- Online event attracted more than 4000 guests
- NZ and AU treasurers talked about the effects of the pandemic on their economies
- Both discussed the lessons they had learned
The coronavirus pandemic would likely result in significant structural changes to the Australian economy, with the rapid adoption of technology, increased working from home and a shift to regional areas by city-based workers, Treasurer Hon Josh Frydenberg MP told an exclusive CA ANZ online event.
His New Zealand counterpart, Deputy Prime Minister and Minister of Finance Hon Grant Robertson, said that the pandemic had sped up the adoption of technology but cautioned that governments needed to ensure this didn’t exacerbate inequality.
In an online member event hosted by CA ANZ Chief Executive Ainslie van Onselen on 5 March and livestreamed to 4000 guests on both sides of the Tasman, the two economic leaders answered a range of questions from CAs.
When asked about the most valuable lesson learned during the pandemic, Robertson said it was about making decisions with only limited information – although he also joked that he had also learned how to survive on four hours’ sleep a night.
“The big lesson for me is if you don't have all the information, go back to first principles,” he said.
“For us, that was in terms of the business community wanting to ensure cash flow and confidence, that people knew that there was support coming, that they had the confidence to be able to keep their staff on and we've both run different kinds of wage subsidy type schemes across Australia and New Zealand.”
The lesson for Frydenberg was to listen to and accept the advice of experts. He said that while he and Robertson had been dealing with the economic fallout of the pandemic, it was primarily a health crisis with very severe economic consequences. This meant moving very quickly to shut the borders, establish the National Cabinet and introduce other restrictions.
When it came to the economic response, it was important to act without ideological constraints. “As a Coalition Liberal Treasurer, I wasn't expecting to come to government and put in place an economy-wide wage subsidy at A$1500 a fortnight,” Frydenberg said.
Asked about the long-term changes, both Ministers nominated technology.
“The adoption of new technology has been very rapid and that adoption of technology has changed the way we work, the way we communicate and, indeed, the way we shop,” Frydenberg said.
More technology has also driven a push into regional areas. “Where people are digitally enabled, they can work from regional Australia where they may have lower house prices and a higher standard of living or quality of life,” Frydenberg said.
In New Zealand, the pandemic had hastened the shift to more flexible working and to e-commerce, Robertson said. But he said the march of technology could exacerbate inequalities, as New Zealand discovered when it introduced online learning and found some students didn’t have access to devices at home. It then moved quickly to supply them.
“That’s something to watch out for,” Robertson said. “We want to make sure that the opportunity … in regional New Zealand or regional Australia can be maximised.”
Looking ahead, Robertson said his priority for this year’s budget would be to keep New Zealanders safe from COVID-19, then to accelerate the economic recovery and rebuilding. He would focus on home building to help alleviate the housing shortage and tackle the big issues such as responses to climate change and the wellbeing of children.
There would be only a gradual return to lower debt levels, which would involve “getting the balance right between continuing to invest but being acutely aware of the extra debt that we've taken on”. Frydenberg echoed the importance of retaining fiscal discipline, saying “our motivation has been to ensure that the labour market remains very resilient”.
He noted that it took a full decade to bring down the unemployment rate after Australia’s previous recession in the 1980s and 1990s, and for younger people it took 15 years. “That's a scarring of the labour market which we've sought to avoid here,” he said, adding that this was the motivation for the JobKeeper wages subsidy and the more recent JobMaker hiring credit.
I'm confident, and so is the RBA, so is the Treasury, that even when that major payment of JobKeeper comes off, the steady trajectory in the labour market will continue.
There are positive signs in the employment data, with 320,000 new jobs created even as the Government’s direct economic support was halved.
“I'm confident, and so is the RBA, so is the Treasury, that even when that major payment of JobKeeper comes off, the steady trajectory in the labour market will continue,” Frydenberg said.
“But a lot will depend on the rollout of the vaccine, both here and globally, and whether or not there are other variants of the virus and the challenges that that will create.”
The Australian Treasurer lauded the “critically important” role accountants had played in helping their clients navigate through the large number of new measures introduced by the Government.
“Let's face it, we're not out of this crisis yet. It's going to be some time before we get everything back to normal and therefore businesses will do it tough, families will do it tough,” Frydenberg said. “They'll need that expert advice about their own financial position and accountants can provide that.”
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