Sydney Morning Herald
by Mark Carnegie
11 February 2020

In a world of rising fear and uncertainty one thing is crystal clear: for the Australian economy to live the Morrison government's surplus hopes must die.

Our economy is sick and needs help, and it needs it now. Money needs to be spent to fix it fast. For the next three years the deficit doesn’t matter - saving the economy does.

It might not be reflected in the sharemarket or talked about in cabinet, but the state of our economy and the fragility of consumer confidence should scare you witless. The people whose judgment I rely on don’t think coronavirus is the next bubonic plague; to them it looks more like a very serious flu.

However, with a 67¢ Aussie dollar and a per capita recession well in progress, the idea that our "economy is robust" is laughable. This economy is sick and for it to get out of the intensive care ward it doesn’t need retrovirals and oxygen, it needs money and heaps of it.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg have a stark choice: stick with the plan and kill the economy or break the glass, press the economic fire alarm and get stimulating.

If they get this wrong the weight of history will crush them.

Right-leaning governments in the US and Britain abandoned the religion of austerity long ago and are going all out to get their economies moving, even though they are growing faster than ours.

They chose different routes from each other: tax cuts in the USA and big spending in Britain. But despite being conservative in nature neither government is claiming to be fiscally prudent any more. They are both taking full advantage of record low interest rates to spend on a range of social plans or to get people to spend with the money they have been given via tax cuts.

They are spending doves in hawks' clothing. We can choose either of these paths but we could also pursue a more direct approach via direct payments to those who need it most and will spend it now.

Increasing Newstart, cash incentives to get back to work for mums, and an education to employment first-year incentive are the types of programs that would be a shot straight in the arm of the economy. The people who got the money would spend it right away and so the multiplier effect would be maximised.

Boris’ spending plan, tax cuts like the Donald's or a hand-up for people on the edge of a transition is something reasonable people can disagree about.

What we can’t disagree on is that this is the biggest, most immediate crisis since the Rudd government had to deal with the onset of the global financial crisis; it is time to bite the bullet.

It is a paradox, but a right-wing government has to do left-wing things for all of us to prosper. Stop worshipping the surplus and just get on with it. We need to be driving people to the shops and building both the platform for a decade of growth and the infrastructure of the future.