To generate the revenue needed to pay for government services, Australia needs a growing economy. To create jobs in the recovery, Australia will need the economy to get stronger. Growth was already sluggish before the fires and the virus. It has been well below trend every quarter under the current Prime Minister and Treasurer. There was a slowdown last quarter, and now quarterly growth is negative for the first time since the 2011 Queensland floods. Annual growth has declined to 1.4 per cent, the weakest annual growth rate since 2000.
Consumption growth went backwards by 1.1 per cent in the quarter and is down by 0.2 per cent over the year, the biggest annual fall in nearly 60 years. Business investment continues to go backwards and is down 2.9 per cent over the year. The official unemployment rate is up to 6.2 per cent, but even that terrible number doesn't tell the whole story.
Half a million Australians dropped out of the labour market altogether. They just gave up on work. They're not counted in the unemployment figures, nor are those people who lost hours or didn't have enough hours of work to start with, because the official rate counts you as employed even if you only get an hour a week.
Too many Australians are being left behind by the Morrison government, and to claim that there'll be some sort of snapback is insulting to everyone who's lost a job, everyone who's lost hours, and everyone who's just facing an uncertain future.
Australians need a government that understands the economy, a government that understands that the budget must be managed in a way that serves the economy, not the other way around. The government should listen to the Reserve Bank governor, Philip Lowe, who recently told a Senate committee:
There are certain risks if we withdraw that support too early. I know, from the Reserve Bank's perspective, we're going to keep the monetary support going for a long period of time, and I'm hopeful that the fiscal support will be there for a long period of time.
The government should carefully consider this week's OECD report, which encourages the government to direct fiscal support towards a focus on improving resilience and social and physical infrastructure, including social housing. If the tap is turned off too soon, the risks include a longer and deeper downturn and a slower recovery from this shock than would otherwise occur.
A slower recovery means fewer jobs and more people in the unemployment queues, and it means weaker government revenues, making it harder to fund ordinary government services. Cutting the fiscal support when the economy is going through this massive shock would put more pressure on the Commonwealth budget, not less. The government needs to govern for all Australians, protect jobs and stand up for a stronger future.