Matters of Interest

Coronavirus

The Hon. D.G.E. HOOD (15:23): I rise today to speak about the economic impact of the coronavirus restrictions in Australia. I think it was the Minister for Health and Wellbeing who said in question time today that this is not merely a health crisis, it is also very much an economic crisis. The Morrison government recently revealed current restrictions to delivering a $4 billion hit to the economy each and every week. The Prime Minister has urged Australians to get back to work at their offices if it is safe to do so, or at their normal workplace where it is safe to do so, as the national cabinet continues to work on lifting more lockdown restrictions.

Treasurer Josh Frydenberg, an outstanding Treasurer I might add, outlined last week in a speech to the National Press Club the growing cost of closing restaurants and retailers and keeping workers quarantined at home has forecast to hit a very substantial $50 billion. For every extra week current restrictions remain in place, Treasury has estimated a $4 billion reduction in economic activity due to reduced workplace participation, productivity and consumption.

The fact remains that the longer people are unemployed the harder it is to get a job. In the early 1990s the unemployment crisis resulted in a 5 per cent increase over three years, but it took seven years to get back to its pre-crisis level. This was, as the Treasurer described, unemployment going up the elevator and coming down by the stairs.

The Australian response in containing the virus has been quite remarkable, and in many ways the Marshall government has helped South Australia lead the way in a national response, something of which I believe as a nation and certainly as a state we can be very proud. As a result of all this, we are well placed to bounce back from COVID-19 once the true recovery or rebuilding phase commences.

With a national unemployment rate forecast to double to around 10 per cent in just three months, this underlines the importance of getting people back to work and back to their activities as soon as possible to avoid long-term economic and social impact from the high unemployment rate that will result. The national economy is on track to enter its first recession since the 1990s, with forecasts of an economic contraction in the June quarter. GDP is expected to fall significantly by around $50 billion, or some 10 per cent, in that quarter.

Notwithstanding that, Australia's success to date in terms of our health response and the unprecedented scale and scope of our economic response, economic indicators are going to get considerably worse in the period ahead before they get better. This is accepted and understood. The hardest hit sectors, like retail and hospitality, are among our biggest employers, accounting for more than two million employees between them. Despite the panic buying of household goods, Australia's credit card data confirms that spending has been substantially decreasing.

The most recent credit card data from the major banks indicates that spending on arts, recreation, accommodation and food services was down some 60 to 70 per cent in late April, compared with the same time the previous year. Despite the record increase in retail trade in March due to panic buying, overall consumption, according to the National Australia Bank data, has fallen some 19.5 per cent since the start of the year. The good news for South Australians is that the declines, whilst being across all jurisdictions, are such that we have fared substantially better, with a fall of 16.8 per cent.

The global economic shock the world continues to endure is comparable, indeed worse, than the global financial crisis. It is, however, reassuring that national cabinet has indicated that it will continue to consider more opportunities for easing restrictions, building on decisions already taken to date, such as around elective surgery, or in some states limited gatherings and visitations.

An essential part of the back-to-work strategy has been the reopening of schools, a measure the Marshall government successfully implemented at the start of the current school term. It must be noted that the response of the South Australian public to the tough social distancing measures, coupled with the world-leading coronavirus testing regime implemented by the state government, and the outstanding work of SA Health and our dedicated doctors, nurses and allied health professionals, has seen South Australia well placed to bounce back from this unprecedented pandemic.

This is a very serious challenge to our economy, which is one we have not seen for many years, maybe never seen at some level. It will take everything we can muster as a society to team together in order to overcome the economic hit, but it is important to note that our state is as well placed as anywhere in the world, both in terms of dealing with the health crisis and dealing with the economic crisis. If you need to be somewhere to face this pandemic, South Australia is best place to be.