It has become a "natural" tendency of politicians to attempt to put a favourable gloss or spin on events or data as they unfold. Often they go too far, thereby failing to accept and respond to the reality.
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The 31st US President, Herbert Hoover (1929-33), was famous for the positive spin - his efforts were to reassure the public in the context of the Great Depression that his policies were bringing recovery - but to no avail. So much so that Edward Angly wrote a book in 1932 filled with the optimistic forecasts about the economy offered by Hoover and his associates under the sarcastic title, Oh Yeah?
There was little doubt this week that our Treasurer Josh Frydenberg had been thumped by reality when announcing our obvious recession. Gone were those boasts of "A Strong Economy" and the claims that the government was "Making it Stronger", claims we heard almost incessantly right up until early this year, jolted by the arrival of COVID-19. It had become a delusion, with the government ignoring many inherent weaknesses in our economy - wages flat lining, record household debts, poor productivity, mounting job insecurity, and a majority struggling week-in-week-out just to meet the costs of living.
Sure, the government's budget had been brought back to "balance", but many spending and tax commitments had been made spreading well into the 2020s - in education, health, defence, NDIS, and infrastructure, which would challenge the sustainability of that fiscal position.
The threat of the virus, and concern about our hospital and medical capacities, saw the government forced to drive our economy into this recession - closing our borders and many activities, and enforcing social distancing.
They had to act quickly, and decisively, with little real idea of the likely full consequences of their policy reactions. At the same time they had to seek to "cushion" the economic and social impacts with spending and financial support totalling some 13 per cent of GDP.
To be fair, it was very much a case of "learning by doing" - it was all done in a rush, and mistakes and miscalls would be made, as they were conspicuously in relation to JobKeeper, which is now to cost some $60 billion less than first envisaged.
The likely initial extent of the enforced recession, coming on top of the Black Summer bushfires, has now been revealed in the growth data released this week, with GDP falling by 0.3 per cent in the March quarter, and the government admitting that they expect a further 8.5 per cent fall in the June quarter, which they hope is the epicenter of the impacts, predicting recovery to begin in the September quarter.
Growth positives in the quarter were a favourable trade account and government spending. But it was clear that although consumer spending had been particularly weak (falling 1.1 per cent), it would have been much worse without the panic buying of toilet paper and our household necessities.
While these broad numbers have now been admitted, any recovery will depend on the strength of business and consumer confidence. Although the government has ditched its initial spin of a "bounce" or "snap" back, it is not really providing much detail, except the broad notion that confidence is recovering, and "maybe" the recession will be somewhat less severe than first thought.
The initial prediction was for a 10 per cent decline in GDP in the June quarter, now 8.5 per cent, with peak unemployment now expected to be somewhat less than the initial prediction of 10 per cent.
Let's hope this reassessment is not just spin. It could be seriously counterproductive without the government being prepared to be more forthcoming as to its recovery strategy, in particular how it sees the unwinding of the JobSeeker and JobKeeper schemes, and other assistance, impacting on growth and unemployment.
Consumers won't spend and businesses won't invest if they remain uncertain about the sustainability of any turnaround, especially if unemployment numbers are sticky downwards (as they have always been), as businesses still hit the wall, and bankruptcies mount as outstanding loans and rents etc, are chased, all against the background of a very severe global recession.
It is no time for Morrison to be a Herbert Hoover.
It is no time for Morrison to be a Herbert Hoover. It is fundamentally important for the government to take us all into their confidence, sharing as much information as they can, admitting openly the full extent of their confidences and concerns.
John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.
