Australia’s road to normality and “sovereign capabilities” relies on an economic recovery plan focused on economic self-sufficiency, less dependency on China, innovative businesses, and fewer restraints on competition in manufacturing and other sectors said Prime Minister Scott Morrison on April 29.
“It isn’t achieved through nationalisation or large public subsidies and protectionism. It’s achieved by having competitive businesses that can operate in these sectors and be successful. That is what the road back looks like,” he said.
Australia, like many countries, has suffered an economic downturn caused by CCP (Chinese Communist Party) virus pandemic, commonly known as novel coronavirus.
In response to a question about dependency on China, Morrison said, “Australians will find markets, as we have been now for a long time, all around the world, and for many years now our markets have been diversifying.”
Morrison seemed confident that trade with China could continue even as Australia pushes for an inquiry into the origins and handling of the CCP virus outbreak in Wuhan, and despite recent growing tensions between the two nations.
Responding to a reporter who asked whether the wheels had fallen off Australia’s relationship with China, Morrison responded, “The thing about our relationship with China is it is a mutually beneficial one.”
China is the leading exporter of steel and needs Australia’s iron ore to make it. Iron ore export is worth in excess of $63 billion (US$41 billion) to Australia, with China making up a large proportion of that. In the wider scope of resources and energy, China imported about $82 billion (US$53.6 billion) worth in 2018.
Australia is a growing competitor in the international market for resources and energy, with coal and iron ore some of its strongest assets. Another advantage is that the mining industry is not hugely subsidized by the federal government, annually it contributes in the region of $31 billion in taxes and royalties.
Protecting Public Health and the Economy
Australia is fighting a battle on two fronts: health and the economy. As the curve continues to flatten, restrictions have begun to ease. However, the economic recovery is still a long way off.
Australia will learn to live with the CCP virus and new cases and more outbreaks are expected.
Morrison said the aim isn’t to eradicate the virus, which is why the government’s contact tracing app, “COVID Safe” is vital to managing future outbreaks. Launched on April 26, to date 2.4 million people have downloaded the app.
Morrison said we are close to a “COVID safe environment” as many states and territories have begun to ease restrictions. National Cabinet will meet on May 11 to discuss easing more restrictions.
“We don’t want to just win the battle against COVID-19 but lose a broader conflict when it comes to the economy and the functioning of our society,” Morrison told reporters in Canberra on April 29.
“Of course there will continue to be additional cases, of course, there will be outbreaks—that’s what living with the virus will be like,” he said.
The Jobkeeper program has been vital to protecting Australia’s economy during the economic downturn.
Writing in The Conversation on March 30, tax expert and visiting scholar at Australian National University Steve Hamilton said, “This is a welcome move by the government that will keep many businesses afloat and connected to their employees, which are critical to a speedy recovery. It is commendable that the government reversed course so quickly given rapidly deteriorating economic conditions.”
“You can’t shut down the economy for months without providing massive support to businesses and workers,” he said.
Australia has seen over 800,000 people sign up for Jobkeeper and Jobseeker since the start of the CCP virus outbreak.
The $130 billion (US$83.2 billion) Jobkeeper package legislated on April 9 grants around 6 million Australian workers a $1500 per fortnight lifeline subsidy. The money is paid to employers to continue paying their employees for six months. It also brings the total economic support provided by the government and the Reserve Bank of Australia to a staggering $320 billion (US$205 billion)—more than 16 percent of GDP.
In addition, the government’s coronavirus supplement is a $550 per fortnight additional payment to recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance, and Special Benefit.
“This was an emergency response measure,” Morrison said. “This was not a change in the government’s view about the broader role of the social safety net in Australia.”
Unemployment is expected to rise again from its current rate of 5.2 percent to almost double at 10 percent as the fallout from the CCP virus continues to take effect.