What our post-COVID world will look like

JD: And on YourLifeChoices podcast Mind Your Own Retirement we are going to talk finance, we have Dr. David Haywood from the public policy at RMIT University. Let me give you a little bit of background on David first of all. Now David is an economist and was, until recently, the director of the Victorian Council of Social Services, RMIT Future Social Service Institute, before that he was the dean of RMIT School of Global Urban and Social Studies for seven years. He’s undertaken extensive research around the funding of social services and social policies, and a regular media commentator on budgets and policies. David do you do your own tax?

DH: No, I don’t actually John, I’ve got other better things to do.

JD: Man, I feel sorry for the guy who does it because you’ll be going ‘hey hang on what’s that!’

DH: I do sound very busy, don’t I.

JD: You do, and obviously you’re very well experienced and beautifully versed do be able to talk about post pandemic policies when it comes to some of the biggest changes in our economic world. I was wondering, there’s so many questions, but can you give me say the three big changes you see after coming out of the COVID-19 lock down and this incredible time we have.

DH: Look I think that the big assumption there John, is that we actually get out of it. And unfortunately, until they develop a vaccine it’s not certain we will. Remember the history with pandemics is that there’s quite often a second wave that can be worse than the first. Let’s hope we get through it. Assuming we do get through it, and that’s going to take some time, I think that the three big issues that we’re going to have to grapple with: Number one is that terrible problem that we’ve been dealing with for the last 30 years, it’s rising inequality. Now there’s lot of reasons why that worries me but speaking with my economic hat on – once too much of income gets concentrated in the hands of too few, you get too much saving and not enough investment. Interest rates stay low, we don’t get enough investment and so economy stays flat. It’s a paradox of increased wealth and concentration of income, number one is inequality. Number two, I think an issue that we’re going to have to deal with is too little competition in important parts of the private sector, and you might have noticed over the last five or six years that every so often the ACCC, the Australian Competition Commission, takes companies to court arguing we need more competition not less of it. And unfortunately, in the major cases they have a track record of losing, so we end up with fewer companies. Post coronavirus think about airlines, we still don’t know what’s going to happen with Virgin. So, I’d like to see more competition and a stronger effort by our politicians to make that a top priority – get more competition in the economy, which will make a more dynamic economy. And the third one, which is really worrying me, it’s probably top of my list actually is…

JD: Are you going to say unemployment?

DH: Well I have placed unemployment right up there with inequality is the top consideration, I mean unemployment is going to stay high for a couple of years there’s no way it’s going to come down. Now the critical question is how high it will stay post coronavirus, particularly if the federal government gets rid of, or winds back, the job keeper and job seeker payments. Big questions to ask. But my third one is actually, kind of wraps up the other two, it’s about the fragility of our democracy. With the spread of outlets where people can pedal thoughts and fake truths… We don’t have a mechanism for one truth, where we can squabble over what the truth is, but we’ve got all these alternative voices going out and there’s mad stuff that’s happening where people are marching, as we saw in Melbourne the other day, pedalling ridiculous ideas and  we don’t have the means of stopping it. So, number one – the first thing I’d do on that, I’d stop people being able to go on the internet and make false identities. Make it a bit as hard as opening a bank account, so if someone says something that is not true, we know who it is, and we can hold them to account.

JD: Well I guess the civil libertarians would be right onto you for that one, wouldn’t they?

DH: Not all of them because unfortunately what’s happened is, they’ve gotten right out of control. So, if you have a look at what’s happened with people using the internet with false identities, they troll, and they troll mercilessly, women in particular. You ask women what they feel about it, and how come people can do on the internet what they can’t do on the real world? They couldn’t get away with that sort of behaviour if they had to use pen and paper. So, let’s try and even it up, try and restore the integrity of our democracy, which you know right now our democracy is at lowest point since the second world war.

JD: David Haywood is the professor of public policy of RMIT University. David, winners and losers, who are going to be the winners in the next say 24 months, and who would going to be the big losers just to distil it down?

DH: Look, big losers undoubtedly are going to be the people who are unemployed and that looks like it’s going to fall disproportionately on the young. Because of the hit that cafes and restaurant and bars have taken and that’s not going to let up soon unfortunately John. That’s going to be with us, you’re going to have all those people who depended on those sort of jobs, one, two or three jobs, their fight is going to be tough for the foreseeable future. I think the winners are probably going to be the same people who have always won, the people that have got the income and the wealth. If you’re actually employed by them and you’ve got a reasonable job, or you’ve got a very good job, prices are actually pretty low, interest rates are low, it’s easy to borrow money. So, if you’re in stable work, in good work, or you get a high income, it’s never been better because you don’t have to worry about inflation pressures.

JD: The community within YourLifeChoices, of course, is made up of a lot of retirees. How do you think our retiring friends would be most affected, and is there time to claw back some of those financial loses that they’ve incurred?

DH: Look, I think that retirees are going to cop it because interest rates are going to stay low. You know, some analysts are actually talking about negative, genuinely negative, interest rates imagine that! Imagine trying to get your head around that concept. So if you’ve got investments and you’re dependent on that income coming in from interest rates – it ain’t going to be there, and that’s going to be for as long as in the inequality persists, we’re going to see these terribly low interest rates which is going to make it very hard for many of these retirees to cope.

JD: Last question for you David, you’re now the king of the mountain and you have a magic wand, what is Dr. David Haywood’s top priorities as king of Australia?

DH: King of Australia, well actually the first one would be to have the government focus much more on what I have called the care economy. You know what we have done for too long? We have focussed our government investment on infrastructure, things that appear to be durable and long lasting, but you know what’s the most durable and long-lasting thing you can do? You can care for somebody who’s fragile, somebody who needs support, could be somebody who is a victim of family violence. You invest in those people, and you ensure that not only their lifetime is going to be better but their children’s lifetime. Or if it’s about your parents, if their cared for well in an aged care facility, or if it’s somebody with a disability. I’d love to see our government invest much more in the care economy, less in infrastructure, improve pay, conditions and training and get it right so it’s a great place to work, and we know those levels of care are the highest we could possibly imagine. Giving that genuine reason to return, not just an economic return but a social return. I think that would be fantastic if we did that, and we become less fixated on wealth. You know, we’re spending 90 billion dollars on new submarines and most of it is not going to stay in Australia because they’re being built by an overseas agreement. More on the care economy.

JD: It’s defines us as a society doesn’t it?

DH: It does indeed, you know what I reckon one thing that this coronavirus, one of its legacies, I think people are going to really get that, and they’re going to think ‘yeah, you know what, for too long we’ve undervalued our health care workers, our care workers generally.’ Look at all these royal commissions at the moment John, going into aged care, disability, family violence, and they’re all telling us the same thing – we’re not spending enough where it matters most. If ever there’s going to be time to get our priorities right, this is it.

JD: David, it’s been fascinating talking to you and thank you so much for giving up your valuable time for Mind Your Own Retirement and we hope we get to talk again. You be safe through this incredible time.

DH: You’re most welcome John, thank you very much for having me.

Written by YourLifeChoices Writers

YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.

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