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A lucky country says goodbye to the world’s longest boom

Australians seeking government aid waited in line in Sydney on Thursday.
Australians seeking government aid waited in line in Sydney on Thursday.Matthew Abbott/New York Times

SYDNEY — The line for unemployment benefits curled around the block in an upscale neighborhood of Australia’s largest city, with officially prescribed wide distances between everyone in need.

There were restaurant workers in masks who had spent decades jumping from one hip hangout to another. An immigrant whose paychecks had risen as reliably as the sun. And a manager of event venues wearing $500 boots who had not worried about work since the 1990s.

In a country where the last recession predates the birth of the web browser nearly three decades ago, the coronavirus is ripping away any pretense of economic exceptionalism and shouting to the nation that its days of exuberance are over.

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“It always felt like if you work hard and put in the hours, you can get whatever you want,” said Milena Molina, 45, the manager of a law firm who was laid off last week for the first time in her career. “Now it’s just uncertainty. It gets worse every day.”

Nearly every country confronting the coronavirus pandemic sees a recession in its future. A staggering 3.3 million unemployment claims were filed last week in the United States alone. Economists are predicting that the damage to the global economy could last months if not years, despite bailout packages and massive stimulus efforts like the $2 trillion intervention approved by Congress this week.

But the havoc inflicted by the virus is delivering a special psychological blow in Australia, a country less familiar with declining fortunes and dim prospects than almost any other.

Until very recently, it was the land of a forever boom, with 29 years of uninterrupted growth. Immigration, rising trade with Asia — especially exports to China — and careful monetary policy kept the country growing even through the most challenging moments of the global financial crisis.

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The coronavirus, though, is a force unto its own, and it is overwhelming even the strongest and most privileged of countries. Australia, along with many other parts of the world, has come to a virtual halt, shuttering its borders and restricting domestic travel. Even though the country still has a relatively low infection count, with around 3,000 confirmed cases, its two largest states, New South Wales and Victoria, are under lockdown orders for all but essential services.

Every day brings another round of huge layoffs. On Thursday, Flight Center, a major travel agency, fired 6,000 people. Two of Australia’s largest retailers also said they would close for at least four weeks, leaving another 15,000 people out of work — on top of tens of thousands more from smaller businesses, many of whom have never been unemployed.

Before the coronavirus, about 700,000 Australians were receiving unemployment benefits, known as job-seeker payments. Over the next few months, some economists say, that number could jump to 1.7 million — and the country’s social safety net is already buckling under the load.

Prime Minister Scott Morrison effectively doubled welfare payments with a coronavirus supplement in an aid package that was announced Sunday night as the government also instituted a broader shutdown of most businesses.

On Monday, the website where people can sign up for benefits crashed. Although the site’s capacity has since been tripled, lines at Centrelink, which manages government aid, have become symbols of a new era, with hundreds of people showing up before sunrise and waiting for hours outside drab offices that many of them used to barely notice.

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The newfound demand has produced a flood of complaints as Australians unfamiliar with welfare suddenly discover all the hurdles of identification and paperwork.

“The story here is not that the government treats unemployed people as a subclass, an afterthought — that’s old news, the daily reality for decades,” said Jeremy Poxon, a longtime anti-poverty advocate, on Twitter. “The story here is that, now, they’re finding it hard to get away with it.”

On Tuesday night, Morrison pleaded for patience.

“We are deeply sorry about this,” he said, adding: “Everyone is doing their best. What we’re dealing with is unprecedented.”

Warwick McKibbin, a professor of public policy at the Australian National University, said the aid package and the apology both signaled an ideological shift that points to the severe alarm caused by the pandemic.

Morrison’s conservative party, known as the Liberals, has often criticized the stimulus package produced by a center-left Labor government during the 2008 financial crisis, arguing that it was wasteful and unneeded.

Now the party of austerity is actively promoting an aid package that amounts to 4 percent of the country’s gross domestic product, slightly less than Labor’s previous package, and more stimulus is expected.

“What’s notable is that no one is saying these are risks, that the market has to solve everything,” McKibbin said. In the United States and in other countries, too, he added, a greater acceptance of managing capitalism with government intervention may be emerging.

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But it is far from clear whether what has been produced so far will be enough.

Economists are predicting that unemployment in Australia will spike to anywhere from 10 percent to 25 percent in the next few months, a jobless rate not seen in Australia since the Great Depression.