Economic repair needs to be fair
We've all come a long way since we first spoke of the coronavirus in this place. To a certain extent, we have so far dodged the proverbial bullet. While there is much sadness for those who have died, it is a relief that the potential for widescale deaths has severely diminished. We recognise that many people are suffering hardship and distress, and we won't know the full extent of this until restrictions are fully lifted. In the main, Australia has done exceptionally well, due to the vigilant actions of our governments and the collective will of our people. The federal government and the state governments haven't always been in sync over what needed to be done, and that has caused much public and business confusion, but overall the national cabinet has worked together constructively on the common goal of protecting the health and wellbeing of Australians. Australia is now in a very much better place to contend with the pandemics that most certainly will arrive in the future.
There has never been such a grounding of the economy, of business and of personal liberties as that we have seen over recent months. Everything we have done was necessary at various points in time, and some restrictions will no doubt continue longer than others, but how do we return to the new normal? How do businesses that rely on close social contact—restaurants, cafes, pubs, retailers and the like—survive when they are encouraged to open but have to operate with restrictions? How many businesses that were struggling before COVID-19 and only just hung on because of government payments and jobseeker will rapidly fall by the wayside when these payments stop? How many people will lose their jobs when their employer can no longer rely on government effectively subsidising their payroll?
How many people are afraid of going back into the workplace after many weeks of isolation? How long will it take to lift levels of consumer and business optimism, which are the main drivers of the economy?
All of us here need to play a part in leading our country out of the slump and into a prosperous new normal. We must all be united in the desire to ensure Australia remains economically strong and socially cohesive. This means all of us in this place need to work together to put aside our partisan blinkers and use this rebuilding opportunity to decide how we reshape our nation. I recognise this task is formidable. Hundreds of thousands of Australians have become unemployed, GDP is likely to fall for the first time in 30 years, we are staring down $120 billion of deficits this year and next year, and debt has passed $600 billion. The government's strategy for budget recovery is to go for productivity and economic growth. All options are on the table, but we can reliably assume its strategy will be to drive business investment, which would drive a rapid economic expansion, lift GDP, reduce unemployment and increase tax revenue, enabling us to pay down the debt. I very much see the appeal in this strategy for government and the community, but we need to learn from the past.
Since World War II, there have been two occasions when debt has surged to new heights. In both cases, the Hawke and Howard governments acted to return the budget to a more sustainable position by cutting spending and hiking up taxes. We don't yet know if the Morrison government plans to cut spending. If they do, they must be upfront about where these cuts will fall and what the effects will be. The government have also said that they do not plan to increase taxes as part of the recovery. Whatever it does to repair the budget, the government must always remember its heart. It is on notice that repair cannot come at the expense of those who can least afford it. Repair must be sustainable and affordable and must also very much be fair. We expect it will not squeeze those who are already struggling or cut spending from health and education in order to mortar the huge holes that the pandemic has left in the nation's accounts.
The government needs to level with us about what this recovery is going to take and how we are going to get there. We recognise that the federal government may need to reconsider the company and income tax cuts that were passed in better times and which are still to flow through. When we agreed to pass these tax cuts in the last parliament, we did so on the understanding that they were on a sustainable and affordable footing and that the government would revisit them if necessary. Tax cuts might support growth, but it would be irresponsible to keep them if the government cannot do so without cutting spending in areas of need. We expect that the government will provide us all with a lot more information about the state of the budget in the coming weeks and how it intends to get us back in the black. There is much to be done by all of us, and I know we will all look after the best interests of the country.