The cruel choice for Australia in the next coronavirus numbers

Scott Morrison has made it clear there will be a “snap back” from emergency budget measures within six months.

The free childcare will come to an end, the JobSeeker allowance will halve to the old Newstart rate of $550 per fortnight and the JobKeeper wage subsidy of $1,500 per fortnight will have to stop.

That means there will be real pressure to ease the state shutdowns as well. The economy will depend on it.

Right now, there is no sign of federal frustration at the way NSW and Victoria have gone their own way. Fishing has stopped south of the Murray but is allowed to the north. While Victoria bans golf, NSW allows it for now.

Morrison accepts the state bans have to run their course when each state faces a different challenge.

But there is a limit to how hard the states can go. While Victorian Premier Daniel Andrews talks of taking restrictions to Stage Four, a tougher crackdown only makes an economic recovery more difficult.

To suppress the virus too far is to drag out the economic pain to breaking point.

To be blunt: do you snap back, or do you just snap?

National cabinet faced a dangerous scenario in the early modelling because the numbers showed a growth rate that could overwhelm the health system.

The numbers to be discussed on Tuesday are far better because the shutdowns have worked so well over the past two weeks. This has bought time to increase the capacity of the intensive care units and buy more ventilators.


We will see a glimpse of this on Tuesday. Some of the modelling will be released, most likely with a smothering of hand sanitiser because the raw numbers could be so grim.

A fundamental finding is already clear. The measures taken so far have given the health system the capacity to cope with the virus at the current growth levels. This is before the latest shutdowns show up in the case numbers over the next week or two.

One issue for national cabinet is the pace at which Australia can emerge from the shutdowns. With the case numbers no longer soaring, there is time to consider when to ease the restrictions.

States that go too hard for too long have to face the reality they may be keeping citizens out of work when the federal assistance stops.


The pressure on tenants is a case in point. The national cabinet has been working for more than a week on ways to help tenants who cannot afford their residential or commercial rents, but a bailout is horrendously expensive.

Tenants have been protected by a ban on evictions and the JobKeeper payment, but the basic income is not enough for many rental homes in the cities.

Morrison’s answer is to tell landlords to be flexible. Those with investment properties – a big group, given more than one million people use negative gearing – will have to go to their banks to defer their loan repayments.

The banks, in turn, have to seek clearance from the prudential regulator. Right now they have approval for six months, but no longer. Taking this help beyond October is far from guaranteed.


The JobKeeper package is another example. It has a sunset clause to stop the payments after six months, forcing Parliament to decide whether the Commonwealth could afford an extension. Every month would add another $21 billion in debt.

So the spring deadline will be set in law for the economic measures but is yet to be accepted for the health measures. This tension has to be resolved.

Australia is in for a long, slow battle against the coronavirus over the next 12 to 18 months while waiting for a vaccine or for herd immunity. The social distancing measures have to stay in place in some form, yet the full shutdowns cannot last that long.

A new balance has to be struck or the economy will snap.

Sign up to our Coronavirus Update newsletter

Get our Coronavirus Update newsletter for the day’s crucial developments at a glance, the numbers you need to know and what our readers are saying. Sign up to The Sydney Morning Herald’s newsletter here and The Age’s here.

Most Viewed in Politics



Related posts

Make a comment