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Prime Minister Scott Morrison's Plan for Recovery

On Monday the Prime Minister gave an address to CEDA in which he set out an economic plan for the period up to the election and a second plan to run for the next four years after that. This was important from a political perspective because the challenge he was putting to the public was that if they endorsed his plan then they would have to re-elect his government twice.

It was notable that the Leader of the Opposition, Anthony Albanese, did not use the same occasion to make a speech; a sign that all is not well within the Labor front bench.

Scott Morrison started his speech by announcing that the Australian economy had contracted by $85 billion since the pandemic arrived in the country. This is an economic activity that will have to be replaced. Indeed for the economy to return to pre-COVID levels of unemployment and output the economy will have to grow by 1% above trend for the next five years.

In his speech, the Prime Minister was preparing the voters for the end of direct government assistance in September. He said that these programs (jobseeker and jobkeeper) could not continue at their existing levels beyond September, without significant cuts to essential services such as schools and hospitals. Instead, the focus needed to be on growth and productivity.

With this in mind, the $85 billion in lost expenditure would be replaced by an equivalent spend on infrastructure that would be implemented by bringing forward shovel ready projects as well as co-funding with the states 15 major infrastructure projects.

In order to ensure that spending started as soon as possible, the National Cabinet would implement a “one-touch” system of approvals that would involve all three levels of government working together, avoiding duplication and delays. He wants to cut approval times from three years to 21 months.

In addition, National Cabinet has been divided into working groups to look at key areas like industrial relations, energy, planning, and infrastructure. These will each be chaired by a premier or chief minister. The emphasis will be on policies that promote growth and productivity.

There are already signs that it will lead to innovation in government. There are proposals for the development of a single piece of planning software to be used as a platform for approvals across all levels of government. There are also proposals for cost-saving innovations in the energy sector.

As expected there are objections to the Prime Minister’s grand plan. Environmentalists are opposed to the accelerated approvals process for major projects. They point to the fact that approval was given to Rio to blow up the 46,000-year-old aboriginal heritage sites and there was no avenue of appeal, which ignores the fact that the WA legislation is currently being amended.

Labor is very critical of the plan. Jim Chalmers points out that Scott Morrison has admitted that there will be unemployment and business closures when government support is withdrawn. While they haven’t produced an alternative plan the Opposition is critical of the idea of a “snap back to austerity”.

The PM’s response is to say Australia is in a recession and unemployment and business insolvencies are a corollary of recession. His response to Labor is to say that we can’t spend our way out of recession and that people have to get back to work. People on job keeper and jobseeker are unlikely to share his view.

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