Brand Australia spotlighted by COVID-19

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[The Australian] Government has intervened with good grace and understanding and has done so in a constructive way.

Richard Gibbs View Profile

Effectiveness of an unprecedented increase in Government direction and intervention also highlights Australia on the global stage, contrasting with the US and UK. Our state leaders are working collectively under the new National Cabinet model, while the White House is in the process of rallying US states.

Urbis’ Chief Economist Richard Gibbs stated, “[The Australian] Government has intervened with good grace and understanding and has done so in a constructive way.” In return, Australian households and businesses have accepted the step change in governance, supporting institutions behind the nation’s economy. “This is something international investors look for,” said Mr Gibbs.    

It is also no small feat that Australia is facing the pandemic with 30 years of uninterrupted economic growth, placing Government in a resourceful position. During the last three months of the 2019/20 FY, Government deployed $289 billion (around 14.6% of GDP) in either direct fiscal spending or balance sheet support to cushion the blow of COVID-19. “Yes, it is back to debt and deficit as the new reality, but Australia has a wonderful capacity to do this without creating a debt crisis,” said Mr Gibbs.

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While Government assumes unemployment rates will peak in this current quarter at 9.25%, we will most likely reach a higher unemployment rate in 2021 as more businesses fail and people move from job keeper to job seeker.

Richard Gibbs View Profile

Despite Australia’s relative position, now is not the time to rest on our laurels and wait for the pandemic to pass. Persistently high unemployment rates pose a significant threat to the nation’s recovery, especially given Victoria’s recent move to Stage Four restrictions and an increasing number of COVID-19 cases in NSW. “While Government assumes unemployment rates will peak in this current quarter at 9.25%, we will most likely reach a higher unemployment rate in 2021 as more businesses fail and people move from job keeper to job seeker,” said Mr Gibbs.

Population growth has also been key for Australia’s economic growth to date, but with closed borders reducing net overseas migration, the source of 65% of the nation’s population growth for the last five to seven years has been eliminated. According to Government, net overseas migration will fall from 232, 000 in 2018/19 FY to just 31,000 in 2021/22 FY. The lifting of border restrictions in accordance with the three-step process Government announced in early May, which would deliver an additional $2 billion per week to the national economy, is no longer a reality.   

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one of the unexpected dividends of closed borders is that we have to do more with our own human capital.

Kate Meyrick View Profile

Now is the time for Australia to ensure a single-dip recession is the harshest economic blow dealt by COVID-19 and galvanise a domestically driven economy to shine even brighter on the global stage. In the absence of being able to continue importing certain labour skillsets, a focus on the education and training sector, including support for STEM outcomes, alongside investment in job trainer and job maker, will prove beneficial both in the short and long-term.

Urbis Future State Director Kate Meyrick observed; “one of the unexpected dividends of closed borders is that we have to do more with our own human capital.”

Another significant opportunity to evolve is presented by investing in construction and development to redefine our urban landscape. Internal demand for housing was already shifting pre COVID-19, with regional Australia experiencing a net inflow of 65,000 people between 2011 – 2016. When the Census was conducted in 2016, one third of people were working from home in some capacity and had greater freedom to roam for cheaper housing prices and enhanced quality of life.

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this change may not be permanent on a full-time basis, but COVID-19 has certainly accelerated lifestyle trends.

Nathan Stribley View Profile

At present, approximately 50% of the population are working from home, according to ABS data. Urbis Director Nathan Stribley stated; “this change may not be permanent on a full-time basis, but COVID-19 has certainly accelerated lifestyle trends supporting increased demand for regional Australia, and the revitalisation and economic stimulus opportunity that presents.”

With Australia’s young and vibrant economy, COVID-19 may have simply “put a lightning rod underneath the focus on best use of our human capital and urban space,” said Mr Stribley.