Australia’s economy was weak before coronavirus. Could a ‘job guarantee’ help repair the economy?

Treasurer Josh Frydenberg hates it when it’s pointed out, but Australia’s economy was in poor health well before COVID-19 hit our shores.

A former federal Treasury secretary, Martin Parkinson, said it himself last week.

“Going into COVID, we’d had very weak productivity growth, very weak income growth, economic growth was quite anaemic,” he said.

“If you look at our productivity performance over the last decade, it has been running at about a quarter of its long-run average.

“This is all pre-COVID,” he repeated for those in the back.

Parkinson made those observations on the No Limitations podcast with Gregory Robinson, in a wide-ranging discussion about Australia’s economic situation.

Why would he draw attention to the prevailing weakness in the economy?

Because we need to understand the nature of the challenge we’ll be facing.

Parkinson said the rebuilding task would require exceptional leadership.

“[It] is going to require all sides of politics to basically put aside some of their ideological shibboleths and try and come together in the national interest,” he said.

“This is going to require us to mobilise our community in a way that we have not done, you know, and didn’t even do in the 80s and 90s, [that] we have not done outside of a war-time footing.”

He said Australia already had a “permanent underclass” and he didn’t want it to get larger.

His biggest concern was how to deal with long-term unemployment after the lockdowns ended, and we’d need a strong rate of economic growth to reduce unemployment over time, he said.

“The last time we got to a 10 per cent unemployment rate was after the ’91 recession and it took a decade to get it back to about 5 per cent,” he said.

“[And] in that period, after the 90s recession, we actually grew quite strongly.

“Going into COVID, [growth was] bouncing around about 2 per cent per annum for a number of years.”