Coronavirus has left Australia in better shape than most
In one of his final poems before dying at 59, Australian poet James McAuley wrote: “Winter will grow dark and cold / Before the wattle turns to gold.
McAuley (born 1917), a Christian, apparently had in mind eternal life. But he well understood his immediate future on this earth, which was dark indeed.
Treasury secretary Steven Kennedy acknowledged on Thursday that Australia was already in recession, one that had come about so suddenly as to be unique. In Australian history, no government has shut down large sections of the private sector, with or without a pandemic. The same goes for other Western nations.
The economic consequences of the medical response to COVID-19 are new territory. So much so that we do not know whether a depression will eventuate. However, we do know that Australia entered the year with a comparative advantage compared with many other nations.
As Josh Frydenberg pointed out in his well-written and clear ministerial statement on May 12, the Australian economy was in a strong position — when compared with similar nations — at the beginning of the year.
Growth had risen from 1.8 per cent to 2.2 per cent in the December quarter. Moreover, the International Monetary Fund was forecasting the Australian economy was likely to grow at a faster rate than that of the US, Britain, Japan, France and Germany in both this and the next calendar year. And the unemployment rate was reasonable at 5.1 per cent.
The Coalition governments after September 2013 — led by Tony Abbott, Malcolm Turnbull and Scott Morrison with Joe Hockey, Morrison and Frydenberg as treasurers — worked to reduce the budget deficit of more than $48bn to a balance or near surplus. A constant figure in the budget reform process was Finance Minister Mathias Cormann. The ongoing deficit reduction was accompanied by the creation of some 1.5 million jobs.
Sure, it was not an economic utopia early this year. But the economy was in relatively good shape, contrary to the claims today of some on the green left, including journalists. In short, Australia was well placed to experience an unexpected recession.
It was much the same with novel coronavirus. Like New Zealand, Australia benefits from being an island, which makes border control relatively easy. Australia called COVID-19 a pandemic before this was done by the World Health Organisation. Moreover, early in the pandemic Australia closed its border with China, the centrepoint of COVID-19. This was done contrary to the wishes of the WHO.
The creation in March of what the Prime Minister called the national cabinet — consisting of federal, state and territory leaders — was an important initiative. As it turned out, it made possible a less dramatic shutdown than that advocated by some state and territory leaders and put into practice by Jacinda Ardern’s Labour government in New Zealand.
The states and territories are primarily responsible for health, education and law enforcement. But the Morrison government managed to bring about a “black book” approach to the pandemic. In other words, in various stages certain industries were instructed to close. Those not on the restricted list could remain open. So agriculture, construction (of various kinds), mining and transport, for the most part, remained in operation, as did early childhood education.
The left is in love in Ardern who, without question, is a popular leader. However, despite a more comprehensive lockdown in New Zealand than Australia, on a per capita basis the two nations have similar rates of COVID-19 infections and recorded deaths.
Unlike some green-left politicians and commentators, Frydenberg well understands that the task is to open up the economy as soon as this is possible, then to focus on private enterprise and increasing productivity. The Australian economy will not recover fully by means of increasing taxation and regulation.
The way out of the recession ideally should reflect the way in. The Morrison government introduced three initiatives to temper the economic impact of the close down. First up there was the economic reform package aimed at providing economic stimulus, followed by a $66bn support package aimed at business and households. Then came the huge JobKeeper program, aimed at making it possible for employers to connect with employees whom they have managed to keep at work or who are waiting to return to work.
Without question, JobKeeper has made it possible for many small and medium businesses to remain in operation. Again, this will facilitate the path to recovery when COVID-19 abates.
However, there is little doubt that this recession, which essentially has affected the private sector, has led to many shattered lives and businesses.
The men and women who have lost their livelihoods may recover their health, but many will lose their businesses through no fault of their own.
That’s why it is important that the economy opens up as soon as possible. Initially the national cabinet, the first time Australia has experienced such an entity, worked well. But its use may be fading.
The reluctance of the less populous states (Queensland, Western Australia, South Australia, Tasmania) and the Northern Territory to open their borders is detrimental to the important tourism industry and makes the life of small-business operators even more difficult than at present.
The advice of the Australian Health Protection Principal Committee, which advises the national cabinet, is that there is no reason the borders between the states and territories should remain closed.
Here some Australian governments give the impression that they are being run by public servants. Take Queensland Premier Annastacia Palaszczuk, for example. Early this week she said the opening of the Queensland border was not her decision but that of Queensland’s chief health officer.
There is no evidence that COVID-19 can be eradicated any time soon. It’s up to elected politicians to make decisions to reopen the economy while managing risk.
The federal government, with the recent support of NSW Premier Gladys Berejiklian, is showing the way. Their approach provides some hope. Otherwise the economic winter will be cold indeed.
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Coldest day in a CENTURY: Parts of Australia's east coast shiver through the briskest May day in 98 years
Global cooling!
Brisbane has endured its coldest May day in a century with the mercury hitting 15C at about 1pm on Friday - and the chilly snap is here to stay.
Including wind chill the apparent temperature was even colder - dropping to 10C at 3pm, according to the Bureau of Meteorology.
The cold snap wasn't just confined to the north with New South Wales, Victoria, South Australia and Western Australia also experiencing an icy weekend courtesy of cold fronts sweeping over the states.
Australians have been warned to brace for continuing cold weather as the week progresses and we head into winter, with most major cities forecast with maximums of 20C or lower on Sunday.
The cold fronts also mean the wet weather will continue with large areas of the country forecast to experience overcast conditions and showers.
In New South Wales the cold fronts brought wind, rain and even snow in some places such as the Blue Mountains and Bathurst.
On Saturday in Sydney, a severe weather warning was issued as massive waves battered many of the city's surfing beaches, including Bondi.
A layer of cold dry air, rain and thick cloud cover is causing the unseasonal weather. 'That acts kind of like an evaporative air conditioner,' meteorologist Lauren Pattie said on Friday.
Ms Pattie also said the cool weather is expected to persist into next week, with frost possible in some areas from Sunday.
Her Bureau colleague, meteorologist Rosa Hoff agreed, saying the cold weather would continue into Sunday.
Brisbane is forecast to drop to just 9C overnight, before warming up to a top of 21C by midday, she said. [It was 27 degrees at 1:30pm Sunday]
The last time Brisbane hit a top of 15C like on Saturday was in 1922 - with other regional centres also breaking decades-long records.
Longreach and Charleville in the state's mid-west had their lowest May maximum temperatures in 50 years at 14.6C and 13.2C respectively.
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Australian universities face an existential dilemma from loss of income
Time for efficiency reforms
Australian universities are "some of the most creditworthy entities in Australia and the world", ratings agency S&P Global says in a report on the effects of COVID-19 on this country's higher education.
This should put universities in a good place for what will be a punishing 12 months to come. The Group of Eight conservatively estimates a revenue downturn of $2.2 billion for 2020.
Already universities with small cash buffers, among them La Trobe University and Central Queensland University, are flagging redundancies.
S&P Global says universities have healthy balance sheets and low debt levels. But that's putting it kindly.
Critics of the university sector refer to lazy capital tied up in buildings and land holdings, which in some cases are used for only the 28 weeks a year when students are actually on campus.
And without shareholders to keep an eye on costs, payrolls have expanded in a heavily unionised workforce.
Robert Leeson, a professor of economics at Notre Dame university in Perth and biographer of the classic-liberal economist Friedrich Hayek, says Australian universities would benefit from some "creative destruction" of their own, reducing the ranks of middle management and making them more efficient.
As the post-coronavirus reality begins to bite, some policymakers are arguing for structural reform in higher education.
National lead partner for education at KPMG, and a former vice-chancellor at the University of Canberra, Stephen Parker, says the last real reform in higher education was 30 years ago when education minister John Dawkins let colleges of advanced education merge with universities.
S&P Global analysts said there was an appetite in Canberra for university reform.
Its recent report said: "We anticipate that when the pandemic is over, there will be greater political pressure on Australian universities to diversify or reduce their reliance on foreign students."
Some industries facing revenue shortfalls after COVID-19 are talking about mergers to get economies of scale and a more stable revenue base. But Australian universities are already large by global standards.
The vice-chancellor of Monash university, Margaret Gardner, doubts that growth by merger is the future for Australian universities.
She says she can't see the policy setting that would underpin mergers. In any case, universities are already very large. Monash has nearly 70,000 students, making it massive by comparison to British and US universities. Professor Gardner says in some senses it is already "merged" with other universities – through joint research projects with domestic universities and by collaboration with overseas institutions.
Also working against mergers is the fact that universities define themselves by their relationship to local communities.
Monash has a strong identity with communities in Melbourne's south-east, not the least because of the massive health market it serves with research and clinical services.
Gardner agrees that universities are going to change but says "the notion that Uni X merges with Uni Y is a very big question that intersects across community and government interests."
If consolidation through mergers is off the table, one way to get greater efficiencies would be a series of more simple alliances doing things such as shared back office, joint tenders for research or submissions to government.
Professor Parker points out the great universities of California are part of a state alliance.
The former vice-chancellor of Deakin University and interim vice-chancellor of the University of Western Australia, Jane den Hollander, says alliances are already on the agenda of university councils.
All five universities in WA are members of the Forrest Research Foundation and this might be a good model for sharing costs and ideas, she said, without losing the structure of individual universities.
Another arrangement might be a federated model that brings together universities with a shared "market type", for example Geelong in Victoria with Newcastle and Wollongong in NSW.
"I'm interested in what regional universities do. Universities are to some extent the first pillar of the community," she says, echoing Gardner. "The big question is not just what happens in the capital cities. How do we nurture the regional role of the university?"
There are some long-established alliances, for example the Regional Universities Network or the Australian Technology Network, but these are more to do with marketing than local communities, shared resources or cost-cutting.
Working with business
The most likely university model for collaboration is with business.
This growth-oriented strategy is well established. Long before the government started pushing universities with tools such as performance funding to produce job-ready graduates, business has been moving onto campuses.
Monash University works with GlaxoSmithKline on pharmaceuticals, the University of Newcastle works with Brambles on printed solar collectors, and Sydney University is partnered with Telstra, Microsoft and Rio Tinto.
Edith Cowan University has 12-week work-integrated attachments for science students, and the University of Queensland commercialises research via its spin-off company UniQuest. UniQuest's first patent application for what was to become the Gardasil cervical cancer vaccine was lodged in 1991.
The University of NSW Torch Innovation Precinct ("We invite you to join us moving from mining and manufacturing to mass innovation and mass entrepreneurship"), which opened in 2016 and is focused heavily on China, is a "good model for driving growth", UNSW vice-chancellor Ian Jacobs says. "It's not going to release spare cash. But it covers its costs and it means we can do additional research."
Professor Jacobs says he has been "hammering" the link between university and business for five years. Universities get cash flow and job-ready graduates and businesses get intellectual property.
COVID-19 has also proven the possibility of some cost savings. UNSW Sydney thought it was at capacity three years ago, the vice-chancellor says. Now that idea is "up for review".
Collaboration, between universities or with business, looks like the best option for universities trying to maintain growth in the face of falling international enrolments.
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Strict social distancing rules for lifts, which would have created havoc for office workers around the country, have been ditched
Safe Work Australia reversed its guidelines on Wednesday stating that there was now "no requirement to provide four square metres of space per person in lifts".
The revised rules say that "you must still ensure, as far as you reasonably can, that people maintain physical distancing in lifts and lift waiting areas".
It is a significant back down from the previous rules that would have created a major choke point for returning workers, adding hours to their journey, if only a few people could travel in a lift at any one time to maintain a 1.5-metre distance from each other.
The Property Council of Australia, which had lobbied strongly on the issue with the federal Attorney-General and Safe Work Australia, welcomed the major concession.
"The new guidelines on lift usage are sensible and practical, and give our building owners, managers and their tenants the certainty they need to plan their return to the office in coming weeks,” said the PCA's chief executive Ken Morrison.
“If we hadn't have had this outcome we would have had people milling around unable to get to their offices, posing a transmission risk in foyer areas.
“It provides recognition that if the COVIDSafe app requires a 15-minute proximity test before it does a digital handshake, then riding for a minute or a minute-and-a-half in a lift certainly doesn’t present that risk.”
Darren Steinberg, chief executive of Australia’s largest office landlord, Dexus, welcomed the decision and said the removal of the four square metre restrictions in lifts would go a long way to enabling people to get to their tenancies in a quick and efficient manner.
“It is a far more sensible approach because it is all about the worker experience when we get back to work full time and this would have been a major detractor, spending a significant amount of time waiting for lifts," he said.
But he warned there would still be delays given some restrictions in lifts would remain.
In landmark towers, such as Sydney's Australia Square which has smaller lifts, the previous 1.5-metre rule would have limited lift capacity to just two people.
Workers could have been forced to wait as much as three hours to get to their desks at peak times if all staff were back at work, according to estimates by building owner Dexus.
To ensure lift rides are as safe as possible, the revised rules encourage the use of staggered start and finish times, along with working from home arrangements for some staff.
The Work Safe rules also encourage lift programming to be modified to allow more efficient flow of users.
The updated rules retain the requirements of four square metres of space per person within offices and the need for a 1.5-metre separation between them.
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