Australia is in our worst economic crisis since the 1930s.
The lockdowns and restrictions imposed in the face of the pandemic saw 1.3 million people stood down or lose their jobs. Even with the economy beginning to open up again, at least 400,000 of those jobs have still not come back. Sixty per cent of those that did were only part-time. Then Melbourne’s second wave hit.
Figures for the first quarter fully affected by the pandemic show that the economy shrank by 7 per cent in the three months to 30 June, the largest drop on record.
But the situation is set to get worse. Although August’s official unemployment figures showed a rebound in jobs, this was largely due to an increase in gig economy work. Hours worked barely grew, suggesting many of those taking up these jobs are hardly working. And unofficial unemployment, including those who have given up looking for work, was almost 9 per cent.
Unemployment is expected to keep rising, hitting an official rate of 10 per cent by December. And that’s if there are no further outbreaks of the virus.
Young, low paid workers in retail, food services and the arts have been the worst hit. Women have also lost work disproportionately.
Scott Morrison is set to make this worse. Even as unemployment is still rising, he is cutting JobSeeker payments by $300 a fortnight from 24 September. JobKeeper payments will also be cut in two stages, to $1200 after September, and $1000 from next year.
JobSeeker payments are set to drop back to pre-COVID levels of $40 a day, below the poverty line, at the start of next year.
Tax cuts for the rich
Instead of helping those hit hardest by the crisis, the Liberals plan to bring forward the next stage of their tax cuts. This would cost a colossal $28 billion over the first three years. But the benefits of it would go to the rich.
The top 20 per cent of taxpayers would get 91 per cent of the benefits. The bottom 50 per cent of taxpayers would receive just 4 per cent, the Australia Institute found. Those out of work would miss out altogether.
Tax cuts would do nothing to create jobs or tackle the unemployment crisis the pandemic has brought us. Nor would they be very effective economic stimulus, as many economists have pointed out, with the rich more likely to simply save the cash windfall, particularly when the pandemic has made eating out and entertainment more difficult.
Those most likely to spend are the unemployed and low income earners, who otherwise have to forgo the basics.
COVID-19 has triggered an economic crisis like no other. There is still no way of knowing when industries like retail, restaurants, tourism and entertainment will be back to normal. We could be waiting six months, or even a year, until there is an effective vaccine.
The state of other economies around the world will also impact Australia through reduced trade. The US and Europe have all suffered twice the economic damage as here, according to the IMF. The flow on effect is sure to hit China too, which has recovered faster so far.
The high levels of population growth that have underpinned economic growth in Australia, fuelled by migration, are on indefinite pause.
Treasurer Josh Frydenberg will bring down the budget on 6 October, outlining the government’s plans for future spending.
We will need far more government support to tackle the jobs crisis. Morrison’s plans for tax cuts, attacks on workers’ rights, and investment incentives for companies show that he remains committed to the same old neo-liberal policies.
The renewed outbreak of the virus in Victoria may have forced a delay in their plans, but the intention is still to force a “snap back” to business as usual as soon as possible.
Their haste to wind back spending on JobKeeper and JobSeeker payments is a further sign of the Coalition’s addiction to reducing debt and limiting government spending.
There is also talk of new spending on infrastructure in the budget. But the government should be stepping in to create jobs in the public sector, through addressing the failures exposed by the pandemic. We need an end to insecure, casualised work and far more staff in our aged care and health systems.
And instead of locking in further carbon emissions through putting government money into expanding fossil fuels through new gas projects, the government could begin the rapid shift to renewable energy and a zero carbon economy that we need.
The government has spent some $100 billion so far on emergency measures to avoid economic collapse. Some hoped the scale of the crisis would force governments to abandon the neo-liberal policies of recent decades.
But it’s clear from Scott Morrison’s plans that it will take a serious fight to force the spending needed to create jobs, as well as address the other crises in health and climate change that the world faces.
By James Supple