We must not shy away from debt as Australia plans its post coronavirus recovery
In one piece of good news as the major parties haggle over how much to spend (or not) on our coronavirus recovery the Greens are sensibly urging $300bn more debt as they seek to outflank both Labor and the Coalition on a good post Covid-19 recovery.
The party accuses Labor and the Coalition of shrinking from the spending needed to revive our post-coronavirus economy.
Indeed, “The government has fallen back on the most extreme neoliberal nostrums – wage suppression, industrial relations ‘reform’, the return to balanced budgets and a bonfire of sensible environmental and other protections in the hope of generating ‘snapback’ economic growth” noted the Saturday Paper.
In marked contrast Greens Parliamentary leader, Adam Bandt says Australia must not shy away from debt as it plans its recovery from the economic slide brought on by coronavirus restrictions.
The Greens have proposed increasing government debt by $300bn in a bid to kickstart the economy out of the Covid-19 contraction through investments in industry, infrastructure and renewable energy, reported Pau Karp in the Guardian Australia last week.
The Greens Invest to Recover plan, released last Monday, sets up the Greens’ economic argument leading into the next election as a battle against Coalition austerity and Labor, which it says is “afraid of sensible borrowing to invest in our future”.
The biggest ticket items include a jobs guarantee, free tertiary education for under 30s, $24bn over 10 years for public education, a $12bn manufacturing fund, 500,000 new public and community homes, $25bn on public transport, $6bn to modernise the electricity grid, a $6bn nature fund and $2.3bn for the arts.
The Greens also propose retaining key features of the coronavirus support packages including free childcare and the doubling of unemployment benefits to $1,100 a fortnight.
While the Greens can only achieve policy goals in partnership with other parties, its policies from a banking royal commission, lifting Newstart and preventing cuts to penalty rates have proved influential, especially over Labor.
But Anthony Albanese has warned the shadow front bench that, if elected, Labor would face a “constrained fiscal situation”. Labor’s shadow treasurer, Jim Chalmers, has said that Labor’s highest priority is to “save as many jobs and communities as possible” but in the long run he still believes “debt matters”.
The Greens estimate Australia’s net debt would rise from 30% of GDP to 44% under its plan – an increase of $300bn over 10 years – which it argues is “still less than half of the advanced economies’ average of 95% during the pandemic and well below those countries’ debt levels even before Covid-19 (which was 76%)”.
The Greens believe debt will be less if revenue measures are implemented, such as reversing stage two and three of the Coalition’s income tax cuts and ending fossil fuel subsidies.
The policy document accuses Liberal and Labor governments of “turning public debt into a bogeyman”. But during the Covid-19 crisis government borrowing has saved the day.
The Greens policy argued that governments have access to “the cheapest money in history” with interest rates less than 1% on 10-year bonds, and less than 2% for 30 year bonds.
“There’s never been a better time for governments to borrow to invest given that interest rates are projected to stay at record low levels for many years.”
“Liberal and Labor say that we can’t borrow any further and the cupboard is bare. Of course, they were saying that even before the coronavirus crisis, but history shows that if we borrow to invest and grow a clean economy, we will be able to easily service the debt and ensure our prosperity.”
The Greens cited expansion after the second world war, at which time “debt skyrocketed to record highs” but was “reduced back down to normal levels within a decade because it was invested and grew the economy”.
Adam Bandt said “Depression-era job numbers demand a Depression-era response. That means not shying away from debt, but using it to invest in building a cleaner, fairer Australia.”
“We can’t cut our way out of this crisis. The government and big corporations are calling for more cuts – to company taxes, to public spending, to workers’ rights – but that is a recipe for disaster. We must invest to recover.”
The coronavirus showed that normal life failed us. We need a new economy as we recover.