‘Appropriation (Interim) Bill 2020,
Appropriation (Parliament Interim) Bill 2020, and
State Tax (Interim) Bill 2020 Package’
Thursday, 23 April 2020
Mr NEWBURY (Brighton):
Borrowing money is not an economic plan. History shows that aimless borrowing always leads to aimless spending. The State deserves more than a clumsy Treasurer asking for a big blank cheque. This week he confirmed the ‘catastrophic’ reality of the Victorian economy. The revelations laid bare in numerical form what we have seen played out in our communities over recent weeks. But they also revealed that the government lacks a sophisticated economic strategy and that our state may suffer a deeper recession than others.
This week the government confirmed that unemployment will peak above 10 per cent: 270,000 of our fellow Victorians will soon be jobless as a result of the heath pandemic, and gross state product will be hit by a 14 percent drop to our $455 billion economy, falling from the previously projected $226 billion to a revised $194 billion over the first six months of the year—and projections that the next quarter may be even worse. The projections are so deep and so profound that every household and every suburb will be affected in an unprecedented way.
The federal picture is equally grim. In a sign that there has been a structural collapse in employment, 517,000 JobSeeker claims have been processed in Australia since 16 March and 870,000 companies have registered their interest in the JobKeeper program.
On Tuesday, the Australian Bureau of Statistics released grim figures which confirm the pressures our state’s workforce is under. The weekly Payroll Jobs and Wages in Australia reported that between 14 March and 4 April Australian jobs decreased by 6 per cent, with Victoria having the largest decrease of the major states, down by 6.8 per cent in those three weeks.
The results, though sobering, were to be expected, with the earlier Business Impacts of COVID-19 report finding that:
Nearly half (47%) of trading businesses made changes to their workforce in the last two weeks as a result of COVID-19.
That report not only highlighted the problem of unemployment, it also made clear the real challenge of underemployment. A key change reported was the decrease in employee work hours, with temporary reductions in work hours in 25 per cent of businesses with 19 or less employees; 41 per cent of businesses with 20 to 199 employees; and 34 per cent of businesses with 200 or more employees.
These figures are a red flag—underemployment will be an ongoing challenge, an issue raised by many constituents directly.
But the recent announcements are more than grim figures: there is a human reality sitting behind them, a human toll that we must never forget. The starkest instance of the human impact was when 100-person-long queues of our fellow Australians waited outside Centrelink to register for social welfare benefits. The queues will be remembered and have had a profound impact on our psyche as a country. Those jobless Australians should also drive the parliamentarians of every Parliament to urgently develop a plan of economic hope for our collective future.
Our state has implemented restrictive health measures that lead the nation—we know that this government had intended to shut the state down further. Initially, on 22 March, the Premier confirmed his intention for ‘a shutdown of all nonessential activity’. The announcement went further, stating ‘school holidays will be brought forward in Victoria, starting on Tuesday 24 March’.
Later that same day, the nation’s first ministers met at national cabinet. When the Prime Minister addressed the nation that evening to announce the outcomes of that cabinet meeting, he revealed a different message to that announced by the Premier earlier, stating that certain targeted business closures would occur and that schools were safe to attend. The Prime Minister’s measures fell far short of the full state shutdown proposed earlier by the Premier.
A Federal Government source would later describe Victoria’s premature announcement as ‘panicked’ and that it risked fuelling public anxiety and confusion. With the benefit of hindsight, we know that is exactly what did happen. The early announcement led to state-wide confusion. Media reports at the time asserted that the announcement caused several smaller and family-run retailers to shut their doors.
Later that week, the Federal Deputy Chief Medical Officer, Professor Paul Kelly, confirmed that Victoria had proposed a more hard-line approach. The Professor revealed that whilst all of the Australian Health Protection Principal Committee supported ‘proportional, scalable and sustainable’ social distancing measures, the Victorian chief health officer had ‘a dissenting view’.
We now know, in the Premier’s own words, that the strategy of a proportional, scalable and sustainable approach to social distancing was the right one. It has worked. A full-scale state lockdown, proposed by the state government, would have irrevocably crippled our economy.
The proportional, scalable and sustainable approach was designed to acknowledge that clinical advice must be balanced against the practicality of how long you can lock up a community and the dire impact to businesses and the workforce of shutting the door on the economy.
Professor Gigi Foster of the University of New South Wales recently reminded Australians that:
The economy is about lives… It’s about protection of lives and human welfare and livelihood.
The notion that policy makers must choose between preventative health and economic policy is wrong. Policy makers must do both.
On Monday, the Premier confirmed previous reports that bars, cafes, pubs and restaurant closures would remain in place for some time. The confirmation followed the chief health officer’s disclosure on Saturday in a newspaper interview that it was the government’s intention that there would be no return of restaurants this year.
At 7.00 am, a teary restaurateur called me after reading the article to tell me that if the report were accurate, the decision would force his business to foreclose. He was hurting. That article was the wrong way for him and other small businesses to find out about their future. And make no mistake: a shutdown of the hospitality industry for the remainder of the year will have long-term consequences for the State.
We know that the economy is about lives. The economy is a combination of millions of moving parts, of people who have taken a risk to fulfil their dream of starting a business, the services and products they trade, and equally importantly, it is also made up of the people who work in those businesses, who have become part of that dream. This pandemic has forced governments to wilfully dismantle those dreams, a decision that has undoubtedly saved lives. But that economic intervention will also have a human cost. We must not forget that in 1930 there was a 20 per cent increase in the suicide rate on the previous year. Similarly, there was an increase in the suicide rate in 1991.
That is why it is essential for the state government to turn its focus towards the economic wellbeing of our state in a more sophisticated way than to simply hold out their hand and ask for a blank cheque. Priming the businesses across Victoria will not only return an economic dividend and enhance the jobs market, it will psychologically instil confidence in our community. Victorians need to know that we are moving again.
Though the government would have you believe that its budgetary position was strong, we know that there were structural cracks in the budget before the tragic summer bushfires and well before the current health pandemic. The Treasurer’s budgetary bravado has been shown to be, in truth, nothing more than bluster.
The Parliament now has before it a Labor government aimlessly requesting a $24.5 billion cheque, an unprecedented request, a request acknowledged to have no known purpose and no linked economic strategy, all under the cover of a pandemic, and the government is affording no real opportunity for scrutiny of how that money will be spent.
This week, the Premier and Treasurer acknowledged that our economy will not recover as immediately as the shutdown was sudden. Rather, a recovery will be incremental. I fear that the recession in this state may be deeper than in other states. Concerningly, what neither acknowledged was that the private sector will be central to our recovery. A clever government would know the role they can play. They have a role in reviving, encouraging and incentivising the private sector. That can only come when the government develops an economic plan for the future, a plan of hope.