In a few short weeks it’s caused Prime Minister Scott Morrison to abandon dreams of a surplus, double the unemployment benefit, embrace stimulus spending and put a Labor and union man, Greg Combet, on his key advisory board.
Men line up for the dole in Waverley, Sydney, in 1936.Credit:Archive
Others are also acting against type. Unions have sat down with businesses and arranged pay cuts for their members; company chiefs have begged for a total lockdown of the economy and states have closed their borders in spite of section 92 of the constitution which guarantees that “trade, commerce, and intercourse among the States … shall be absolutely free”.
Globally, Boris Johnson is subsidising 80 per cent of worker’s wages, Donald Trump is pumping trillions into the US economy, and Western countries such as Italy are gratefully accepting medical aid flown in from China.
“High neoliberalism already had a pre-existing health condition, and this global pandemic may be fatal for it,” worried Fred Bauer recently in National Review, the bible of American conservatism. Millennial Madeleine Kearns wrote in the same magazine of the “danger … [that] opportunistic socialists will have a chance to make their case to a resentful generation that has neither the personal memory nor the grasp of history necessary to resist their advances”.
Huge changes are afoot but what, if anything, will change permanently? Will the generation that came of age in this era of sudden unemployment and disrupted schooling become known as Generation Covid? And which of the shibboleths of our society will be first up against the wall?
Mobilising the state
Australia’s market-based liberal economy is built on notions of small government, free trade, open movement of economic units (people, money, goods), and this crisis is challenging all of them.
Keynesian economics, an expanded welfare state, the notion that full employment was a government responsibility, high marginal tax rates, a car industry in Australia and a sense of security verging on complacency all emerged out of the Depression and World War II. People acted in political collectives to enact change: they joined trade unions, rotary clubs, political parties and, in the 1960s, mass protests.
Melbourne’s usually bustling Bourke Street Mall at a standstill.Credit:Bloomberg
Australian history professor Sean Scalmer from the University of Melbourne said the political decision during World War II to bend the whole of Australia’s economy towards fighting the war had led Australians to ask, “If the state can mobilise for total war why can’t it be mobilised for post-war reconstruction, to create a better society?”
That view lasted 30 to 40 years, but since the 1980s, Scalmer said, the narrative had changed to a belief that “the best way to build society is to reward individual effort”. That ultimately led to political language such as Joe Hockey’s “lifters and leaners”.
Low wages internationally and low tariffs at home killed domestic manufacturing in favour of free trade (why make something when you could import it more cheaply from China?). The services industries grew to become 60 per cent of the economy and to employ almost three-quarters of us. We became a nation of casuals and giggers, of baristas and barristers, of hairdressers and barre instructors. Now, thousands of those people are forming queues outside Centrelink that remind some of the Great Depression’s soup lines.
Illustration: Richard Giliberto.Credit:
ANU historian Frank Bongiorno is sceptical about the scale of change possible here, arguing this crisis will only create “psychological, social and policy effects well into the future” if it lasts 18 months or more. And University of Melbourne historian Professor Marilyn Lake said Scott Morrison’s language was about “getting across to the other side” rather than using the crisis to build a new economic era or idea.
“One is not hopeful about expecting Labor to articulate visions of a new order either,” Professor Lake says.
But Scalmer said the political debate that emerged from this could bring about profound changes to the 30 to 40-year neoliberal compact. One emblem of the change is the sudden new investment in the unemployment benefit – and if the JobSeeker payment has been doubled because a lot of people are newly unemployed, surely that raises a question about its adequacy in future.
“Once you concede the political point, how easy will it be for the parties and parliament to strip it away again? Freezing it while the cost of living goes up for a decade is one thing, but cutting it in half is a much harder thing for the government to do.”
Perhaps in the wake of this virus, we will come to believe again that society itself, not just individuals, needs to do some lifting.
Clogging economic arteries
Among Scalmer’s students – foreign and domestic – the expectation that they will be able to travel at will to work, study or relax is taken for granted. He calls it the “free movement of rich people”. Australia’s universities have relied on it heavily to export education to the Chinese middle class, using the cash-flow to subsidise research and climb global rankings.
Exporting services – education is Australia’s third largest export industry after iron ore and coal – is a relatively recent twist on the frictionless trade in goods that is the backbone of liberal economics. But coronavirus has stopped the services trade in its tracks, along with foreign travel itself. Of education exports, Scalmer says, “I don’t see it going back to the way it was.
Takeaway coffee only from Melbourne cafes.Credit:Louise Kennerley
“I don’t see the middle classes of Asia making the same decisions to send their children all off to Australia and pay a lot of money, on the assumption that they’ll be well-educated and safe and secure,” he said.
It’s just one of the global supply chains whose vulnerability has been highlighted by COVID-19. Australia is now relying on importing enough gowns, masks, ventilators, hand sanitiser and gloves to equip our healthcare workforce. The fact we are trying to retool sleep apnoea machines as ventilators, shirt factories to make surgical gowns and gin distilleries to produce hand sanitiser suggests we do not entirely trust those international supply chains to do the job.
If World War II encouraged a belief in Australia that it needed to manufacture more things itself, perhaps this crisis will too?
Daley believes a number of things could change from this crisis. If we build the surveillance infrastructure to track our movements via our phones to control the spread of the virus, the temptation will be there to keep using it.
And if China comes out of this crisis stronger and more credible than the United States it will “inevitably increase the geopolitical power of China versus the US”.
But he does not think it will have long-term implications for Australia’s willingness to make things rather than import them. In fact, “when it all goes to custard and we can get our essential supplies from somewhere else, it will show that international trade does work”.
The necessity of care
Whatever happens from this crisis could go either way: governments’ massive interventions in the economy could either boost belief in their power, or, if the intervention fails or is mishandled, it could reduce faith in politicians even further.
Train passengers wait on a Central Station platform during peak hour in Sydney.Credit:AAP
It is likely at least to have us scrutinising closely our investments in critical social infrastructure such as hospitals and the national broadband network.
One experience has become a kind of social experiment: masses of us working from home. It eliminates commuting time, road congestion and interstate business meetings, and acquaints us with coffee of our own making and the habits of our families and pets in daylight hours. We are also working out how to use teleconferencing and video calls.
Will this encourage more people to ask for that flexibility or send them howling back to the office at the first opportunity?
“I suspect a lot more people will be working from home some of the time,” Daley says. In any event, says Scalmer, employers are likely to be more accommodating of requests of flexible working conditions, and employees “less accepting of the argument that you can’t do it”.
Marilyn Lake said it had struck her from this crisis that the old feminist issue of “the necessity of care” for children had been so prominent. Newspapers carry daily columns instructing people how to entertain children while trying to work. With grandparents off limits, we have insisted on the need to care for the offspring of nurses and doctors, discussed whether schools and childcare centres should remain open, and whether teachers are being treated like babysitters.
“Women are now workers and someone needs to look after the children. But who should that be?” Lake asks.
The experience of women working in factories in World War II led to the invention of childcare centres. Those women were then pushed back into the home throughout the complacent decades until the 1970s when some in the women’s liberation movement argued the care question “should be at the top of the agenda”.
“Many feminists now fear however that sending workers and children home to work will return us to the 1950s,” Lake says. She hopes, though, that any lasting legacy of coronavirus will go in the opposite direction.
“Hopefully one outcome might be a stronger commitment to providing more flexibility to family and work so people can meet their various needs in ways that speak to their responsibilities.”
Fairness between generations
Perhaps the only certain legacy in Western countries of the COVID-19 will be eye-watering levels of public debt. The Australian government has already committed $63 billion in stimulus spending (and another $135 billion in loan guarantees) with more announcements expected. The longer the crisis goes, the deeper the debt.
“The bottom line is someone’s going to have to pay for all this,” says Daley. “Who will it be?”
According to Lake, the deeper into debt we go into the more she expects governments insist that spending must be cut again and that “we can’t afford anything”.
“This crisis shows how rapidly you could move on climate change if you wanted to but equally after this crisis, conservative leaders will say we don’t want to move on anything now.”
Bongiorno sees “a concerted effort by the political class to blame younger people for acting in ways that would spread the virus”. He sees little impetus for a new politics emerging from this crisis, saying “it’s harder to see a new social and economic deal involving a serious assault on the sway of markets”.
“Politics is about power, and the power in our society is wielded by large corporations – many of them multinational – and, in electoral terms, by middle-class, middle-aged and older Australians with the most secure jobs and the most valuable assets.”
But Daley says the huge debt burden created by this crisis could be a game-changer, and future governments will have just one option: taxing those with wealth.
“There is an awful lot of wealth tied up in an older generation and we will have just spent a phenomenal amount of money keeping that older generation alive, so I think there will be a substantial call on that generation to pay for all this,” Daley says. “The idea that 30 year olds on the dole queue will pay for it simply won’t happen.”
Despite their wealth, the superannuation and tax systems are skewed in the favour of elders, and so far they have the political power to protect that. COVID-19 could change that, Daley says.
“There’s been a defence from older Australians of, ‘We deserved it and we worked for this,’ and, ‘What have you ever done for us?’ Now younger people have a very clear and compelling argument: ‘We took a huge hit to our incomes to keep you alive’.
“That’s politically a pretty powerful argument.”
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Michael Bachelard is The Age’s investigations editor. He has worked in Canberra, Melbourne and Jakarta as Indonesia correspondent. He has written two books and won multiple awards for journalism, including the Gold Walkley in 2017.
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