‘Think again’: PM issues call to action amid recession fears

In an address to the AFR Business Summit, Mr Morrison has outlined the government’s plans to address the growing threat of the coronavirus (COVID-19) pandemic. 

According to the World Health Organisation (WHO), at present (10 March), there are 113,210 cases of COVID-19 globally, spanning 108 countries, with the number of fatalities currently totalling 3,975, three of which have been Australians.

“Those lives lost, to date, are larger than SARS and MERS put together by multiple. So, it clearly is a global health crisis,” Mr Morrison observed.

The prime minister warned that the economic impact of the outbreak could be more devastating than the global financial crisis (GFC), particularly for Australia, which has strong trade links with China, where the effects have been most pronounced.

“The epicentre of this crisis, as opposed to that one (GFC), is much closer to home,” he said.

“The GFC impacts were centred on the North Atlantic, and back then China was in a position to cushion the blow for Australia.

“Relative to SARS in 2013, China is substantially larger and more interconnected with the global economy including to Australia, magnifying the reverberations throughout the world.”

In the near term, COVID-19 is expected to shave 0.7 per cent off Australia’s GDP growth over the coming quarter, after a stronger than expected result in the back end of 2019.

As a result, Mr Morrison has confirmed that the federal government would soon release a stimulus package aimed at targeting the “unique nature” of the economic challenged posed by the pandemic.

Mr Morrison added that the response to the crisis would be “whole of government” and involve cooperation with state and local authorities.

According to the prime minister, the government’s response would be formed around seven key principles, which include:

• measures that are proportionate to the degree of economic shock and the impact on the economy;
• timeliness and scalability – adjusted appropriately as the health and economic effects evolve;
• targeted approaches to address specific issues and support those most affected;
• alignment with other arms of policy and activity, particularly monetary policy, and with the responses of other government;
• using existing delivery mechanisms;
• employing temporary measures accompanied by a fiscal exit strategy; and
• favouring measures that will lift productivity.

Mr Morrison has also urged the business community to play their part in alleviating the impact of the virus on the domestic economy.

“We confront today a new, complex, hydra-headed and rapidly evolving challenge,” he said.

“[While] we all know we’re not immune, so far, as a nation, we have been able to get ahead of this. But to stay ahead, we must work together and continue to take decisive and timely action.

“This is one of those national interest moments.

“Whatever you thought 2020 was going to be about. Think again. 

“We now have one goal, together, this year – to protect the health, the wellbeing and livelihoods of Australians through this global crisis, and to ensure that when the recovery comes, and it will, we are well positioned to bounce back strongly on the other side.

“All Australians have a role to play, in Australia successfully moving through this crisis.”

Mr Morrison specifically thanked the banking sector for passing on the full 25 bps cut from the Reserve Bank of Australia (RBA) following its fourth cut to the cash rate earlier this month.

Addressing the broader business community, Mr Morrison continued: “We need your perseverance, your planning, your enterprise. We need your common sense, we need your calm, we need your commitment. But we need your patriotism, as well.”

“We need you to support your workers, by keeping them employed. Hold onto your people, because you will need them on the bounce back on the other side. Wherever possible, support them – full-time, part-time, casual, including with paid leave if they need to take time off during the course of the virus,” he said.

The prime minister said he is confident the country will withstand the crisis and recover from the expected hit to the economy. 

“Now is the time when we do need to pull together and I have every confidence that we will. That’s what Australians do,” Mr Morrison said.

“Our planning, our preparations, are well advanced. Our action is there to see.

“Our institutions are strong. Our people are strong. Our budget is balanced.

“Most importantly, we face this challenge with the greatest asset, which remains undiminished – that is the common-sense resilience and ingenuity of the Australian people.

“Australia will pass this test, and it will pass it strongly. And we will be stronger on the other side.”

[Related: Coronavirus could curb property price growth]