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The Secret Plan for Snap Back

On Friday there was a secret online conference of 90 advisers to the National Cabinet who were tasked with developing a plan for bringing Australian life back to normal. The group comprises infectious diseases experts, epidemiologists, economists, social policy experts and public administrators, from all over Australia.

In the first instance they will do the research and analysis that will underpin the public policy measures at the Commonwealth and state level. The medical advisers will be analyzing the data of community transmissions to determine the rate and nature of the infection spread. Once the trends are clear then social activities can be prioritized according to the level of medical risk. After that, activities will be resumed that have the biggest economic and social impact. Finally the group will evaluate the economic policies that should be implemented to crank the economy up again and how the debt and deficit should be managed into the future.

The objective of this approach is to ensure that the National Cabinet has the information that will enable national policies to be implemented rather than a political ‘free for all’ driven by voter sentiment. The latter could undermine both the health and economic recovery.

An example of poor policy is the premature school closures. The advice from the medical experts is that the risk from infection spread as a consequence of schools remaining open is negligible at the present time. However a combination of panicking parents and over-reacting teachers unions has precipitated virtual school closures, which is very damaging to a generation of students. Students in year 12 are likely to be forced into tertiary study with inadequate preparation because, for many, the employment market offers them limited opportunities.

One way out will be for the tertiary institutions to undertake remedial courses but it will mean those students incur an additional HECs debt unless there is a policy adjustment.

At the other end of the scale, students from low socio-economic households are in real jeopardy. If they do not attend school for an extended period there is a chance they will not go back if they are over the age where they can leave. In circumstances where there may be higher than normal levels of unemployment, it is possible they will never work in their entire lives. This would represent enormous economic waste.

For younger children the risk is that they will suffer because of domestic violence, household substance abuse and social disconnection. These are not issues about which governments can make policy on the run. They must be prepared for long term consequences including greater expenditure on social supports when income support is withdrawn.

From the private sector perspective there are two pivotal figures advising the National Cabinet on recovery: these are Nev Power, the former boss of Fortescue Mining, who is heading the National COVID-19 Coordination Commission, a crack team from all sides of politics handpicked by Morrison to use their extensive networks and influence to help Australia combat the virus and Greg Combet, who is the key adviser on industrial relations and superannuation.

Power has the daunting task of getting the private sector to snap back into a state of high productivity as soon as circumstances allow. The threat that this won’t happen is dire. The longer the economy is in the doldrums the bigger the economic hole will be. At the same time business owners will need some flexibility from unions as they come out of the wage subsidy program, if business activity does not pick up.

At the same time there will be a need for capital to finance the recovery. Much of that capital will come from superannuation funds but they are being negatively affected by the current recession. Greg Combet will be essential to the negotiation of a solution to the capital raising problem.

The National Cabinet does not want to discuss the work that is going on at the present time for fear that external commentators will try and second guess the outcomes which will create a strong backlash. However there is no hope that the lid will be kept on for very long and government will need to set out the elements of the plan sooner rather than later.

Meanwhile the coronavirus policy is working. On Sunday South Australia announced that it had only two new cases overnight.

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