Economically speaking, we're well and truly in the eye of the storm. All is calm for the moment, but come October, when subsidies and loan deferrals come off, we will be in more tempestuous conditions. Decisions made now will decide whether we emerge intact.
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Many of us are back to a sense of normality; we're out and about, back at work and, most disconcertingly, spending large.
Industry Super Australia has estimated that the government's move to allow early access to superannuation has seen 500,000 (mostly young) people withdraw nearly all their savings.
And an analysis of anonymised bank transactions, by economists at AlphaBeta Advisors, recently found that 64 percent spent the money on more discretionary items like clothing and gambling. On Thursday Afterpay shares were up 5.7 percent to reach a record high of $65.80.
All this suggests that right now we are in a confidence bubble that in large part relies on how many jobs are propped up by the $1,500 per fortnight JobKeeper subsidy.
Of the Illawarra's 147,000-strong workforce, 10,500 registered for JobKeeper in April. On top of that we had 15,000 Newstart recipients pre-pandemic whose payments have doubled and would now be receiving JobSeeker payments of around $1100 per fortnight.
Obviously that number will have grown, since there were 7,400 fewer employed residents in the Illawarra at the end of May.
There is no doubt that JobKeeper has kept our economy more buoyant - and unemployment lower. We released findings of our state-wide survey yesterday that indicates two in five businesses would have closed if it weren't for JobKeeper.
As Assistant Treasurer Michael Sukkar recently told Illawarra First members, JobKeeper alone comes at a cost to the federal coffers of $5 billion per week. So in short, he's disinclined to extend it.
But the Government needs to think carefully about how it winds back JobKeeper, which should be tapered over time, and better targeted.
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Tapering would extend the subsidy past the legislated 27 September deadline so that our artificially-inflated economy doesn't crash and see widespread business closures across several weakened sectors.
The problem is that will cost too much, and that is why savings should be found by better targeting it. We know which sectors have been hit hardest, and our survey revealed those that would be the least likely to be running post-September; accommodation and food services and arts and recreation services foremost amongst these. A tapered JobKeeper could also be targeted to further support sectors at greater risk and even by regions that have been hit the hardest.
The federal government is actively considering what to do about both subsidies, but shrewdly delayed its mid-point review until after the Eden-Monaro by-election on Saturday.
Besides this, there is far more to be done to prepare our economy to emerge from the pandemic. The business community wants to see transformative public policy and thinking, the kind that will kickstart our economy, improve the efficiency of markets, and provide for greater economic opportunity and growth.
Regions with significant commuting populations like the Illawarra, Central Coast and Western Sydney are actively seeking opportunities to convert this lost travel time by creating opportunities for residents to work remotely from the city; whether by working from home arrangements or hubs.
We say that government can lead the way with its employees, and the private sector can follow suit - and there will be strong internal demand for this now that many have had a taste of telecommuting.
It is also time to evolve our inefficient and moribund tax system. This week the NSW Government landed its Tax Review, which proposed the abolition of stamp duty in favour of a land tax, and the overhaul of payroll tax to stop punishing employers for creating jobs. This is something we've long called for, and now needs to become part of National Cabinet discussions.
The Illawarra has a significant natural advantage in its mining and steelmaking sectors, yet these both are hampered by glacial approvals processes for coal mines and extensions and a need for greater uptake of Australian steel in civil construction.
Finally, infrastructure remains the best way to kick our economy along in the short-term while improving its performance for the long term. There is still work to be done in our region to improve major road and rail networks that contribute to the state and national economy.
The Mount Ousley interchange project is needed to remove a dangerous bottleneck in our state's coastal road network. And we are progressing our campaign to have Picton Road upgraded to motorway standard so that we can better access jobs in Western Sydney, more safely and more efficiently.
As in all crises, it falls to government to make vital decisions that will shape our recovery.
The decisions on JobKeeper are important, but transformative thinking in these other areas is required for us to emerge from COVID-19 as an improved economy and society.
Adam Zarth is the Executive Director of the Illawarra Business Chamber and Illawarra First
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