Avoiding an economic ‘cliff’ will require more spending

Just how much “fiscal space” a country has is a judgment call, but it’s safe to say Australia has a fair bit more up its sleeve. The same report said our projected government debt for 2021 as a share of the gross domestic product was about half the average for advanced economies.

But how far should governments go in propping up businesses and jobs that have been destroyed by measures to contain COVID-19? And when should we start to worry about the risks of taking on even more public debt?

So far, Australia’s economy has fared better than most in this crisis. The government rightly responded to the pandemic with one of the biggest stimulus packages in the world, relative to our size, which prevented much economic and social misery.

However, economists are still pretty gloomy when looking at what we’re facing in a few months’ time.

The sheer size of Australia’s stimulus effort, and the fact the spending is concentrated in the six months to September, means that removing it will have a big impact. ANZ Bank has even forecast the economy will shrink in the three months to December because of stimulus being withdrawn.

Business leaders are nervously awaiting this final quarter of the year, with National Australia Bank chief executive Ross McEwan last week supporting targeted packages to support the hardest-hit industries.

Illustration: Simon LetchCredit:

And Prime Minister Scott Morrison has indeed signalled there will be some targeted support for the sectors that have been forced to effectively close, such as aviation and international tourism.

The questions are how much extra support there will be, who will get it, and when does the downside of all that debt outweigh its benefit?

There are clearly limits on how much we can and should borrow, but the view of most market economists is we’re not there yet, especially in an era of ultra-low interest rates. More to the point, attempting to rein in debt through “austerity” would make a bad economic situation even worse.

Independent economist Saul Eslake says one of the key lessons of the aftermath of the global financial crisis overseas was the damage caused by withdrawing stimulus too early. “Germany, Britain and to at least some extent the United States tightened fiscal policy too early in 2010 and dealt their recoveries an unnecessary setback, and we don’t want to do that,” he says.


ANZ Bank head of Australia economics David Plank, who is forecasting a budget deficit of $200 billion for the coming financial year, also says the debt being racked up is worthwhile. “I don’t think a deficit of $200 billion in 2021 is inappropriate. I think what would be inappropriate would be sharply withdrawing government spending,” he says.

Deloitte Access Economics partner Chris Richardson says that with official interest rates at rock bottom and unemployment high, it is a time for government spending to step into the breach. “A given dollar of government spending can do more good today than at any other time that Australians have ever known,” Richardson says.

Importantly, none of this is to say we should be writing a blank stimulus cheque, nor that every business can be saved. Further public spending to get the economy off a “cliff” is a far cry from what proponents of modern monetary theory advocate – expanding the money supply to finance government spending.


It is also a sad reality that many businesses are likely to fail during this recession. It won’t be in the economy’s interests to have a series of so-called “zombie” companies – those that only survive because debt is extremely cheap, but are unable to invest.

Indeed, Eslake points out that part of improving Australia’s low productivity growth will involve allowing capital and labour to move to more productive uses. “We don’t want to adopt a suite of policies that inhibit the movement of labour and capital from low productivity uses to higher productivity uses,” he says.

Australia’s economy still faces a highly uncertain outlook as it tries to avoid the”cliff”, and there will no doubt be many hard decisions facing economic managers in the months ahead. But whether to provide more targeted stimulus to the economy should not be one of them.

Ross Gittins is on leave.

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Canberra mental health patients say they’re avoiding treatment after ‘traumatic’ hospital admissions

The first time Caitlin Amey began hearing things, she called the mental health crisis team in a panic.

“I was told by someone who was on the line [from the Crisis Assessment and Treatment Team] that in order to stop the hallucinations I needed to eat bananas, and that would cure me,” Caitlin said.

“Obviously that was not helpful at all.”

A spokeswoman for Canberra Health services said recommendations to eat food, shower or take a walk were internationally accepted de-escalation strategies.

“There are clear procedures in place to support those in crisis,” the spokeswoman said.

But Caitlin said that was just one of her encounters with Canberra’s mental health system that had ultimately traumatised her and driven her from treatment.

WARNING: This story contains images that readers may find distressing.

Since first experiencing mental health issues at 13, the now 20-year-old has been to several different programs, had multiple admissions at different mental health wards in Canberra and Sydney, and seen a number of health professionals, both public and private.

She described some of those experiences as great, saying staff were amazing.

But she said an admission to the Canberra Hospital soon after she began having auditory hallucinations was so bad that she began to avoid intensive treatment “at all costs”.

A young teenager plays basketball.
Caitlin Amey first started noticing her mental health issues at 13, though it took another two years before she got help.(Supplied)

“Being there traumatised me … flashbacks, nightmares,” Caitlin said.

“At some points I’ll be lying in bed and my entire room will change to [the mental health unit], and I just panic.

After asking to be admitted, Caitlin waited a week as she bounced between Calvary Hospital and Canberra Hospital, before being admitted to the ACT’s Short Stay Unit, a small ward designed for people to stay just a few nights.

“Our meals wouldn’t show up, we would be refused our medication — that was the only admission where that happened,” she said.

Caitlin also raised a serious allegation about a nurse, which Canberra Health Services said they could not find a record of.

A young woman rests her arms on a kitchen bench, revealing scars from self-harming.
Caitlin Amey says despite sometimes being seriously unwell, she has avoided treatment because of previous experiences.(ABC News: Jake Evans)

Caitlin said she was shocked by the experience, and that she raised it with Canberra Health Services (CHS) through a feedback form at discharge, though she did not make an official complaint.

A spokeswoman for CHS said a search found no record of a written complaint or feedback form, and that the directorate had no prior knowledge of it.

“CHS has undertaken a significant investigation to determine if any feedback forms were submitted that canvassed a complaint of this nature. We have not been able to identify any feedback forms to that end,” the spokeswoman said.

“If evidence were to come to light to substantiate allegations of this nature, the appropriate disciplinary actions would be taken.”

The directorate has invited Caitlin to speak to them directly in relation to the incident.

Caitlin has since been in the Short Stay Unit again, and at the Adult Mental Health Unit (AMHU), both times as an involuntary patient.

She said those admissions were comparatively uneventful.

But, like several former patients of the AMHU that the ABC has spoken to, the admissions were such unpleasant experiences that she has avoided treatment in Canberra for fear of being admitted again.

“It’s not like anything particularly bad happened to me, I was never restrained or forcibly medicated or anything, it was just the … isolation,” Caitlin said.

Caitlin said she does not have a vendetta against the health system, and described conversations with caring nurses, and well-run programs — even if those programs did not suit her.

But she said she was speaking out so others who did not feel comfortable standing up knew that they were not alone in their experience.

Staff gave patient’s clothes to wrong person, left him in unsecure room

A couple sits on a park bench, looking at each other with love and concern.
Andy says his “traumatic” experience at the AMHU led to him withdrawing from his wife after discharge.(ABC News: Jake Evans)

Andy is another former AMHU patient who said a “traumatising” admission led to him withdrawing from his wife Sam, and his friends and family.

He first entered the secure facility after being moved from a general ward in the middle of the night, where he was recovering from a suicide attempt.

“It was a bit daunting … they took me in, they took all my belongings, they took my phone charger, so my phone was dead, I had no way to contact Sam or anything,” Andy said.

“It felt more like a prison than anything.”

Andy was in the ward for about a month — but after the first week, he was moved into a room with a broken lock.

“Anyone could have walked into my room at any time,” he said.

“I raised it with staff multiple times, and was frequently told there was nothing they could do about it.

Andy said he began telling doctors that he was “fine” and ready to leave, “just to get out”.

A tattoo on a man's arm reads 'celebrate this chance to be alive and breathing', with his son's name and heartbeat above it.
Andy’s tattoo is a reminder of his son’s life and his own battles with mental illness.(ABC News: Jake Evans)

A spokeswoman for CHS said it was an error made by the maintenance team not to urgently fix the lock, and to allow Andy to remain in the room.

“It is not accepted practice for a patient to remain in a bedroom with a broken lock … Canberra Health Services apologises to the patient for that,” the spokeswoman said.

“Systems have now been revised so that where there is an outstanding maintenance issue like this, the room will not be used.”

Andy’s wife Sam said staff also gave clothes that she had brought in for him to another patient by mistake.

“She was walking through the ward with a jumper on that was two times the size of her,” Sam said.

Fortunately, Andy was able to get his clothes back from the patient.

Andy said the whole experience was so unpleasant he began to hide his mental health issues.

“It got to a point where I didn’t talk to anyone about my mental health because I didn’t want to be put back in AMHU again,” he said.

Worker says some staff ‘disrespectful’, unwilling to be there

The ABC has heard several complaints of patients not getting some medication on time, not being able to see psychologists, patients answering ward phones, and staff ignoring simple requests.

One worker, who has worked in multiple wards in Canberra, said the AMHU was partly staffed by trainees who seemed to be unequipped for the work.

“A lot of them didn’t know how to communicate with the residents, with the patients,” the worker said.

He said some trainees appeared to be there “in sufferance” as part of their training.

The worker was clear that on the whole staff were professional and tried their best, and long-term staff “knew their stuff”.

However, he said some security staff made hurtful comments to patients.

“Some of the things they say to the guys there isn’t great, not very respectful,” the worker said.

Shane Rattenbury speaks behind a host of media microphones.
Mental Health Minister Shane Rattenbury said changes were being made “all the time” and new resources were being added to Canberra’s system.(ABC News: Jake Evans)

Mental Health Minister Shane Rattenbury acknowledged some patients had “dissatisfying” experiences, but said the Government was working to improve the system.

“I would hate to think that people might not seek out treatment, and I would encourage people to keep coming forward, knowing there are new options being opened up all the time as we better understand people’s needs and we put more resources into the mental health system,” Mr Rattenbury said.

He cited a new role to help patients access nurses at the AMHU, who sit behind a glass barrier known within the unit as “the fishbowl”, as an example of the Government listening to patient concerns.

“There’s been significant patient feedback that they feel that’s a real barrier,” Mr Rattenbury said.

“So we have now just introduced a concierge model, where one of those staff members operates outside of that staff area to be a point of engagement.

“That’s the sort of example where [we have responded] to the patient feedback that’s come through and they’re the sort of improvements we need to keep making.”

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