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Back in black. Cough, cough.

May 15, 2020 • 15m 47s

As the federal government struggles to rebuild Australia’s battered economy, the threat of a trade war with China risks hampering our recovery. Today, Paul Bongiorno on the twin challenges of rebuilding the economy, and managing our relationship with our largest trading partner.

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Back in black. Cough, cough.

224 • May 15, 2020

Back in black. Cough, cough.

RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

As the federal government struggles to rebuild Australia’s economy, the threat of a trade war with China risks damaging our recovery.

Today: Columnist for The Saturday Paper Paul Bongiorno, on the twin challenges of rebuilding the economy… and managing our relationship with our largest trading partner.

[Ringing]

PAUL:

Is that you Ruby?

RUBY:

Hello Paul! How are you?

PAUL:

Oh good I’m just going back into the room…

RUBY:

Mhmm.

PAUL:

Firmly closing the door...

RUBY:

Perfect.

PAUL:

So when you’re ready I’m ready.

RUBY:

Alright let’s jump in. So Paul, in a normal year, this week would have been budget week.

PAUL:

That’s right, Ruby but that’s not what happened of course. Coronavirus has delayed the budget until October. The government with its fingers crossed is hoping by then to have a clearer idea of just how great the economic carnage has been, and what pathways there are out of it globally and domestically.

RUBY:

So what did the treasurer, Josh Frydenberg, say in his economic update on Tuesday instead?

PAUL:

Well, the treasurer had a bleaker view than we have heard until now from the government. Talk of a “snap back” was all the go at the beginning of last month now it was of a “sobering” economic impact in “very difficult” and “uncertain times.”

Archival tape -- Josh Frydenberg:

Australia finds itself at war against a faceless and flagless enemy.

PAUL:

Frydenberg said the coronavirus has created a one in a hundred year event.

Archival tape -- Josh Frydenberg:

A health and economic shock the likes of which the world has never seen.

PAUL:

The message was given a dramatic twist though Ruby when midstream, the Treasurer suffered a dry, hacking coughing fit

Archival tape -- Josh Frydenberg:

[cough]

PAUL:

It lasted an agonising minute.

Archival tape -- Josh Frydenberg:

[more coughs]

PAUL:

And robbed Frydenberg of his voice as he was spelling out the extent of the ruin.

Archival tape -- Josh Frydenberg:

Too long a speech… [coughs]

PAUL:

The Treasurer was keen to tout the successes of the JobKeeper payments.

Archival tape -- Josh Frydenberg:

[cough] Sorry.

PAUL:

During the course of his coughing fit he attempted to list a handful of businesses that had been rescued by his initiative.

Archival tape -- Josh Frydenberg:

Like Luke, the owner of a local restaurant and bar in Chapel Hill, Brisbane, who said JobKeeper “saved our bacon” and Adrian, owner of an auto business…

PAUL:

I’ve gotta say, it was a grim spectacle. The Treasurer’s real focus was to emphasise why it’s so important that the nation gets back to business, but in a way that will not risk a second wave of infection. The promise of restoring almost one million jobs by July depended, he warned, on everyone continuing to follow the health advice.

Archival tape -- Josh Frydenberg:

Failing to do so could see restrictions re-imposed at a loss of more than $4 billion per week to the economy

PAUL:

In a sense, that is the size of the gamble that the national cabinet – y'know the prime ministers’ premiers and first ministers – are taking with their tentative three-stage reopening of the economy.

RUBY:

And Paul - this was supposed to be the week when Josh Frydenberg’s was set to announce the nation was “Back in the black”.

PAUL:

Oh the irony of ironies, Ruby. That’s right. All through the election campaign Frydenberg and prime minister Scott Morrison promised this would be the week that we were back in black. They even had AC/DC ads to ram home the point. And you know it worked. Post-election analysis found this claim was a key element in the surprise election win.

Maybe not surprisingly on Tuesday, Frydenberg baulked at predicting how wide of the mark it actually was. But Deloitte Access Economics weren’t so shy - it’s forecasting the deficit will hit $142 billion, an Australian record. It projects that unemployment will not return to pre-virus levels for at least four years.

RUBY:

So it’s quite a different picture now then. How was Frydenberg’s speech received?

PAUL:

Well I’ve got to say it was seen pretty much as a disappointment. Economists and commentators from the left to the right of the spectrum found it a rehash of what was already known with no clear ideas of a route to recovery

In his reply speech shadow treasurer Jim Chalmers said all we got was a cut and paste of what the government had already said. And Ruby he cheekily went on to say:

Archival tape -- Jim Chalmers:

If only the Treasurer had coughed up some detail or a plan.

PAUL:

Former Liberal leader Dr John Hewson said he was “none the wiser” after the statement. He said there was no pathway forward, and we have to trust they know what they are doing.

RUBY:

So do we have any indication as to when Australia’s economy might start to recover?

PAUL:

Well, we did get some analysis from accounting giant KPMG. It said it will take many parts of the economy years to recover. It will not be until the start of 2022 that the arts, retail trade, air transport and the accommodation and café sectors will be back to what was considered normal.

RUBY:

Right. Back to Josh Frydenberg for a moment… his coughing fit in Parliament led to speculation that he might be unwell with coronavirus - what’s the latest there?

PAUL:

Well, he was tested and it came back negative. Very quickly I have to say, almost within a matter of hours. We’re told some water went down the wrong way.

And that’s very good news not only for Josh Frydenberg but for his senior colleagues, the Prime Minister walked out of the chamber shoulder to shoulder with the treasurer all the way back to his office.

RUBY:

We’ll be back in a moment.

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RUBY:

Paul, the other big story this week - and it’s very connected to our economic situation - is the mounting tension with China.

PAUL:

Yeah, Ruby. Morrison’s challenges are multiple and severe, and I’ve got to say they’re not helped by his handling of our relationship with China. Not only is the Asian giant our biggest customer, but little known or maybe recognised, Australia is one of the few nations that actually has a trade surplus with her. By some measures we’re the nation with the biggest trade surplus.

But anyway, our relationship is so fraught is the relationship that, unlike his predecessors, Howard and Gillard for example, Morrison cannot get on the phone to President Xi Jinping to directly sort out the latest trade row threatening billions of dollars of our exports.

And even at the Trade Minister level, Simon Birmingham’s request for a phone call to his counterpart Zhong Shan is being ignored. Birmingham is desperate to defuse China’s threats to slap an 80 per cent tariff on barley exports worth 600 million dollars, and he wants to resolve the blocking of about one billion dollars worth of beef exports over a claimed “labelling issue”. And y’know our Wine and dairy exporters are worried they could be next.

Midweek, Morrison and Birmingham admitted that they are concerned - however, they are publicly framing the problem in technical trade terms. Trying to be quite diplomatic about it.

RUBY:

What has been the response to all this - from the business community?

PAUL:

Well Ruby, the Australia China Business Council for example, its chief executive Helen Sawczak definitely doesn’t think it’s a technical trade issue. She said during a web discussion with Huawei’s Jeremey Mitchell that anti-China hawks, particularly in the national security area, are giving unbalanced advice.

Archival tape -- Helen Sawczak:

There’s been a lot of talks about national security concerns, and that it should be overriding our economic interests. Well if the spooks were managing our economic interests, this country would go down the gurgler...

RUBY:

And this all relates to calls for an international inquiry into China’s role in the outbreak of coronavirus, which Morrison was pushing for and which we talked about on the show a couple of weeks ago...

PAUL:

Yes Ruby, you can imagine Morrison regrets trying to lead the world on this issue, and if he doesn’t he should. China saw us playing deputy sheriff to Donald Trump, and it threatened repercussions then. It seems willing to make good on those threats. And two former foreign ministers, Julie Bishop and Gareth Evans, have been highly critical of our ham-fisted diplomacy. This week Evans described the government’s suggestions for the Covid-19 inquiry as a “thought bubble”.

Archival tape -- Gareth Evans:

But I have to say the inquiry thought-bubble that was articulated by the government was very much an own-goal and an exercise in diplomatic self-isolation...

PAUL:

Bishop picked up the theme, she said Morrison’s talk of weapons inspector-type powers for health investigators was inappropriate, and, she said, “futile” because China as a security council member could veto it if it believed it was hostile. Bishop said calm and considered diplomacy was required.

Archival tape -- Julie Bishop:

Through quiet advocacy and persuasion, China can become part of an exercise in lessons learned...

PAUL:

Now Julie Bishop - remember she was foreign minister for six years - well she was dismissed as an “airhead” by Liberal senator Concetta Fierravanti-Wells in an angry tweet. Fierravanti-Wells is an outspoken critic of China. She’s one of those China hawks...

Archival tape -- Concetta Fierravanti-Wells:

Post Wuhan Coronavirus, Australians do not want business-as-usual with the Communist regime in China.

PAUL:

...and joining her from the floor of parliament was Nationals MP George Christensen.

Archival tape -- George Christensen:

Thankyou Mr Deputy Speaker. Australia is at a crossroads. We can keep giving in to communist China’s threats, or we can stand up for our sovereignty and our economic independence

PAUL:

He said Australia should no longer put up with China’s economic infiltration and blackmail.

Archival tape -- George Christensen:

Being so entangled with an authoritarian regime has left our nation open to economic blackmail and boycotts like that mooted by China’s ambassador, and the actions recently against both barley and beef exports.

PAUL:

Now Ruby I’ve got to say this is curious from George. He won his north Queensland seat based on a very strident campaign of looking after our coal export jobs. Anyhow, one thing is for sure: without China’s trade, Morrison and Australia won’t get the economic bounce-back the nation desperately needs.

RUBY:

And while parliament did come back this week, it’s now suspended again.

PAUL:

That’s right, at least that’s the government’s plan. And it is causing considerable concern. A few people have said it’s undemocratic. And Labor’s parliamentary tactician, Tony Burke, says now is the time for scrutiny. But his attempts to have the government bring down a new parliamentary sitting calendar have failed.

Archival tape -- Tony Burke:

It’s ridiculous to have a situation where the rugby league is going to be going back and playing, and the Prime Minister’s saying that Parliament can’t meet in the normal way

PAUL:

All government’s can find parliament a nuisance but Scott Morrison appears particularly dismissive of its role to hold him to account on things like sports rorts and putting his political interest ahead of the national interest.

RUBY:

Paul given your experience covering federal politics, do you think it’s a problem we aren’t having regular sittings of parliament during such an unprecedented economic crisis?

PAUL:

Well yes I do. I think there is a balance here. It’s clear that tough decisions have to be made quickly and they have been. But as we’ve seen the Parliament can meet and come to the task properly. Already the Australian parliament sits less than for example the congress in the United States, or the parliament at Westminster. And I just think that if this is allowed to keep developing in the way it is, we may as well shove our parliamentary democracy.

RUBY:

Paul, thanks so much for your time today.

Thank you, Ruby.

--

RUBY:

Also in the news...

New figures from the Australian Bureau of Statistics show the county’s unemployment rate has had its steepest monthly rise on record.

Nearly 600 thousand people lost their jobs in April and a further 600 thousand people had their working hours cut back.
The Treasurer Josh Frydenberg said the majority of people no longer in work — 325,000 — were women.
The ABS said 2.7 million Australians either lost their job, had their hours reduced or left the labour force last month.
However the official jobless rate climbed just 1 percentage point despite the mass layoffs to 6.2 per cent.
That’s lower than expected, with the ABS saying it was due to a slump in the proportion of people actively looking for work.
The youth unemployment rate also rose to 13.8 per cent, up from 11.5 per cent.
The Prime Minister Scott Morrison said the loss of jobs was "devastating" for Australian families affected by government restrictions and business shutdowns.

**

7am is a daily show from The Monthly and The Saturday Paper.

It’s produced by Ruby Schwartz, Atticus Bastow, and Michelle Macklem.

Elle Marsh is our features and field producer, in a position supported by the Judith Neilson Institute for Journalism and Ideas.

Brian Campeau mixes the show. Our editor is Osman Faruqi. Erik Jensen is our editor-in-chief.

Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

New episodes of 7am are released every weekday morning.

Make sure you don’t miss out by subscribing on your favourite podcast app. I’m Ruby Jones, see you next week.

As the federal government struggles to rebuild Australia’s battered economy, the threat of a trade war with China risks hampering our recovery. Today, Paul Bongiorno on the twin challenges of rebuilding the economy, and managing our relationship with our largest trading partner.

Guest: Columnist for The Saturday Paper Paul Bongiorno.

Background reading:

Chokehold on the economy in The Saturday Paper
The Saturday Paper
The Monthly

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7am is a daily show from The Monthly and The Saturday Paper. It’s produced by Ruby Schwartz, Atticus Bastow, and Michelle Macklem. Elle Marsh is our features and field producer, in a position supported by the Judith Neilson Institute for Journalism and Ideas. Brian Campeau mixes the show. Our editor is Osman Faruqi. Erik Jensen is our editor-in-chief. Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

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224: Back in black. Cough, cough.