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:
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:
The differing outcomes are as follows:
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
On the whole it is preferred that the double-hit-cum-slower recovery numbers are the base line.