Australia’s economic comeback is on.
Right around the country, businesses are re-opening, confidence is growing and people are getting back to work.
The job is not done and there is still a long way to go. But Australia starts the year in a stronger position than nearly any other country on earth. Consider this; last month, 400,000 people died from COVID around the world, yet in Australia, there wasn’t one death from COVID and we have no one in ICU or on a ventilator due to the virus.
So too on the economic front the impact across Europe, Asia and the Americas has been far more severe.
The International Monetary Fund (IMF) is forecasting the economy of Spain to contract by 11 per cent; the UK by 10 per cent; Italy and France by 9 per cent; Canada, Germany and Japan by more than 5 per cent and the United States by 3.4 per cent.
It is in stark contrast to Australia at less than 3 per cent.
It is in this context that noted economist, Chris Richardson, has said of the Australian economy “the glass is more than half full and it’s continuing to fill pretty fast”.
This week saw the release of further economic data supporting the recovery that is underway.
Consumer confidence rose and is now up in 16 of the last 20 weeks. Business confidence increased across all industries and is strongest in retail.
Nearly 80,000 motor vehicles were sold in January, up more than 10 per cent over the year. New housing approvals increased for the sixth consecutive month, up more than 20 per cent over the year, with more than 18,000 applications for the Morrison Government’s HomeBuilder program in Queensland.
In the words of Master Builders Australia, “without HomeBuilder, thousands of small builder and tradie businesses would have gone under and hundreds of thousands of jobs would have been lost.”
This week job ads increased and are now at their highest level since April 2019. New jobs data from the ABS also saw improvements across all states and territories.
It follows a fall in the unemployment rate to 6.6 per cent, and the creation of 320,000 jobs in the last 3 months alone. Ninety per cent of the 1.3 million Australians who lost their jobs or saw their working hours reduce to zero are now back at work.
The strength of the labour market has exceeded even the most optimistic forecasts of Treasury and the Reserve Bank of Australia.
More than two million Australian workers, nearly a quarter of whom are in Queensland, and more than 450,000 Australian businesses have graduated off JobKeeper since September, with even more expected to do so in coming months.
These businesses include Cotton On, Australia’s largest global retailer, which I visited recently. During the peak of the crisis, they had 5500 workers on JobKeeper, but as their doors reopened and their customers have come back, they no longer need that income support. Optimistic about their future, they recently announced an expansion of their distribution centre which will create 100 new jobs.
Their story is not unique, but one I have heard from countless small businesses across the country. From the homewares store, to the cafes, pubs and bakeries, I have got the same message; the federal government’s JobKeeper program saved business and staff.
But JobKeeper can’t go on forever. It was always meant to be temporary.
With $80 billion already out the door, it is the most expensive support program in Australia’s history.
As the jobs come back and Job-Keeper ends in March, the economic recovery moves to the next phase.
Other government measures like the JobMaker Hiring Credit, the 340,000 new training places, the 50 per cent wage subsidy for apprentices, the new manufacturing strategy, and the $29 billion in infrastructure investment that will be spent this financial year and next, will drive increased economic activity.
Income tax cuts, which are putting more than $1 billion a month into the pockets of Australian families, and substantial business investment incentives announced in last year’s Budget, will together help create around 100,000 jobs. Jobs is our priority. Keeping people in work and helping those out of work get into work.
This week, the Governor of the Reserve Bank said “the recovery has started earlier and has been stronger than we were expecting.”
However, there is no room for complacency. In the face of adversity, Australians can be proud of what they achieved last year and can look to the future with confidence and optimism.
JOSH FRYDENBERG IS THE FEDERAL TREASURER