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Is criticism of Australia's liberal democratic response to the coronavirus disaster justified?

By Chris Lewis - posted Monday, 30 March 2020


Surprise, surprise. There are prominent individuals of the left once again berating Australia's government policy choices, now in response to the coronavirus disaster.

This is despite the difficult task that Australian governments have with regard to the coronavirus response, as indicated by the debate between those who urge health considerations to be put first through a full lockdown, and those who believe in a gradual tightening of the screws to keep economic activity going as long as possible.

For example, Richard Denniss, inspired by the interventionist approach of China which closed down its economy hard, argues that if Australia had a bigger public sector today (including health and social welfare), "we would be better prepared to weather the health and economic crises triggered by the coronavirus".

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While Denniss also notes that the current extensive social security response to the coronavirus is at odds with past decades given Australians were told of the need to rein in government spending (as a "cost" to the economy), the current extension of social welfare measures is in line with being a modern liberal democracy.

The Morrison government has not abandoned its centre-right philosophical approach that is more liberal in terms of societal and economic leadership when compared to Labor's more interventionist centre-left policy approach.

After all, there are always sound reasons for any nation to balance its public expenditure with revenue, particularly in times of high economic growth, a reality downplayed by those who nearly always urge greater government intervention.

Rather, given that there are strengths and weaknesses in both the centre-left and centre-right policy perspectives with regard to the extent of government financial assistance in line with the particular context of the day, the demands created by the coronavirus disaster simply demand much greater government intervention.

Contrary to Denniss's assertions, Australia (like many other liberal democracies), despite promoting the private sector and freer trade much more in recent decades, has maintained levels of public social welfare expenditure while including reform such as mutual obligation requirements which have been relaxed in response to the coronavirus disaster.

In fact, it is debatable whether Australia would even have the same level of social welfare services today if it had not made the necessary economic reforms from the 1980s, a period which Denniss argues "allowed powerful groups in society to dress up their personal preferences as national goals".

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While policy trends are never perfect, and create new policy problems, it is an undeniable fact that the loss of domestic manufacturing industries has been compensated by vastly cheaper manufactured goods via imports while allowing Australia to prosper from greater mining, agricultural and education exports as global aggregate economic demand has increased.

In response to the coronavirus disaster, the Morrison government has announced several one-off $750 payments for eligible welfare and pension recipients, along with an additional $550 payment per fortnight (from late April 2020) for the unemployed (existing and new) and those receiving student payments.

While it is argued by some that government should be subsidising a large proportion of workers' wages to keep companies afloat, as is the case in the UK where its government has indicated it will cover 80 per cent of salaries up to a ceiling £2,500 a month as long as employers keep workers on their books, the Morrison government's initial approach was astute enough to know that many businesses will not hold on to workers simply because they may already be heavily indebted and/or have no work as customers turn away.

This is despite the Morrison government indicating on 29 March 2020 that it was working on a wage subsidy scheme as part of its plans to allow businesses to "hibernate" during the coronavirus pandemic yet retain staff as part of a third stimulus package to be announced in coming days.

The Morrison government's boost to social security spending has also been mirrored by the US Congress announcing similar measures that include one off payments to low-to-middle income earners ($1,200 per working person and $500 per child), $600 per week provided for four months to jobless people in addition to unemployment assistance they receive through state programs, and assistance to those not eligible for unemployment benefits such as the self-employed and those employed in the gig economy like ride-share drivers.

For all of the talk by Denniss and others of flawed policies for decades, often looking to other nations for the inspiration of policy examples, it was worth remembering that China does not even have a decent social welfare system.

As argued by others examining China and its coronavirus response, only the Chinese "with a deep pocket" were able to maintain their lifestyle and afford the home delivery of meals, groceries, and certain medicines in quarantined cities like Wuhan.

While delivery workers were also hailed as "heroes" in China for their hard work, along with doctors and nurses, they and small shop workers were unlikely to stop working given a lack of savings and social support.

Although Australian governments (like other liberal democracies) have been eager to support existing businesses to help them survive the coronavirus disaster, the Morrison government is astute enough to know that individuals need income support to afford goods, rent or home ownership payments which often demands two income earners in a family.

This is especially true given consumer spending makes up 60% of the Australian economy with the nation already having the world's second-largest household debt levels at around 120 per cent of GDP, after almost trebling in the 28 years since the early 1990s. As of 2019, the average mortgage debt alone was around $350,000.

The emphasis on consumers rather than production to boost economic activity is especially important with regard to the coronavirus disaster as less vital sectors decline and lose many employees. Given greater basic groceries demand, Coles and Woolworths are amongst the few employers actually hiring.

With Denniss expressing cynicism towards the Morrison government's lack of urgency when compared to China, it is worth noting making international comparisons in terms of strategy and health outcomes, even at this early stage.

In contrast to President Trump's recent statements where he has expressed a desire for the US economy to get back to business as usual within 15 days on the basis that "We cannot let the cure be worse than the problem itself", an approach that would mean a clash with rational state governments and public-health experts, the Morrison government has always listened to health experts and has long informed the Australian population to prepare for the long haul.

In health outcomes terms, while Australia also has one of the highest per capita test rates in the world, its death rate as a proportion of positive coronavirus cases remains very low (as of 29 March 2020) at 0.38%. This is far lower than most other nations, including those with very different political systems such as China (4%) and Sweden (3%).

In other words, Australia's liberal democratic governments have been both competent in terms of results thus far, and careful to work with the people and interest groups in accordance to the values of Australia's unique liberal democratic system, despite obvious domestic policy differences that may be evident at the state government level where different rates of infection are occurring.

Under the Morrison government's leadership, the extent and severity of government policy in response to the coronavirus has depended on the rising rate of positive coronavirus numbers and the willingness of societal players to adhere to the recommended measures.

As of 29 March 2020, the Australian government response was not yet as dramatic as the UK which banned all outside gathering of more than two people on 23 March 2020.

But, whatever the policy difficulties ahead for Australia in response to the coronavirus disaster, Australia's liberal democracy has made considerable effort thus far to uphold the pragmatic potential of its political system that still endeavours to balance the liberal and collective needs of its society.

Hence, a financed public will mean an effective response can occur when the coronavirus is over which will help surviving and new businesses that will emerge, within a hope that our great liberal democracy can move on sooner rather than later.

Only time will tell whether the Australian government response to the coronavirus has worked or should have been more extensive much earlier, but I strongly believe Australia's government response has been commendable thus far.

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About the Author

Chris Lewis, who completed a First Class Honours degree and PhD (Commonwealth scholarship) at Monash University, has an interest in all economic, social and environmental issues, but believes that the struggle for the ‘right’ policy mix remains an elusive goal in such a complex and competitive world.

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