June 19, 2020
Source: The Daily Telegraph
Author: Gabriel Metcalf
Date: 18 June 2020
Australians are feeling the chilly wind of a recession for the first time in a generation. But even in a global downturn, Australia is uniquely placed to ride out the recession and come back even stronger. Here are four ideas to make that happen.
First: embrace domestic tourism as a replacement for international tourism. There will be no global travel for the foreseeable future, aside from perhaps to New Zealand. Our tourism sector, making up more than 5% of exports and forming the economic and employment heart of many regional communities, is at genuine risk of disappearing. However, the number of Australians who would normally travel overseas on holiday each year — 9,917,000 — is larger than the number of international tourists who come here— 9,343,600.
The solution is clear — invite Australians to rediscover their own country. The entire “experience sector” from bars and restaurants to museums and galleries, along with every venue that normally relies heavily on international tourists, will have to think about how to adapt its offering to entice Australians to invest their time and money closer to home. But this idea will be met with much good will: we are all itching to get out and see whatever we can see.
Second, use Australia’s reputation for competent good government to recruit investment and talent. Australia has become one of the most admired countries in the world because of its success in managing Covid, which gives us a chance to demonstrate the virtues of competent government. We are a safe bet for companies to invest their cash, particularly in fast-growing sectors like advanced manufacturing and Medtech.
Where other countries have been driven further apart by political polarisation, Australia has been able to unite behind a shared purpose and follow the scientific advice. Australia is one of the best places in the world to live. It has political stability and world-class healthcare. Simply put, it is less risky than many other places for business investment and companies looking for good places to expand, whether for Asia-Pacific headquarters or for new manufacturing facilities.
Third, there is a similar opportunity for attracting the best global talent to Australia. Immigration is projected to decline by 85%, which will ripple through the entire economy, but that is not destiny. The Covid-moment provides Australia with an opportunity to have a more strategic immigration policy that proactively recruits a smart next generation of entrepreneurs. Many will be drawn to the new tech precincts popping around across Sydney, but we need to encourage them to come.
Fourth, make reforms to unleash innovation. After every recession, economies grow back differently to how they looked before. Australia already had a problem of falling labour productivity and low wage growth, along with an economy overly reliant on digging things out of the ground, so it’s inevitable that this period will cause some major changes to how the economy looks.
These changes will cause hardship. But perhaps there is opportunity here as well, if the urgency of economic growth creates the political space to make reforms that are normally off the table. If the government is willing to spend some of the political capital it has earned in the crisis, it could undertake forms to the tax structure or perhaps even the industrial relations system to help make Australia a place where new companies have a better chance of succeeding. Australia is overdue for a round of major economic reforms. The crisis may create a window of opportunity.