Josh said the OECD gave him top marks

OECD’s Economic Outlook of June 2020 was said by Treasurer Frydenberg to rank Australia as best-in-class in terms of economic policymaking. Au contraire m’sieur, the OECD has provided a template for describing the Australian situation more clearly. The conclusion is the opposite: if the current regime continues, each of the 6 key OECD “directions” will be corrupted further, harming current and future generations. This topic deserves careful reading.

The Morrison Government's rollout of COVID-19 "stimulus", that is their fourth such process since 2016, has been shambolic:  no needs analysis, no plan, no performance indicators and quality feedback, and sloppy implementation.  Its attempt to dominate the States & Territories was vapid and unsuccessful.

OECD’s critical dimensions, the ones under great attack in Australia, are:

1. Businesses and workers likely to face extended weak demand would benefit from support to upgrade, invest and innovate, and to shift to sectors with better prospects, through strengthening active labour market policies, particularly retraining schemes, and by facilitating investment. 
2. Streamlining and improving access to income support programmes, such as the Citizen’s Income, would prevent large increases in poverty and support demand in the recovery. 
3. If non-performing loans start rising, the government should stand ready to reinforce the bank asset support programme (GACS). Implementing the new bankruptcy law would help by ensuring that viable companies are restructured rather than liquidated. 
4. Pursuing the government’s plans to develop a multi-year programme to reduce administrative complexity, improve the legal system’s effectiveness and reduce investment and employment costs would support new businesses, productivity and jobs. 
5. Supporting the renewal of the ageing infrastructure and the transition to lower carbon activities would sustain the recovery and improve well-being. 
6. Accelerating the adoption of digital technologies, as demonstrated by the rapid move during the crisis to ‘smart working’ and online services, would raise competitiveness.includes what they do, how long they’ve been at it, and what got them to where they are.

Politicians and journalists are reinforcing each others’ misconceptions. There are three main topics to be debated and one is being suppressed. Both of their majorities are attacking capricious and incompetent behaviours to the extent they can see them; and both have a naïve optimism about the prospects of a laissez-faire health regime.

Neither are properly understanding the history – what went wrong and why? and what are better “options” – indeed, there is a perverse determination to not “repair” as the lack of “planning” for the future is in the hands of the people who made the mistakes and who ensure that their doors are locked against genuine planners.

A major theme of this planner’s work is that there was no plan from the time that the borders were closed on 1 February to when NCCC tied itself in loops by adopting then rejecting then reverting to a long-term gas-driven future; while neglecting to revive the sector they agreed, in theory, is the highest priority, namely SMEs in travel, tourism, accommodation and the arts and entertainment. We are up to 120 days of delay without the numskulls being any wiser.

The PM is stuck in the National Cabinet which is intrinsically non-planning and non-determinist, without a better policy direction than the one that failed over 4 ½ previous stimulus episodes under the same man. Even the Caravan Industry Association is waiting for NCCC to act, pointlessly.

Treasurer Frydenberg has been optimistic about the pace of recovery which he says is due to success in managing the crisis.

If losing 1.4 million jobs through avoidable delays and incompetent payment channels is success, I challenge the Treasurer to engage Professor McKibbin to do a proper counterfactual analysis of the Government's Vs my scheme.

To be precise, on 17 June in the House of Representatives (Hansard p 63), Frydenberg said,

"If you look at the OECD's recent report, they said that the Australian economy will grow by around four per cent next year and that the contraction this year will be by no means as severe as it is in other countries."
 

OECD modelled "one hit" and "two hit" scenarios, the latter including slower than expected recovery.

There is a dictum in economics, to state your assumptions and err on the conservative side.  I have taken the second option for the following reasons:

1. the complexity and uncertainties are incredible and politics is dominating science in terms of early re-openings = high risk
2. dithering has cost 1.4 million lost jobs and the Government has not even started its stimulus package for tourism, 120 days on
3. the Government has appointed inexperienced people to key posts and rejected a generous offer by an expert reform planner, increasing the risk and costs of delay.  (those options are under copyright so the Government has snookered itself.)
4. where States have re-opened early in the USA, experience is that c 12-15% only of former patronage returns, due to majority fear of infection.  That fear is evident here
5. the caravan industry is refusalist and likely to miss out on the relevant two-part stimulus package outlined on this site if it remains quiescent
6. the Government has mismanaged the political agenda by focussing on relaxing environmental controls over distant, long-term projects which are not stimulus but are divisive, instead of OECD's prescriptions (above).

The differing outcomes are as follows:

• double hit was presented first, 2020 "government consumption" up but all other indicators down substantially.  2021 "private" up 1.1%, government up 3.9%, and capital formation down 2.1%.  GDP up overall by 1.0%
• Single hit  for 2021 - private up 5.7%, government up 3.3%, capital up 1.8%, GDP up 4.1%.

Note that Private is 58% of GDP, government is 19%, and capital formation is 24.5%.  Private is three times more significant than government;  with another critical element being the proportion of private that is services as due to limited exposure to international trade constraints.

OECD noted further that 

• Indirect effects via input-output linkages (businesses not closed-down but impacted by reduced demand) could add between 6-8 percentage points to the direct hit to aggregate output based on the sectors affected directly in the initial OECD benchmark estimates. On this basis, direct and indirect effects could result in a total production decline of about one-third in the major advanced economies if containment measures were fully implemented in a similar manner across economies.
   

On the whole it is preferred that the double-hit-cum-slower recovery numbers are the base line.