Economic Response – Australia
COVID-19 Economic Response: Australia
Australia was the first country to declare COVID-19 a pandemic and against strong criticism one of the first countries to close its borders. First to China and then the rest of the world. The first economic impact was clearly going to be tourism especially in Queensland and the aviation sector and the Government was quick to respond.
The national health of Australians and the health of the Australian economy were high priorities to the Australian Government from the outset of the coronavirus epidemic. The quick response, the cooperation of state and federal governments, the bold and innovative packages and the multi-level, scalable and widespread support was an approach admired by many other countries.
Initial support for key sectors such as aviation was quickly followed with increases to the Jobseeker payments and handouts to pensioners and welfare recipients and a very large stimulus package for business which included cash payments, instant asset write-offs and other measures.
As thousands of businesses in sport, hospitality and entertainment were then forced to close as the first stage of social distancing, the unemployment queues grew along with the voices calling for a UK style approach which was an 85% wage subsidy across the board.
The government resisted copying other countries and announced a massive a multi-billion dollar JobKeeper program which was met with great relief. But issues requiring attention continued to emerge on a daily basis and the government responded fairly quickly with measures to address each one with an individual approach. The Reserve Bank injected billions into the economy with monetary policy and a further reduction to interest rates.
Commercial and residential tenancies was a major concern and after much discussion with stakeholders a code of conduct was announced for commercial tenancies. Residential tenancies are under state jurisdiction with individual states addressing the matter in differing ways.
Further announcements on measures, funding boosts, waivers and deferrals seemed to follow on a daily basis. At the same time, each state government added their support with programs and measures suited to their particular jurisdiction.
Will it be enough? That may be another billion dollar question. Some of the funding from the key programs is still to flow to businesses, with a 5 week lag between announcement and actually receiving any money. Too long for many businesses which have had to close the doors, possibly never to reopen.
But as signs that the policy of suppressing COVID-19 began to emerge and Australia genuinely flattened the curve, varying opinions on ‘where to now’ and how lifting restrictions would affect the economy and the long-term impacts were being expressed. Some economic analysts are predicting unemployment to tip 10% even in a post-COVID-19 economy and with international travel and border re-openings flagged as last on the list to be lifted, the tourism sector is definitely going to require longer term support.
Who is going to pay for all this? The other multi-billion dollar question. While Australia has been lauded for their economic response to COVID-19, many are wary of how the mounting debt is going to be repaid and if the legacy of short-term gain for many may mean long-term pain for many more.