The key numbers are being released in real time. On the health front, they are the daily deaths and infections from the coronavirus. Victoria has not reached the point where it can satisfy itself, let alone the other states, that the second wave is behind it.
On the economic front, the regular updates of payroll data reveal a fractured, three-speed labour market. Victoria, not surprisingly, is in reverse, losing twice as many jobs in August than it had gained when restrictions were first eased in May. But it is NSW that should trouble Scott Morrison, even if his tribal instinct is to blame Daniel Andrews for everything. The recovery in employment in his home state stalled last month, notwithstanding the continued low case count for the virus. Public anxiety over a second wave in Sydney remains a handbrake on recovery. Meanwhile, Western Australia and Queensland continue to add jobs.
The primary lesson of the pandemic hasn’t changed: there can be no viable national economy until the virus is suppressed in every state and territory.
The word most often used to describe the global health and economic crisis is “unprecedented”. It suggests there is nothing to be gained by revisiting previous Australian recessions. But there are two worth looking at to understand why the Prime Minister’s tribal approach continues to undermine the national effort.
The first example is the 1961 recession. The Coalition government of Robert Menzies brought that crash on itself by lifting interest rates too high, and restricting the supply of bank credit to fight inflation. GDP contracted by 1.7 per cent in the year to the September quarter 1961. At the federal election held in December that year, the government came within a seat of losing its majority.
The detail that is relevant today is what happened to employment. The government still played an active role to minimise the damage to the labour market, even as it overshot on its so-called credit squeeze. The private sector shed 40,000, or almost 2 per cent of all its jobs between June 1960 and June 1961. But the public sector offset almost all those losses, adding 24,000 positions over the same period. It meant the recession did not cast a long shadow over the recovery.
Morrison sees this crisis as an opportunity to reduce the size of the public sector workforce through cuts to departments such as Foreign Affairs, as well as the ABC. He has short-changed the arts and denied JobKeeper payment to universities. Menzies would be rolling in his grave at these violations of his middle class compact.
The second case study is the recession of 1990-91. The crash was similar to its 1961 counterpart based on GDP – the economy contracted by 1.4 per cent in the year to the June quarter 1991. And the trigger was identical – punitive interest rates.
But there was a restructure of the economy underway at the same time that would have destroyed jobs regardless. In the end, the public sector could not cover for the mass retrenchments in manufacturing, financial services, agriculture and construction. More than 330,000 jobs, or 4.2 per cent of the entire workforce, disappeared between June 1990 and November 1992.
The 1991 leadership brawl between Bob Hawke and Paul Keating distracted the government, and prolonged the jobs recession, even as GDP was recovering. But even as their partnership crumbled, they continued to reform the economy. John Howard rates the tariff cuts they announced in March that year as their greatest joint achievement.
When Keating became prime minister in December that year, the temptations of politics was to focus exclusively on a scare campaign against the John Hewson-led opposition. But Keating continued Labor’s great reform adventure. He had secured compulsory superannuation, and delivered his Redfern speech for reconciliation before the 1993 election. After his shock victory, he reformed workplace laws, legislated native title and struck an unlikely partnership with Victorian Liberal premier Jeff Kennett to introduce competition policy.
The long run of economic growth from the second half of 1991 to the end of 2019 owed its strength, in part, to the completion of the reform program under Keating.
Keating does not see Menzies as a kindred spirit. But their twin leadership examples demonstrate what is missing in Morrison’s response to the pandemic. Menzies saw every job as worth saving, and Keating never took his eye off reform.
George Megalogenis is a journalist, political commentator and author.