Australia has just recorded its first technical recession – marked by two consecutive periods of negative growth – since the recession we had to have in the early 1990s.
June quarter data showed the nation experienced its most significant economic contraction since the 1930s, evidenced by a collapse in GDP of 7 per cent.
This is bested only by our worst annual economic contraction which occurred at the height of the Great Depression when the economy shrank by around 10 per cent.
The contraction appears to have been mostly driven by a collapse in household consumption of 13 per cent during the quarter, with discretionary spending down by a quarter and services on spending down by 18 per cent.
Of the reduction in services spending, transport was reportedly the hardest hit, down a massive 86 per cent. With this category including taxis, public transport and air travel, it’s understandable how it was impacted most during the national height of COVID restrictions.
I offer this glum summary of our economic situation to provide some context around where we all find ourselves, but more importantly the opportunity it presents if we adjust our behaviour as consumers, and how we spend our money as businesses and individuals.
And while the figures are stark, there is a silver lining in them, starting with the fact that they are in the past and reflect a time when – other than Victoria – COVID restrictions were at a peak.
Household income during the period in fact increased, fuelled by JobKeeper, JobSeeker and other subsidised income, noting that notwithstanding widespread business contractions, sectors like freight and logistics have been busier than ever.
This is income that will get injected back into the economy, and while much of it may be amassed in the biggest quarterly savings buffer Australians have accumulated since the 70s, savings do eventually get spent.
Therein lies the opportunity: whether you support government intervention and subsidies or not, the stimulus and savings created by the government provides a glimpse of the pathway out of the COVID economic crisis, once community health and safety measures are active and our economy starts to re-open, which Victoria is clearly a critical part of.
Those with discretionary post-COVID dollars to spend need to buy Australian wherever they can to support our economic recovery and help maintain and grow Australian jobs. And if you look at the supply chain for many consumables, there are enormous opportunities to, and reasons for, buying Australian.
The quality of Australian-made products is generally second-to-none, so that is no longer an excuse not to buy local. And it goes without saying that when you buy local you are supporting dozens of parties in the supply chain from raw materials and ingredients, manufacturing and maintenance equipment, packaging and associated consumables, and of course local transport operators that are represented in every movement, from paddock to plate and from factory to franchise.
It’s equally incumbent on our local, state and federal governments to get behind Australian businesses and support investment in Australia. To support the recovery, and with interest rates at record lows, it is more likely than not that every tier of government across all jurisdictions will initiate projects to stimulate jobs and growth.
We are already hearing of infrastructure projects being brought forward, which will be a boon for our industry because of how vital transport is at every stage of infrastructure construction.
We also expect and will be encouraging state and Commonwealth governments to develop and release policies that provides incentives for individuals and businesses to spend money locally.
The extension of the instant asset write-off on capital equipment up to $150,000 until the end of the year is but one example of existing policy designed to stimulate growth, but it’s important that businesses taking up incentives like this to invest in Australian-made goods and services wherever possible.
As we map our way through, and eventually out of, COVID, let’s do it in a way that recognises the quality and value of products made in Australia by businesses that are Australian-owned.
Governments, businesses and individuals investing in Australia by purchasing goods that are made here instead of overseas, will go a long way towards inspiring confidence in our capacity as a nation to produce things of great quality, as well as help to accelerate our COVID recovery.
CEO, Victorian Transport Association