Economists warn of long road to normality

Katina Curtis, AAP Senior Political Writer
(Australian Associated Press)


Australians stuffed their homes with groceries and DIY projects in anticipation of a coronavirus lockdown.

As the nation’s politicians look at how to reopen the economy, the latest retail data from the Australian Bureau of Statistics shows a record jump in food sales in March.

Spending in supermarkets went up 23 per cent with the strongest growth on non-perishables like flour, pasta, long-life milk and canned vegetables and soup.

Liquor stores saw spending increase by more than 30 per cent for the month.

Other strong spending spikes were in hardware, building and garden supplies (up 17.4 per cent), and electronic goods (up 11.3 per cent).

But the squeeze on discretionary spending as jobless queues grew and people’s hours were cut was also on display as spending on cafes, restaurants and takeaway fell a record 22.9 per cent.

Clothing, shoes and accessories spending dropped 22.6 per cent.

BIS Oxford Economics’ chief economist Sarah Hunter says despite the hopes of politicians, it will be quite some time before retail trade returns to normal.

“The majority of the sector will not be able to operate as normal for many months, confidence is still well below historical averages, and some households will increasingly have to grapple with weaker incomes as a result of job losses,” she said on Wednesday.

Capital Economics’ Marcel Thieliant noted the record rises for groceries would be likely countered by a slump in spending in April.

Prime Minister Scott Morrison and state leaders are working toward a three-stage easing of coronavirus restrictions with the aim of having an open “COVID-safe” economy by the end of July.

The economy will take a $50 billion hit in the three months to June from the existing level of shutdowns, Treasury has estimated.

Treasurer Josh Frydenberg acknowledges it will take some sectors longer than others to return to normality.

“It’s a bit more difficult, as you say, in hospitality or in retail,” he told ABC TV.

“What we’re looking to do is to give confidence to the employers that they can get back into business because obviously they have to eat up what is left of their working capital in order to reopen and restock their cafe or their restaurant.

“(And) give consumers the confidence they can go and shop freely or eat freely at the restaurants and at the cafes.”

Employers started to receive their first round of JobKeeper payments on Wednesday to help them pay and retain staff.

So far, more than 725,000 businesses have registered, covering 4.7 million employees.

That’s more than a million shy of the number of workers the government had anticipated it would cover, but Mr Frydenberg isn’t budging on expanding eligibility.

How much it comes in under the $130 billion price tag won’t be revealed until the delayed October budget.

Labor says the underspend on JobKeeper is a reflection of how hard it’s been for businesses and workers to access it.

“JobKeeper has the capacity to do a heap of good,” shadow treasurer Jim Chalmers told reporters.

“But the confusion around it, the poor communication, the fumbled implementation, the exemptions and exclusions form the JobKeeper payments mean that so many more Australians will join the unemployment queue … than is necessary.”

The number of jobs in Australia dropped by 7.5 per cent in the month to mid-March and more than a million people have applied for unemployment benefits.


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