It was encouraging to see our growth numbers for the September quarter released this week, (technically) spelling the end of Australia's worst recession since the Great Depression of the 1930s.
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GDP expanded by 3.3 per cent through the quarter (the largest quarterly increase since the March quarter 1976) compared with a drop in the June quarter of 7.0 per cent.
Without the impact of the second wave of COVID in Victoria from July, the increase in the quarter could have been more than 4 per cent.
Naturally, the Treasurer and Prime Minister were euphoric with the result. But, I fear, somewhat premature in their celebrations.
It is still a very open question whether this is the beginning of a robust recovery, or a period of significant uncertainty.
The virus has only recently been contained - mostly because we have been able to keep our international border effectively closed, and have been able to dramatically improve our control of the rate of infection through more effective contact tracing, maintenance of social distancing and so on.
On the positive side, a vaccine will be deployed through 2021, which will probably significantly reduce deaths but may not do much to reduce the possibility of infection.
However, the Morrison government hasn't yet embarked on a broad-based, longer-term recovery strategy. And we are yet to experience the full effects of the removal of JobKeeper, the reduction in JobSeeker, the removal of a host of other industry and liquidity assistance, mortgage and rent deferrals, the reapplication of bankruptcy and insolvency requirements and so on.
The Reserve Bank and the government have warned that it may be a bumpy ride over the next couple of years, with unemployment and underemployment sticking well above pre-COVID levels and wages remaining very flat for several years to come.
We also cannot ignore the continuing parlous state of the global economy, with now a genuine risk of double-dip recessions in the US and Europe, as the effects of the lockdowns and other policy responses to their second waves of COVID take effect.
Much of our government's enthusiasm has been based on the rebound in consumer spending, and the recent pick-up in consumer confidence. However, it would be wise to be cautious about whether this will be sustained as those benefits are removed.
It should be recognised that although the household savings rate fell a little in the September quarter, it is still very high - consumers are being careful, concerned about the security of their jobs, or their capacity to get new jobs.
This is especially so given the record levels of household debt, still expanding, and near the highest in the world.
The government is relying on a transition by business to pick up the slack, and to preserve and create new jobs, as the government's direct support is phased out. This is a punt!
Although the states have also initiated considerable increases in their spending, there will still be a need for more federal budgetary stimulus to ensure that our recovery from the recession is sustained.
With 2021 an election year, perhaps as early as September, expect the May budget to deliver this, when the government will have a much better idea of the actual impact of reducing/terminating its many concessions and benefits.
However, as I have argued many times in this column, an effective recovery strategy presents a unique opportunity for genuine structural reform.
Broad-based tax reform and other alternative means of funding its activities need to be investigated as a matter of urgency, especially recognising the now monumental debt burden for future decades.
Productivity enhancing, infrastructure investments, perhaps co-investing with our cashed up super funds, should be pursued, including affordable housing.
Most important, Morrison should accept the imperative of an urgent transition to a low-carbon Australia.
Unfortunately, we are widely identified as a conspicuous global laggard.
This will only get worse as Biden rejoins the Paris Accord, and drives global competition in emissions reductions.
By not having moved decisively over the last several decades, we have squandered many leadership opportunities, many hundreds of thousands of jobs and billions of dollars of investment and growth across all key sectors - power, transport, agriculture, buildings and manufacturing and industrial processes.
This is the key to a significant and sustainable recovery from this recession.
John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.
