Hewson's View: We can't afford the gloves to come off in bid for national unity

The Australian economy was in decline before COVID, with weakening growth and employment, and record household and mounting corporate debt. Photo: Shutterstock

The Australian economy was in decline before COVID, with weakening growth and employment, and record household and mounting corporate debt. Photo: Shutterstock

The concept of the National Cabinet is wearing thin. The initial aim was an attempt to ensure coordination and collaboration (C&C) between the federal and state governments in the response to the "unprecedented" challenges of the pandemic, COVID-19.

C&C would be important given the history of our Federation, where over time the Feds and states had institutionalised the "blame game", especially in areas where there was significant overlap and duplication in their policy and service delivery responsibilities, and where the states had become increasingly "competitive".

Morrison was desperate for it, given his lack of leadership and poor performance in addressing the bushfire crisis, coming on top of his lacklustre response to the drought. He was desperate to be seen to be leading a "national" response by providing a framework for C&C - in his terms, to be seen to be "in control".

This seemed to be a sensible imperative recognising the uncertainty of the potential speed and intensity of the virus, and the magnitude and urgency of the required medical, economic, and social policy responses.

The slogan became, "We're All in it Together", although it soon became evident that they weren't, as the states took different positions on the detail of the responses, notably in respect of schools, border closures, travel, and so on.

The blame soon flowed again over responsibilities in relation to the release of passengers from the cruise ship Ruby Princess in NSW, and most recently the live sheep ship in Perth.

The intensifying disputes over the dismantling of state border restrictions has become farcical, especially between Queensland and NSW. It should be most disturbing just how soon the concept of "the national interest" has been lost.

It should be a particular concern that much of the C&C has been lost as we now move into the more challenging period of "recovery". Our economy is in the worst shape it has been since the Great Depression, in terms of both the collapse of national product and income, and unemployment, and state differences are likely to be even more pronounced given the differences in their industrial bases.

Our economy is in the worst shape it has been since the Great Depression.

For example, those more heavily dependent on international tourism and education face the prospect that our national border probably can't be opened completely until an effective vaccine is developed and deployed. Others will be grappling with the significance of differing collapses in demand and disruptions to national and global supply chains.

While the states have done, and will have to do more, to transition their state industries, this will be marginal against the magnitude and urgency of the federal government's national recovery strategy, the detail of which is yet to be developed.

There are now very real questions about whether the Feds actually recognise just how tough it may be, and just how long it may take, to turn our economy around. The near 50 per cent error in the cornerstone "cushioning" policy of JobKeeper, and their inability to explain "how" it happened, have created a real sense of unease.

I was surprised that the PM's casual reference in his Press Club speech earlier this week, to a period of three to five years to restore our economy, didn't attract more media attention, given he had previously been insistent that our economy would "bounce" or "snap" back.

It also doesn't help that the federal government is yet to fully accept the fact that our economy was in decline before COVID, with weakening growth and employment, record household and mounting corporate debt, waning consumer and business confidence, weakening productivity, and flat wages, such that a majority were living week-to-week struggling with the mounting costs of living.

While the attempt to achieve C&C was important in the initial responses to the virus, I suggest it should be even more important to a sustainable recovery.

I had hoped that the National Cabinet would provide a framework within which many of our structural challenges, previously ignored or "kicked down the road", such as climate and energy policy, tax reform, even federation reform, could be addressed.

Given the reluctance of the Morrison government to recognise the reality and urgency of such challenges, it will be up to the states to drive these processes, as the reform responses should be "national".

The states may just have to rise to the occasion.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.

This story States need to step up on national reforms first appeared on The Canberra Times.