OPINION

Coronavirus: We are now a nation in self-isolation

Treasurer Josh Frydenberg announces the delayed budget release. Picture: Dion Georgopoulos
Treasurer Josh Frydenberg announces the delayed budget release. Picture: Dion Georgopoulos

There's new official lingo about tackling COVID-19's economic challenge.

A "bridge" is being built to take us to the other side of the crisis.

Meanwhile, the government is preparing a "cushion" for businesses and individuals who are already or soon will be its casualties.

The Reserve Bank on Thursday unveiled its bridge-building package. It cut the cash rate again, to 0.25 per cent. It will also put a staggering $90 billion into the banking system, with the government injecting another $15 billion, to encourage low-interest lending targeted at small and medium-sized businesses.

The banks are co-operating by offering "loan holidays".

But the "bridge" requires constructing a foundation of confidence, when many businesses and consumers feel only fear.

In present circumstances, normal economic incentives have a much lesser effect. The market signals don't work properly. If small businesses have their customers disappear and don't expect them back any time soon, owners won't be too interested in cheap loans.

Morrison has stressed Australia is not in shutdown. Not officially. But out of a combination of alarm, caution and government measures to contain the virus's spread, many activities have shut down, and more do so every day.

Friday's announcement of further rules for non-essential indoor gatherings - earlier in the week limited to under 100 people - will be a blow for restaurants and pubs. The density permitted is no more than one person per four square metres of floor space.

Many of those bustling, cheerful, crowded eateries will not be able to make ends meet - unless perhaps they compensate by providing takeaway services, likely to be a growth industry.

On the economic front [the government] knew it was behind the curve immediately after announcing last week's $17.6 billion stimulus measures.

From Friday night Australia closed its border to foreigners. As a health measure, this is sound, but it'll be yet another brake on the economy, even though foreign arrivals have already fallen drastically.

Australians have also been told not to leave the country. Australia is in national self-isolation. And unlike for individuals, there is no set endpoint.

Qantas has stopped international flights and stood down 20,000 staff. A measure of these strange times is that Qantas is talking to Woolworths about some of its employees working there. The hoarding frenzy has become a job creator.

During this week, Morrison seemed on top of his messaging, and the pioneering "national cabinet" of federal and state leaders was showing there is such a thing as "co-operative federalism".

But federal and state governments and the community are a long way from having any certainty as to what measures - health or economic - might eventually be needed in a crisis expected to last six months, perhaps longer.

In circumstances unprecedented in living memory, difficult judgements are being made that juggle health, the economy, and public sensibilities.

Devising rules for nursing homes pitted health against the humane. COVID-19 is lethal for the frail aged. But this week the government decided visits to these facilities should be restricted rather than stopped.

It was a trade-off. A ban would have been safer in medical terms, but for residents a devastating isolation from family. The balance struck was sensible, and has been generally accepted as such.

In contrast, the debate about schools has been fraught and is unfinished in the public mind. The government advanced several reasons for not closing them, including that it could mean a 30 per cent hit on the health workforce.

This is crucial in the government's thinking. The health system will be under enormous pressure in the next few months, with no guarantees about how well it will cope, despite the reassuring words.

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Despite the arguments of health officials and governments - including that children are at low risk of the virus - certain schools have closed and some parents are removing their children from others.

Widespread closures would not just be hard for parents but also set back children's education, because only a limited number of schools and families could swing quickly into home schooling.

Clearly, the bad behaviour the crisis has triggered has not abated - the out-of-control supermarket scenes, and the abuse of shop staff, health workers at some testing places, and even teachers.

On Thursday, restrictions were announced for the dispensing and sale of drugs by pharmacies.

Is the binge buying just panic? There is a great deal of that, with people unreceptive to the indisputable point there would be plenty of supplies if everyone behaved normally.

Home Affairs Minister Peter Dutton (who is still quarantined with COVID-19) says some people are sending products overseas or "profiteering" by selling in a black market; he declared the police are in pursuit of them.

The government maintains that on the health front it is keeping ahead of the curve, although critics dispute this.

On the economic front, however, it knew it was behind the curve immediately after announcing last week's $17.6 billion stimulus measures.

Now it is finishing its second package, to be announced on Sunday, which will dwarf the initial one; the combined measures will be legislated by the "mini" Parliament early next week.

It admits the difficulty of predicting the downward-spiralling economy - the May budget has been delayed until October 6.

Last week the imperative was to keep growth going to try to avoid a recession; now the goal is being cast differently.

"What this second package will be designed to do is to cushion the blow for Australians, particularly those who have lost their jobs, but also for those small businesses who are facing this very, very difficult moment," Frydenberg told the ABC.

After the Reserve Bank announced its measures, its governor Philip Lowe said in his speech: "At some point, the virus will be contained and our economy and our financial markets will recover."

At what point and at what cost? That bridge could need to have a very long span.

  • Michelle Grattan is a press gallery journalist and former editor of The Canberra Times. She is a professorial fellow at the University of Canberra and writes for The Conversation.

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This story We are now a nation in self-isolation first appeared on The Canberra Times.