Recessions worry me, both the immediate impact and the struggle to recover. When the global oil crisis dunked Australia into recession in the mid-1970s, recovery under Malcolm Fraser's Coalition government was slow. Extraordinary drought didn't help, and it took a charismatic Bob Hawke and a clever team of ministers to restore prosperity to the national economy many years on.
The early 1990s recession was home blown, preceded by reckless debt-fuelled takeovers and mergers. Australia learned the lesson, too late, that the benefits of financial deregulation and globalisation require the strong regulation of banks and corporations, and a commitment to taxation and government spending so nobody is left behind. Ironically, the man that led Australia to drink too heartily from the deregulation spring, treasurer Paul Keating, was three years later the prime minister who steered the nation to recovery.
Every recession has a protracted, painful aftermath.
And then there was the global financial crisis in 2008 and the hard years that followed. Technically, a recession was never recorded, but the real economy was flattened. A new Rudd Labor government delivered a heavy dose of government spending and a long list of recovery measures. Even so, unemployment still rose markedly, struggling firms closed forever, the youth labour market collapsed, corporations took the opportunity to restructure, regions suffered.
Every recession has a protracted, painful aftermath. So now we've started another one, this time with conservative governments running both the nation and our state.
Straight up, Prime Minister Scott Morrison and Premier Gladys Berejiklian have reacted pretty much like the Labor leaders who have managed recessions in the past: a quick, large injection of cash, the immediate protection of as many jobs as possible, and the commissioning of shovel-ready projects to bring the economy back into growth.
Yet maybe we are already seeing a departure from the Labor recession-management text book and the commitment of government to lead the economy through the recovery phase. The federal Coalition government is reluctant to guarantee its admirable JobKeeper and JobSeeker schemes beyond September, while overestimates of the cost of these schemes became an opportunity to do less not more.
In NSW, the government last week started efforts to cut the salaries of health workers, teachers, police, ambulance workers and firefighters. Treasurer Perrottet preached to parliament, to us, that NSW public servants should be grateful to the private sector for the taxes it pays and the wealth it generates, because these pay public sector wages and fund the business of government. Spare me.
In Britain they call this meanness the language of austerity. Austerity used to be a kindly word. In his book, Austerity Britain, 1945-51, David Kynaston tells the story of the sacrifice made by the British people in the years immediately following World War II. Tolerance for high tax rates and the scarcity of consumer goods enabled government to re-build that nation around quality public education, a well-funded national health system, decent public housing and a genuine welfare safety net. By 1950, says Kynaston, the generosity of the people saw an end to unrelenting austerity with the knowledge that a safe secure life was now central to every British home. It's a story as remarkable as the war story itself.
But Britain's response to the global financial crisis was starkly different. The crisis had brought London to its knees, and the extraordinary bailout of the private sector banks - by the taxpayer - had left the nation deep in debt. In 2010 the new Conservative prime minister David Cameron announced in response a major program of cuts to government sending. Famously he announced that "the age of irresponsibility is giving way to the age of austerity."
And so began round after round of crippling cuts to education, health, housing and welfare, and to the regional investment projects that had kept Britain's struggling industrial cities afloat. The damage done to British regions continues to this day. The austerity word in Liverpool, Newcastle, Manchester, Leeds and Sheffield no longer incites warm feelings of a time when the concerns of the many were the priority of governments.
Recovery from recession involves choices by governments. These choices determine what the years after a recession look like. This time round Coalition governments will make the choices.
Stay tuned.
