Grattan on Friday: Six issues on Scott Morrison's mind over summer

When he ended 2019 amid literal and political smoke, it would have seemed inconceivable Scott Morrison could finish 2020 on a high. Or that he’d have reached there on the back of Australia’s worst downturn since the Depression.

Morrison learned from his mistakes of last summer, about how he needed to adapt his own style, and where power really lies in the federation. That knowledge served him well in the COVID crisis.

He was ever-present, with frequent news conferences, and the creation of the “national cabinet” – a success despite arguments and fragmentation – maximised the federal government’s clout in a situation where the preponderance of power rested with the states.

The imperatives of 2021 will be different – assuming we remain largely COVID-free. In juggling the dual health-economic challenges, the emphasis will be on the latter. Reducing unemployment will be top priority, requiring some delicate balancing as the fiscal life support is removed.

And Australia will be operating in a world where COVID is still rampant, and in a situation further complicated by deep tensions in our relationship with China.

The public may – or may not – be in more of a mood for political disputation in 2021, which they certainly haven’t been this year. If they are not, that will work against Anthony Albanese.

The (bad) times have suited Morrison, including making it easier to keep his own troops in line. Next year will bring the climate debate seriously to the fore – never easy to manage internally.

With a very healthy lead as preferred prime minister, Morrison feels confident he has Albanese’s measure. But one uncertainty is whether Labor might change leaders. How would Morrison have to adapt his style if he faced Jim Chalmers or, more intriguingly, Tanya Plibersek?

As he now contemplates an unpredictable 2021, what issues will the PM have front of mind? And what do experts believe should be done on them?

THE ECONOMY

Thursday’s budget update told a better story than expected as recently as the October budget. The virus’s containment and massive fiscal support have made Australia one of the few positive standouts in a devastated world.

Growth is forecast at 4.5% in calender 2021, after a fall of 2.5% in 2020. Unemployment, 6.8% in November, is set to peak at 7.5% in the 2021 March quarter. But it won’t be “comfortably” under 6% (5.25%) until 2024.

Despite the encouraging prospects, Treasurer Josh Frydenberg emphasises the road ahead will be tough and long, as we move to a post-COVID economy, and there are risks to the recovery.

“These include the timing, distribution, and effectiveness of the vaccine in stopping the spread of the virus globally; trade tensions that limit Australia’s access to international export markets; and domestic economic uncertainty that could lead to higher household savings and lower consumption,” he said.

THE EXPERT’S VIEW

Saul Eslake, independent economist: “What the government has to do is manage and accelerate the transition from policies that support pre-existing jobs and businesses to policies that nurture the new jobs and businesses that will be sustainable in the post-COVID world – and in a ‘post China’ world where we need to diversify markets”.

Read more: So far so good: MYEFO budget update shows recovery gathering pace

CHINA

The bilateral relationship was already bad, but the 2020 deterioration has been spectacular and alarming. Riled by various Australian policies, China was further angered by the early call for a COVID inquiry.

China is now targeting Australian exports ranging from barley and wine to coal; this week Australia referred the barley dispute to the World Trade Organisation. Earlier, the parliamentary year ended with legislation on foreign investment and agreements with foreign governments that had China in the sights.

Handling the relationship is Australia’s 2021 foreign policy conundrum. There’s no obvious way forward, with China determined to make an example of Australia, as payback and a warning to other countries.

Morrison repeatedly declares the government wants ministerial and leadership dialogue to resume. The Chinese show no interest. Things have been made harder by COVID’s “virtual” summit diplomacy. If 2021 sees some face-to-face summits there’ll be chances for in-person encounters.

THE EXPERT’S VIEW

Richard McGregor, China specialist at the Lowy Institute: “The solution is not entirely in Australia’s hands. But assuming we want to dial this down, we have to find the right combination of firm language (which offers no retreat from our core interests) and diplomatic signalling which encourages China to also agree to establish a floor under the bilateral relationship”.

Read more: Taking China to the World Trade Organisation plants a seed. It won't be a quick or easy win

CLIMATE POLICY

Morrison has been shifting on climate, and where he lands will be important for domestic politics and Australia’s international reputation. Eyes are on whether he’ll commit Australia to the target of zero net emissions by 2050, endorsed by all states and, in a recent Essential poll, 81% of Australians.

Joe Biden’s election, Britain’s strong stance, next year’s Glasgow climate conference, and the possibility of trade barriers – all will put pressure on Australia. But Morrison has to contend with Nationals and some Liberals for whom the 2050 target is anathema.

THE EXPERT’S VIEW

Tony Wood, director of the Grattan Institute’s energy program: “Morrison should announce that the government’s strategic objective is net zero emissions by 2050. To make that credible, he should complement his government’s technology focus with a commitment to deliver an economy-wide investment framework to deploy these technologies, with legislated milestones tightly set in the short term and consistent with the strategic objective in the long term”.

Read more: The Paris Agreement 5 years on: big coal exporters like Australia face a reckoning

INDUSTRIAL RELATIONS

Hard liners see the government’s reform package as a Clayton’s effort; pragmatists say it’s sensibly moderate. It will be highly contested over the summer, but the government is signalling it will compromise. Morrison doesn’t want IR to cost votes. However he needs some results, which means persuading Senate crossbenchers.

THE EXPERT’S VIEW

Ray Markey, emeritus professor of employment relations, Macquarie University: “The government should rebalance its employer-influenced proposals to genuinely protect casuals and gig workers, and support genuine enterprise bargaining”.

Read more: Chance for genuine industrial relations reform thrown under the omnibus

AGED CARE

The government this week announced $1 billion extra, but the big decisions await the royal commission’s February report. We know – from COVID which claimed nearly 700 lives among aged care residents and from the commission’s interim findings – the system is unfit for purpose, as it faces the baby boomer bubble.

THE EXPERT’S VIEW

Joseph Ibrahim, geriatrician, Monash University: “The aged care legislation should be rewritten to put human rights at its centre, and enough money provided so older people can enjoy their lives in the same way as everyone else”.

Read more: 3 ways to transform our 'Soviet-style' aged-care mess into a system that puts older Australians first

WAR CRIMES

The fallout out from the inquiry into alleged Australian atrocities in Afghanistan has been swift and divisive, with some serving and former soldiers furious at Defence Force Chief Angus Campbell’s plan to remove a unit citation – which prompted the government to force him to defer a decision. Veterans also attacked Defence Minister Linda Reynolds’ frank reference to “incidents of alleged cold-blooded murder”.

THE EXPERT’S VIEW

Neil James, executive director of the Australian Defence Association: “We just need to let passions cool so objective decisions can be made in the new year”.

The ways ahead on all these issues will be complex. In political terms, the question is whether Morrison can maintain in the new circumstances of 2021 the ascendancy he established, somewhat unexpectedly, in 2020.

Read more: Grattan on Friday: Australia's war crimes in Afghanistan – how could those up the chain not know?