Not as bad as it seems: Expert busts a common COVID myth

‘People have misunderstood what is happening right now,’ says economist.

Chris Richardson

While Australia has entered its first recession in 30 years, according to one foremost economist, things aren’t as bad as they seem

Deloitte partner and economist Chris Richardson told the Press Club this week that he’s not worried about the economy but believes stimulus policies need to be extended.

Mr Richardson pointed out that, while “incredibly obvious and newsworthy” stories about higher debt are taking up much of the public consciousness, people need to understand that, put in context, Australia may not be in as bad a position as the media would have you believe.

“That’s the point, this is not an ordinary economy. People have misunderstood what is happening right now, and I am desperate to get that across,” he said, adding that while debt has increased rapidly, interest rates have also fallen quickly and should remain low for at least three years.

“That means something really important,” he said.

He added that, even though the government is borrowing and spending heavily right now, “the cost of interest, the amount of interest the federal government is paying right now is headed down …  a share of the economy. In fact, the lowest that we’ve seen in the better part of a decade. Why? Because interest rates have fallen so spectacularly.”

“The defence of our lives and our livelihoods is a lot cheaper; this is a great investment … and it’s a lot cheaper than you think.”

And according to a Yahoo Finance report, Mr Richardson believes Australia is in a good position to cope with the COVID-19 challenge.

“We entered this crisis with a healthy budget and lower government debt than most other nations around the world. And that has been perhaps the hidden asset we noticed the least through this,” he said.

“2020 has been a war for our health. The next war is a war for our jobs. And a war for health has many beneficiaries, but perhaps [mainly] older Australians, we're protecting older Australians. The next battle, the battle for jobs, particularly will be about a battle for younger Australians.”

And though as a nation we may be on the front foot financially, Australians, especially those on lower incomes and who have lost jobs, should still prepare to tough times ahead.

Mr Richardson believes the key to surviving this challenge is JobSeeker unemployment benefits, saying there was a strong case to lift the payments before the pandemic sent one million into unemployment.

The $550 Coronavirus Supplement introduced earlier this year, essentially doubled the fortnightly JobSeeker payment to around $1100.

However, as of 25 September 2020, the government plans to reduce the supplement to $250 per fortnight.

“If it [JobSeeker] goes back to $40 a day, it’s going to be twice as bad because it’s going to be affecting the incomes of twice as many people,” said Mr Richardson.

Australian Council of Social Services chief Dr Cassandra Goldie agreed with Mr Richardson’s point, saying JobSeeker and JobKeeper payments must remain at their present rates, as a “devastating cut” for two million Australian families will send them into poverty.

Mr Richardson said every dollar spent on unemployment benefits now will help the economy.

“And the last point – something that people I think haven't noticed – postcode by postcode, suburb by suburb, town by town, this crisis hit hard where we already had the highest rates of unemployment,” he said.

“We’ve had relatively the most job losses where unemployment was already the highest. That means particular regions are doing it really, really tough, and an extra dollar of unemployment benefit does double duty. It does extra heavy lifting at the moment as the best targeted, most effective regional spending we can do.”

Do you agree that, as a nation, we are fit to handle the challenges presented by the pandemic? Do you agree that unemployment benefits and government assistance should stay at the levels we are currently seeing? What suggestions do you have for coping with COVID-19?

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    COMMENTS

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    KSS
    11th Sep 2020
    11:14am
    Given tbere are already reports of people on Jobkeeper refusing to return to work, and people on job seeker refusing to take work because they are getting more staying at home doing nothing, then no I dont think it should be continued as it is now.

    It needs to be better targetted to those who really beed tge help, those whose jobs will be the last to return for example and people should not be getting more than they would have if they were turning up for their usual shifts. As for the young , they should be bussed out to farmers who need help with their harvests. If those jobs are good enough for young foreign backpackers, they are good enough for the unemployed youth or indeed anyone fit enough.
    Paddington
    11th Sep 2020
    12:04pm
    Some of that I agree with esp the last bit. Not just the youth either. If the youth are in school or studying at tertiary level then exempt them too. For Victoria maybe keep the upper levels until at least xmas. There will always be rorters but you cannot punish all the people.
    johnp
    11th Sep 2020
    12:35pm
    I dont understand re
    "people on Jobkeeper refusing to return to work, and people on job seeker refusing to take work
    "
    Maybe I am wrong but I was under the impression people still had to turn up for work and I havent heard of this being prevalent. Similar comments for jobseeker - I thought they still had to prove they were applying for jobs. Maybe I need enlightening ??
    Farside
    11th Sep 2020
    12:36pm
    ABS reported record new job gains for July, does not sound like people are refusing to work.

    Cherry picked anecdotes of employers struggling to fill jobs should be treated with suspicion. Such stories defy common sense given both Jobseeker and jobkeeper are significantly less than the minimum wage. For a start, Jobkeeper does not give employees the legal right to refuse to return work. Jobkeeper recipients refusing to return to a safe workplace upon lawful and reasonable request to do so can be fired. Employers struggling to fill jobs with the unemployed should have a closer look at the pay and conditions on offer as well as any applicable relocation and resettlement costs.
    Pixter
    11th Sep 2020
    2:49pm
    KSS, your beliefs are deeply flawed, and they fly in the face of Chris Richardson's reasoning, outlined in the article. The employment market has contracted significantly - the jobs simply don't exist and may never return. Covid-19 is essentially forcing the economy to restructure. The goods and services market is shrinking as the populace realises it can live on less. Industries that once thrived may never recover. Other industiries will expand, especially high technology (eg robotics, AI), information technology, and their ancillary sectors - hopefully Australia will capitalise on opportunities. Jobs in agriculture are predominantly casual, short-term seasonal, and prone to uncertainty, being dependent on weather conditions, and exposed to increasingly extreme environmental events. Government spending, particularly on education and reskilling, is needed for the restructuing to proceed smoothly, with minimal disruption from costly and painful economic downturns. As the article explains, every dollar spent will return twice the value, more so in this low interest-rate financial environment. Sadly we have a federal government addicted to the contractionist shiboliths of thatcherism and trickle-down voodoo, where every dollar spent is a dollar wasted.
    KSS
    11th Sep 2020
    5:50pm
    Paddington if you are at school or in tertiary study then you will not be receiving jobseeker or jobkeeper payments.

    Pixter, you have no idea what you are talking about. You keep comforting yourself with the old 'there are no jobs' mantra. JAnd then tell the farmers who can't get their sheep shorn that there are no jobs! Or the fruit farmers who can't get their fruit picked. Just don't start complaining when the supermarkets are empty because the farmers couldn't get their crops in.

    Do a bit more research before you insult others'opinions just because they don't coincide with your own.
    Sundays
    11th Sep 2020
    6:38pm
    Uni students over 18 and working part time can.get Jobkeeper. They shouldnt receive more than their normal pay
    pedro the swift
    11th Sep 2020
    11:21am
    KSS, couldn't agree with you more. I find it specially strange that now with jobs lost, we are trying to import farm workers. Australians who are not working should be told to get out and do what backpackers can do and go work on farms. Just have to make sure conditions and pay is up to standard and noone is exploited.If they dont want to go , cut benefits.
    Farside
    11th Sep 2020
    12:39pm
    "Just have to make sure conditions and pay is up to standard and noone is exploited." is the sticking point. Historically backpackers and temporary migrants have been the ones to worry less about terms and conditions. And of course, during these covid times, closed state borders don't help the situation.
    Sundays
    11th Sep 2020
    12:58pm
    Agree, but isnt the problem that backpackers are paid below award because as a condition of their visas its ok. Likewise Pacific Islanders. We would have to introduce work for.the dole schemes or offer award wages.
    KSS
    11th Sep 2020
    5:54pm
    Regardless, it is better to be working than sitting at home glued to Netflix all day on the taxpayer teat. There have been farmers and orchardists offering over $400 a day for fruit picking and still can't get people to do it.

    I have even considered using my holiday leave to go and help out.
    Farside
    15th Sep 2020
    10:36am
    "Sexual harassment, requests to wear a bikini, being asked to lure other backpackers into exploitative schemes, and an hourly wage of just $2.50 — these are the stories of backpackers working under the Federal Government's visa scheme." Not surprising these jobs are less attractive to many unemployed, especially those whose best bikini-clad days are behind them.

    https://www.abc.net.au/news/2020-09-15/backpacker-farm-workers-speak-of-wage-exploitation/12545294
    Tanker
    11th Sep 2020
    11:57am
    We have been so conditioned to believe that government debt is bad but stems from a particular economic belief that was adopted by Reagan and Thatcher.
    Robert Menzies had a totally different take on that and felt that National Debt was there to serve the Nation and provided it resulted in more jobs giving working people money to spend it would benefit the economy.
    We, and our politicians, need a re-boot of their mind set.
    Paddington
    11th Sep 2020
    12:07pm
    Yes spending is the answer so money needs to go to those who will spend it. This makes the jobseeker payment a good idea to keep up. Jobkeeper is probably a good one too. Wherever the spending is happening now then direct it there.
    Farside
    11th Sep 2020
    12:41pm
    This small minded thinking occurs when you elect numpties that think managing an economy is like running a corner shop or household budget.
    Nan Norma
    11th Sep 2020
    1:18pm
    I wish people would stop assuming everyone on jobseeker doesn’t want to work. A family member suddenly found himself having to apply to Centrelink, thanks to comic-19, for the first time in his life. His ex partner took him to court wanting money. The judge awarded her $1200 a week. Yes, $2400 a fortnight. He gets, at the moment $1100 a fortnight. He would love a full time job.
    Farside
    11th Sep 2020
    5:05pm
    well she will be disappointed then when she gets zip. Why would the court disregard his capacity to pay?
    KSS
    11th Sep 2020
    5:58pm
    I don't think we are getting the full story here. I strongly suspect the legal action was started well before COVID-19 and nothing was updated. Unless the wife could prove he had deliberately stopped work to avoid paying her, the judgement simply doesn't make sense and as Farside said, she is going to be disappointed.

    However, that wouldn't stop him from going bush to help out on a farm and earn more than the Centrelink payment!
    Eddy
    11th Sep 2020
    2:17pm
    Some people just have nasty hearts, they always look for reasons to avoid helping people who have fallen on hard times. This pandemic is like any other disaster, natural or otherwise, where innocent people have been caught up and are suffering. They need our help no less than the victims of bushfires, floods, earthquakes, climate change and droughts. Of course there are always rorters, but that does not mean we have to abandon everyone because of a dishonest few. Supporting people financially in these times will pay dividends in the future when the economy returns to a 'normal' condition. This may be 1-year, 3-years, 5-years or more but nevertheless it is a valuable investment for our people and future generations.
    As I have pointed out previously, the level of government debt at the end of WW2 was more than twice as high, as a percentage of GDP, than the current and projected post-Covid-19 government debt. As we pre-boomers and baby boomers can attest we did not suffer great austerity as we journeyed through our lives. The current generations deserve no less than we received.
    Life experience
    11th Sep 2020
    3:10pm
    Many people are refusing shifts to keep jobkeeper. I know of quite a few people.
    I also know of someone who has given up work as a lifestyle choice and still getting paid.
    Then does cash in hand jobs. Makes me mad.
    Franky
    11th Sep 2020
    4:45pm
    Giving these generous handouts and at the same time imposing massive fines for anyone not obeying orders in regards to covid 19 is the old carrot and stick principle. It works a treat! Overseas there is a massive pushback to this madness, but here barely a dissenting voice is heard and it's immediatly drowned out. I have genuinly lost my business income and am glad for job keeper.
    Farside
    11th Sep 2020
    5:08pm
    There is no entitlement to receive Jobkeeper if refusing a lawful and reasonable request to return to work.

    Not much you can do to stop the cash economy but nothing wrong with retiring. As it is pensioners can earn some extra coin tax free.
    ozjames70
    11th Sep 2020
    10:39pm
    Farside seems to live in a different world to most pensioners. The current OAP is below the poverty level and does not provide a quality level of existence. Sure if you are lucky enough to have assets, you can be selling them down to survive. You eventually run out of assets to sell, which is a lesson various governments are experiencing.
    Not sure where you think pensioners can "earn some extra coin tax free". Every dollar you earn as a pensioner is counted and you not only lose $1 of pension for every $3 you earn, but you lose all the other benefits that make the pension tolerable. By this I mean part of a pension is better than no pension, but it is less than the 1900 legislation promised, mainly due to wealthy politicians messing with it for their own benefit.
    As far as people choosing not to work, maybe it is time business stood up and admitted it has driven wages to an all-time low, executive wages to a ridiculous multiple of the working wage and profits to an obscene level. The collapse of big business has been forecast for many years and it will happen, but greedy executives are fighting to prolong their demise as much as possible, If you don't believe this, just look at the companies that have staff on JobKeeper, who have cut all staff benefits, but posted exceptional profits and continue topay executives at ridiculous levels.
    Farside
    12th Sep 2020
    1:58am
    Ozjames, no disagreement the pension is below the pov level but to be frank I am more concerned with those trying to get by on jobseeker etc, which are even less than the OAP. Has something happened to the work bonus that enabled pensioners to earn an extra $300/fortnight without affecting the pension?

    https://www.yourlifechoices.com.au/age-pension/work-bonus

    FYI, I do live in a different world to most pensioners. No pension for me so I am selling down assets as you surmise.
    Greg
    12th Sep 2020
    9:16am
    ozjames70 - Do you own your home or are you paying rent?
    Franky
    11th Sep 2020
    4:41pm
    The government should come clean and admit they made a huge mistake with these lockdowns. I just saw the QLD numbers yesterday, 990,000 people tested, 1143 total cases and 6 lives lost. You be the judge if that justifies the pain inflicted on public and economic life. I am sure more lives have been lost from suicides, domestic violence etc. Ask at your doctor's surgery and they will confirm that for you.
    Sundays
    11th Sep 2020
    6:35pm
    These numbers show that the border closures in Qld are working!
    Greg
    11th Sep 2020
    6:40pm
    So without these "lockdowns" as you call them what was the case numbers and deaths?
    Maggie
    12th Sep 2020
    12:01pm
    Frankly I wouldn't bet on getting that information from your doctor's surgery.
    Maggie
    11th Sep 2020
    10:21pm
    I thought long ago that if I was 20 years younger I would go fruit- picking rather than ask for a hand out.
    It seems to me that Australians are really resistant to moving any distance from home to get work, other than the fifos of course.
    Most European and Americans are prepared to move to the other side of their countries, or even to the other side of the world if need be.
    Teacher
    11th Sep 2020
    10:52pm
    I don't know much about the legality of Jobkeeper or Jobseeker matters but I am more concerned about the farmers getting the help they need to pick their crops. What we need to be thinking about is 'starvation' because if the farmers can't get the overseas workers because of Covid then it could be a problem to get enough to eat never mind enough money to spend. I think it's up to our younger healthy jobless to get out there on the farms (probably less like to contact the virus out there too) and get into it. Surely it's not hard to learn to pick fruit or vegetables. Think back to the history of World War II. When all the eligible young men went off to war who did all the farming? The women! Because we can't even import from state to state at the moment it's up to us in our own states to help everyone to be able to have the food they are used to such as fruit,vegetables, meat, bread, milk and butter. All these are 'perishables' and we can't rely on frozen dinners for the rest of our lives. Even those won't be available unless the farmers get some help. So what, if you're not as comfortable out in the dust and flies as you would be in front of the TV! Would you rather be isolated for 14 days in a hotel room doing nothing or getting some fresh air, very fresh food and good companionship with the 'back road' communities? Of course, the farmers would have to play fair too and pay standard wages and provide decent accommodation and living conditions. Tnere is a type of security already established to check on these things for the overseas backpackers when they come in on a working visa so something like this could apply to our own people.
    You never know! If you're female the "farmer might take a wife".
    Maggie
    12th Sep 2020
    12:04pm
    Unfortunately one of those farmers is facing charges of rape - a far cry from the TV show about farmers wanting wives!
    Fair Dinkum
    12th Sep 2020
    5:02pm
    Yes, it would be hard to live on $40 per day but they don't have to for those that can they should get off their backsides and go and help the farmers out with harvesting their crops there is a large number of people that can do this work. I believe there are people required in the shearing sheds as well. So for those that can stop your winging get out there and have a go may even make you feel better
    Farside
    13th Sep 2020
    3:37am
    And this is why you have to wonder why we tell our kids the jobs of the future are in STEM based occupations. Seems not if unskilled fruit picking, casual rural jobs, hospitality and like is the best work they can look forward to.
    Maggie
    13th Sep 2020
    9:36am
    Farside,
    It maybe the best for now,and they should take pride in keeping the farmers going.
    No-one has suggested it's forever.
    Incognito
    13th Sep 2020
    7:12pm
    Yes it is going to make a big difference for those already struggling, worry about rent and keeping food on the table and paying bills has been eased for many. Don't forget those on Youth Allowance and Austudy, who have had to spend more money on internet usage to study from home.


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