If the definition of an economic recession was two consecutive quarters of downturn than Australia was officially in a recession. It’s first since 1991 which Paul Keating famously referred to as “The recession we had to have.” In that year the March quarter went backwards 1.3 per cent and in the June quarter 0.1 per cent. In 2020 there had been a decline of 0.3 per cent in the March Quarter and the in the June quarter……. 7 per cent. Three times more than the previous record record quarterly fall of 2 per cent in 1974.
A trade surplus and increased government spending had helped as much as it could but a massive plunge in private spending had hit the economy hard. A 12.1 per cent drop in household expenditure and a 17/6 per cent fall in services spending. Many businesses had been shut down for three months or operated within limitations, the accommodation and food sector took a hit of 39 per cent in the second quarter.
The biggest drop in private spending came from a massive 12.1 per cent plunge in household expenditure, led by a 17.6 per cent fall in services spending, as many of these businesses were shut for part of the three-month period and restricted for the rest of it.
Accommodation and food was by far the hardest hit sector, with output down a whopping 39 per cent in the three months to June 30.
Cafes and restaurants that were shut down often have staff that are not elligible for jobseeker or jobkeeper.
The Australian Broadcasting Corporation reported with government payments boosting incomes, less activities and gatherings to spend money and increased uncertainty from the pandemic and the recession were driving people to save at significant rates. Twenty Australian dollars from every $100 earned, a significant increase up from $6 from every $100 at the start of the year.
Given the Jobseeker and Jobkeeper payments were to be scaled back Westpac Bank’s Senior Economist Andrew Hanlan thought this gave people, “a considerable buffer to draw upon in coming quarters.”
Oh really, well thank you Mr Hanlan, thank you very much.
Compared to other countries Australia’s downturn of 7.3 per cent was nothing compared to Spain and the United Kingdom who were both north of 20 per cent. The United States of America was under 10 per cent.
Deloitte Access Economics senior economist Sheraan Underwood drew upon the very clear link between successfully combating the virus and helping your economy to recover.
Monday and another week began in earnest. I was very busy and stressed about my secondment but was enjoying the work.
In the news there was some talk about a proposal that Queensland Premier Annastacia Palaczszuk put forward for the border processing to move south into northern NSW to alleviate wait times and to help those who lived in the border communities such as Coolangatta. She claimed she had suggested this back in March.
New South Wales Premier Gladys Berejiklian had a straight forward response.
There were a couple of a cluster of cases in New South Wales.
In Victoria there were 275 confirmed cases overnight and it was announced that masks were going to become mandatory come Thursday. Students across the state were going back to learning from home.
Federally there were announcements made about changes to welfare.
There are 3.5 million people on Jobkeeper which is a $1,500 payment for workers who are employed but who are not getting any hours from their employer due to the economic shutdown.
After September, Jobkeeper which worked out to $1,500 a fortnight would go down to $1,200 and then on the 4th of January, 2021 $1,000 a fortnight. It would also switch to a two tier system.
Then there are 1.3 million on Jobseeker which was the old Newstart allowance for people looking for work. When COVID and a sharp rise in unemployment occurred there was $550 supplement added to the Jobseeker allowance. That would be reduced to $250 per fortnight in October and continue until March 2021.
The government was hoping that as time went on more and more would be at work as these payments decreased. The debt was increasing and there was certainly reform needed around Jobkeeper.
Yet for those who would struggle to survive with less money this gave them some certainty about what was coming and increased uncertainty about how they would get by.
July 21
A woman out and about garnered a little bit of media interest when she was found walking outside of her local area. But she had a very simple explanation.
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In Queensland on Wednesday, Premier Annastacia Palaszczuk did not rule out further border restrictions even as she called on people to visit the state if they were not coming from one of the declared hotspots.
Facing an election in October, businesses particularly tourism ones were hurting and she wanted to show her support including scrapping of fees for those who run whale watching tours. This would equate to about $6,000 for each operator.
In Victoria there was a growing need to be considered.
40 aged care homes in the state had at least one positive COVID-19 case and over 200 cases were linked to aged care facilities.
Professor Marylouise McLaws, an infection control expert at the University of New South Wales and an adviser to the World Health Organisation noted in an article published by The Guardian that infection control was very difficult in aged care homes.
In Victoria 403 cases were reported overnight with five deaths taking the state’s death toll to 49.
There were 201 Victorians in hospital with COVID and 40 in Intensive Care Unit including four children. Victoria Health Minister Jenny Mikakos advised 20% of Victoria’s COVID patients were under 50.
A man in his 50s was also one of the ones who had passed away.
Premier Andrews advised there 3,630 active cases in Victoria.
Premier Andrews also advised that 9/10 people who were confirmed cases were continuing to move around the community after developing symptoms. Over half of people who got tested did not immediately self-isolate after waiting to get their results.
He also announced a $300 payment that could be claimed by casuals or those with insecure work who needed to self-isolate.
Minister Mikakos said the data showed a quarter of infections from the start of July are young people in their 20s and people over 60 only represented 6%.
On the 23rd of July the World Health Organisation reported globally there had been 15,019,293 confirmed cases with a daily increase of 248,393.
There had been 614,311 deaths with a daily increase of 7,035.
In Australia there had been 12,896 confirmed cases with a daily increase of 468. There had been 128 deaths with a daily increase of two.
In Canada there had been 111,697 confirmed cases with a daily increase of 573. There had been 8,862 with a daily increase of four.
In United Kingdom there had been 297,663 confirmed cases with a daily increase of 751. There had been 41,047 deaths with a daily increase of 17.
Having reached over one million cases on July 17, in India on the 23rd of July there had been 1,238,635 confirmed cases with a daily increase of 45,720. There had been 29,861 Indians die with a daily increase of 1,129.
In the United States of America there had been 3,868,453 confirmed cases with a daily increase of 62,929. There had been 141,479 deaths with a daily increase of 1,042.
The Prime Minister did an address at the National Press Club in Canberra talking about the tough road ahead economically with a plan to stick with the National Cabinet meetings over the previous COAG meetings.
Reform to vocational education was on his mind and bringing unions to the table for industrial reform.
The Prime Minister outlined the road to recovery would be a long one taking between three to five years. The unprecedented actions of Jobkeeper and Jobseeker set in place for a financial quarter would not continue indefinitely with the PM warning “At some point you’ve got to get your economy out of ICU.”
There was no push to have Australia turn more inward, while the Prime Minister defined us as a sovereign trading economy he sought to create an educated workforce that would mean competitive and modern manufacturing, agricultural industries while still trade of natural resources would play a big role.
These remarks were not without context, Australia did call for an independent enquiry into the source of COVID-19 in Wuhan and in the weeks since China has placed tariffs and seen a reduction in importing Australian barley and wheat.
As China has grown into the a economic powerhouse it has started flexing abroad in trade and in military excursions. No different than other superpowers before it but surely any calls that could help in combating this global pandemic should not lead to bullying tactics.
The national leader relayed all the work that had been done to build up medical stockpiles, hospital capacity and testing numbers and contract tracing abilities.
Now here was a mainstream conservative leader steering through a once in a century health crisis, a budding trade war and a looming recession who had outspent all previous Prime Ministers.
The expense the welfare packages running long term came with a hefty price tag. Long term it was just not feasible even for the biggest bleeding hearts amongst us.
Which drove home the gravity of the situation, if Jobkeeper and Jobseeker continued for only the next quarter and the economy didn’t re-open to a certain extent by then…
Then what?
On the 2nd of June, Treasurer Josh Frydenberg told us what we already knew, Australia was in a recession.
On the 26th of May however the Prime Minister was focussed on the positives. Citing that with a hopeful completion of the 3 Step Plan by mid-July for re-opening the economy across the country there would hopefully be 850,000 jobs ultimately restored.
He did acknowledge the idea of flicking a switch and turning the economy back on was simply not plausible.
I will close as I sometimes have with the opening hook of the Prime Minister’s speech that day, designed to draw you in emotionally while he unveils policy.
One could get cynical about these things, there is after all a political purpose behind them. A number of highly paid staff curating and writing the brief and deciding what goes in and what doesn’t make it.
I would remind you that in these words the Prime Minister is talking about real people and in these few individuals he is seeking to talk about all of us and not just Australians but all people.
About people who have lost a lot and the grace and courage they display in these moments that came from within them and lies within each and every one of us.
We will need this courage and grace and so we need these words to be said by our leaders now more than ever and we need to believe in them.
