This pandemic is a wrecking ball through the global economy, destroying almost 500 million jobs. It is expected to cause more economies to contract than at any time since 1870.
Its impact on global growth dwarfs the GFC, with the OECD forecasting a 6 per cent fall this year compared to just 0.1 per cent in 2009.
Without question, it is a supply and demand side shock like no other.
In Australia, the battle goes on. The cost is immense; an effective unemployment rate at 9.9 per cent, with an expectation it will increase to more than 13 per cent during the September quarter.
Significant falls in business investment, housing investment and household consumption are all expected to be confirmed in next week’s National Accounts.
And there’s a hit to the nation’s balance sheet as the budget deficit hovers around $200bn this year, off the back of record government support and declining revenue.
This is the harsh reality of what we face.
The more positive news, though, is that the Australian economy is fighting back and showing resilience in the face of an almighty challenge.
There is hope and there is a plan.
Treasury analysis indicates that of the 1.3 million Australians who since the crisis lost their job or were stood down with zero hours, more than half, almost 700,000, are back at work.
The recovery has been strongest in NSW, with 315,000 people finding effective employment since April. This compares with 149,000 in Victoria (prior to the full effect of stage-four restrictions), 100,000 in Queensland, 67,000 in Western Australia, 51,000 in South Australia and 17,000 in Tasmania.
The formula is clear: contain the virus, ease the restrictions and jobs come back.
In June and July, more than 340,000 jobs were created, about 58 per cent going to women and 44 per cent to people aged 15-24.
The nation is clearly at two different stages: there is Victoria, and there is the rest.
Outside Victoria, the number of people on unemployment benefits is about 3 per cent below the peak in May. In Victoria, it’s 3 per cent above.
In April, Victorians made up about 30 per cent of those stood down on zero hours across the country. In July, it had risen to about half.
Victoria saw its participation rate fall in July, the only state to do so.
So too with business confidence, consumer confidence, retail sales and auction volumes, Victoria is seeing falls not shared by other states.
With Victoria a quarter of the national economy, getting it back on track is critical to the nation’s recovery. Victoria’s success will be Australia’s success.
To this end the Morrison government has deployed more than 1700 ADF personnel, specialist AUSMAT teams as well as other commonwealth officials to assist with the health and logistics task.
We have provided additional funding for childcare, mental health and paid pandemic leave as well as making significant changes to the JobKeeper program, which will be of particular benefit to Victoria.
The changes to the employee eligibility and business turnover test and increased demand out of Victoria are expected to cost about $16bn, 80 per cent of which is expected to be spent in Victoria.
By the September quarter, almost half its private sector workforce will be on JobKeeper.
Extended and expanded Job-Keeper at $101bn is the single largest government support program in Australia’s history.
It has done “a remarkably good job” in the words of RBA governor Phil Lowe; without it “the unemployment rate would have been substantially higher”.
It’s Treasury’s analysis that JobKeeper and our other economic support measures have saved 700,000 jobs and without them unemployment would be five points higher.
The combination of JobKeeper, JobSeeker, the $30bn cashflow boost to small business and the two $750 payments to those on income support is helping cushion the blow. It was the first phase of our response.
The next has been the targeted measures to boost aggregate demand, increase flexibility in the labour market and improve training opportunities for our workforce to create more jobs: the JobMaker plan.
* Investment incentives and the 50 per cent accelerated depreciation allowance, and bringing forward $10bn of infrastructure projects.
* The HomeBuilder program, which has contributed to an 80 per cent jump in sales of new houses in June.
* Separate support measures for the aviation, arts and tourism sectors and the $1bn JobTrainer Program to create 340,000 training positions and courses.
Together with the $1.5bn 50 per cent wage subsidy for 180,000 apprenticeships, our programs will not only help younger workers find a job, but keep them in a job.
Maintaining flexibility in the workplace is also critical to keeping people in work.
The room that was given to employers and employees with JobKeeper to make adjustments to duties, hours and location of work has been vital.
Building on that and making progress, for example, around greenfield sites and award simplification with the work streams under way will help our economic recovery.
These are extraordinary and difficult times. While many people are continuing to do it tough, there are lights at the end of this tunnel.
Jobs are coming back as states and territories get the virus under control and restrictions are eased. By working together and implementing our JobMaker plan we, as a nation, will cross the economic bridge to the other side.
Josh Frydenberg is the federal Treasurer.