Canberra Report - Successful Businesses Will Rebuild Our Economy - Wednesday, 5 August 2020

Canberra Report - Successful Businesses Will Rebuild Our Economy - Wednesday, 5 August 2020 Main Image

By Joel Fitzgibbon

05 August 2020

Unfortunately, COVID-19 is still with us, hanging over our heads in the most threatening way. Not one of us been unaffected, just some more than others. The virus has changed both the choices we face and our behaviour. And while we’ve all seen some unfortunate exceptions, it hasn’t shaken our trust and faith in one another.


Whether COVID-19 has strengthened or further eroded faith in our governments, remains to be seen. Sadly, despite the longevity of the crisis, these are early days. Sure, if things go well and the reappearance of the virus is successfully slowed, we may soon be through the health crisis. But unfortunately the economic impacts will be with us for many years to come.


At the risk of sounding like a prophet of doom, we need to be realistic about what’s ahead and what will be needed to mitigate against the consequences. The Government’s response to COVID-19 has been far from perfect. Paying people three times more than they were previously earning, and the doubling of the unemployment payment rate, made little sense, but it kept employers and employees together and injected much-needed cash into our economy.


The Government has now recalibrated and extended the support payments beyond September and that’s a good thing. But alone, those support payments won’t shield us from severe economic pain. Indeed, the support payments may have had the unintended consequence of drawing us all into a false sense of security.


After September, not only will Jobseeker and JobKeeper payments change, but mortgage payment holidays and changes to insolvency rules will also come to an end. Sadly, many Australia families will be in no better position to honour their mortgage payments than they were pre-September. The insolvency rules have allowed corporations to trade even though they are not confident they have the capacity pay their bills. When this exemption ends, many businesses will have no choice but to call in the insolvency practitioners.


All of this underscores the need for governments to be thinking more deeply about the road ahead. Too often we hear politicians talking about a “re-shaping” of the economy. Sadly, too many of them seek to use COVID-19 to argue the righteousness of the policies they’ve been promoting for years but have failed to sell to the community. This is obviously the wrong response.


What we need now more than ever is a “back to basics” approach. We need government to identify the industries which have been most resilient during the pandemic, and to build on their strengths. Removing unnecessary red and green tape can be done quickly and without any cost to taxpayers. Government fees and charges can be suspended for industries capable of bouncing back quickly. Our local Councils are ready and able to spend money on local, job-creating roads, sporting and recreational facilities projects. We should be funding them.


Governments can’t just keep borrowing and spending money, there is a limit. It is necessary to ensure every dollar spent is a dollar well spent and to remember, spending less could cost a lot more if unemployment queues grow much longer and tax revenue further. No one is pretending striking the right balance is easy but it’s a balance we must get right.