriously, it’s a deadly virus”, he told the National Press Club.
After a triumphant return from his brief hospital stint, the coronavirus-positive President told Americans “don’t be afraid of Covid”. He’s apparently feeling better than he did 20 years ago and makes the virus sound more like an elixir than a killer.
Trump even took to social media to declare the coronavirus was “far less lethal” than the flu. Twitter slapped a warning label on the post. Facebook deleted it.
The Budget’s Trump vibe
While the Morrison Government unsurprisingly prefers to treat this virus seriously, this week’s Budget does share a little of Trump’s “don’t let it dominate your life” vibe.
For all the billions being spent to put Australia on a path to recovery, there’s a hard reality at the heart of this Budget: the Government wants the economy to adjust to the reality of living with this virus.
The cushions of support are being removed and replaced with generous incentives. The fittest survivors now have the opportunity to thrive.
The JobKeeper tap is being turned off in March. The payment, which has been critical since the pandemic began, is currently supporting 3.5 million workers in 900,000 businesses.
Many won’t need it after March as restrictions ease and activity picks up. But those in the tourism, hospitality, arts and conference sectors have little chance of survival, especially if a vaccine isn’t widely available for another 12 months, as the Budget now assumes.
The message in this Budget to those businesses and all who work in them is clear: find a way to adjust to self-sufficiency or fold.
The Government isn’t being quite so brutal in its sales pitch, but the reality is spelled out in the Treasurer’s Budget night speech.
“Our values endure,” Josh Frydenberg told Parliament. “Personal responsibility. Reward for effort. The power of aspiration.”
Other values related to the perils of a “debt and deficit disaster” may have been abandoned for now, but Frydenberg is holding up “reward for effort” as a virtue. Or as the Prime Minister might put it, “if you have a go, you’ll get a go”.
The biggest gamble
That’s of little comfort to the travel agents, tour operators, restaurant owners and others who might be trying to “have a go” but are seeing no reward for their effort. The economic adjustment for them presumably means moving on. Retraining, repositioning, relocating, starting again. In a recession.
This shift away from supporting all businesses to only those who are in a position to invest, hire new staff and grow is the biggest play in this Budget. It’s also the biggest gamble.
If a vaccine is developed and distributed in the next six months, there’s no doubt this Budget will put a rocket under private sector growth. That’s the best-case scenario.
Worst case is a series of rolling outbreaks and shutdowns stretching into 2022, which Treasurer estimates would cost the economy a further $55 billion.
The most likely scenario, on which the Budget is based, suggests we’ll be living with the virus in some form for at least another year. Internal borders will hopefully be open, international travel will “remain low” and some restrictions are likely to remain.
In this environment, some businesses will take advantage of the generous tax breaks to buy new utes, trucks, ovens and coffee machines. Some will cash in on the wage subsidy and hire young workers.
Others, however, won’t stand a chance.
If a third coronavirus wave hits and things deteriorate badly, the Government has demonstrated this year its willingness to shift course, but Frydenberg is determined to play down any expectation of the lifeline being extended again. “Our policies are transitioning away from JobKeeper, which is scheduled to end in March,” he told the Press Club.
He warns prolonging the payment is “dampening the incentives to work, hampering labour mobility and the reallocation of workers to more productive roles”.
There’s no sugar-coating the message: The JobKeeper cliff in March is coming.
David Speers is the host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.