Legislative Council - 12 May 2020
The Hon. JOHN GRAHAM (18:17:50): I join with other members of the House who have expressed their pleasure with where New South Wales is at this moment in dealing with the crisis. I thank the community for its action in getting us to where we are today. The truth is, though, that we face economic damage on a generational scale. We have an economic reconstruction task that will linger for many years, a reconstruction task that will fall to a future generation, to a future government of one political flavour or another. I share the concerns expressed by my colleagues about the New South Wales Treasurer's move in one of these bills to cancel the half‑yearly review and cancel monthly reporting statements. The Treasurer's response today was to say, "New South Wales Treasury will continue to publish monthly statements as per usual unless there is an unavoidable delay in data."
Of course, that would be more believable had he been prepared to front the Parliament today to give us a budget statement. I join my colleagues in calling for him to make exactly that statement to the Parliament, to canvass the latest economic modelling and the State's economic outlook, to provide an update on the take-up rate of the State Government assistance package and to outline the recovery and rebuilding plans. The Federal Treasurer has today updated the Federal Parliament on the state of the Australian economy, as other colleagues have indicated. I commend his statement to this House. The Australian Bureau of Statistics [ABS] has undertaken groundbreaking research with rapid economic survey products that have allowed the Government to monitor the state of the economy far more rapidly than they would have been able to in the past. In contrast, the New South Wales Treasurer has refused to update the Parliament and now, in these bills, seeks to hide the state of the budget and of the New South Wales economy from the New South Wales community.
Good economic information—even imperfect economic information—is crucial to the decisions that hundreds of thousands of businesses and workers need to make over this period. The Federal Treasurer knows this, the ABS knows it; the New South Wales Government does not. The reason it is important is this distinction between the budget and the economy. The budget statement does not just provide information about the budget bottom line; it provides information about the state of the New South Wales economy, including forecasts of economic growth, prices and risks. That is essential information for businesses and workers in our State trying to navigate this moment. We know that there is massive economic damage. A report in The Economist pointed to Goldman Sachs research that estimated the economic impact of the different styles of lockdowns. It stated:
It finds, roughly, that an Italian-style lockdown is associated with a GDP decline of 25%. Measures to control the virus while either keeping the economy running reasonably smoothly, as in South Korea, or reopening it, as in China, are associated with a GDP reduction in the region of 10%.
The State is now facing a raft of economic problems: interlinked challenges of supply, demand and the pricing of risk. As a result of this pandemic, global supply chains have been sorely tested. However, generally they have held up, with the obvious exception of toilet paper. Crucially, the world's food supply chain has held—that is, 10 per cent of world gross domestic product [GDP]. Remarkably, global prices for most staples have actually fallen this year. However, businesses are short of money. Bigger businesses will face strained balance sheets. Smaller businesses will simply run out of cash in this period. Their tenants will fall behind in their rent.
On the demand side, regardless of the lockdown laws, economic demand will be shaped by the individual spending decisions that citizens make. That is why spending patterns have fallen by a similar amount in Sweden and Denmark over recent months, even though their lockdown laws could not be more different. Finally, on risk, we know at this moment that investment will fall, not just as businesses conserve cash but also because of the difficulties of pricing risk at this moment of deep, deep uncertainty.
What can Government do at this moment? The Treasurer's answer was to draw attention to these things: stamp duty, payroll tax, the structure of the Federation and the productivity challenge. In the face of a burning economic issue, he was gazing to the horizon. In the early weeks of a war, he was focused on the long term. I do not underestimate the importance of our productivity problems at the moment. The great productivity driver of modern times is the innovation and dynamism that comes from the rapid sharing of ideas in cities. Cities have been innovation engines, dramatically boosting productivity. Social distancing is a direct threat to that. The Opposition's response to the Treasurer's announcement was positive. The shadow Treasurer stated:
NSW Labor is willing to work with the Berejiklian Government to help families and businesses. We want to be part of the reform conversation.
I do not want diminish our productivity problems as a State or a nation, but I tend to agree with Ross Gittins, who put this view on 4 May this year. He wrote:
I can't take seriously all those people saying we mustn't waste a crisis, but seize this great opportunity to introduce sweeping economic reform. It's like telling a baby who hasn't yet learnt to walk it should start training for the Olympics.
These urgers have forgotten that micro-economic reform seeks to increase economic growth by making the supply (production) side of the economy work more efficiently. It delivers results only over the medium to long term. It's thus no substitute for macro‑economic management, which deals with managing the demand side of the economy in the short term.
That really is the challenge for the Treasurer here. A flotilla of small and large firms are looking for guidance at the moment. They need government forecasts and the expert guidance of the Treasury to calibrate the decisions they will need to make in the next days, weeks and months. Productivity and supply are issues, but they are dwarfed by the demand and confidence challenges that face the State and the difficulties of pricing risk that threaten to swamp our economy right now. Good economic information reduces that risk. The Treasurer should make the budget statement the Opposition has called on him to make. These issues relate far more to demand, confidence and the pricing of risk than they do to supply and productivity. That is the prescription the Opposition has called for: stimulus and economic guidance to reduce risk before those micro-economic reforms.
The pressing issue here is a leap in unemployment. For people thrown out of work it will take years to recover. In the recession of the 1990s it took almost 14 years before unemployment returned to its previous levels. What else can the Government do? Here is one thing: set out a road map. The National Cabinet met last Friday and set out a plan to open up the economy in three stages. In contrast, the New South Wales Government is yet to set out the order in which restrictions will be lifted. Victoria is operating in stages. The Northern Territory's road map had stages and dates. The United States Government, led by the Centers for Disease Control and Prevention, is doing the same thing. In New South Wales the public do not know what the stages are or what happens at each stage. Citizens of New South Wales are left watching the Premier's 8:00 a.m. press conference to find out if they can go to the beauty parlour or to a property auction. When I put this issue to the health Minister at the first online hearing of the COVID-19 oversight committee, he stated that the Premier "will make sure that she actually gives that information as she has it."
As a result, in New South Wales we are proceeding restriction by restriction and industry by industry, rather than setting out the stages and a road map for the lifting of those restrictions. That has a massive impact on businesses and workers, especially in the night-time economy. That lack of certainty is increasing risks. I turn to the specific impacts on the night-time economy. The Australian economy is being restructured before our eyes. We know the workers who will be affected are more likely to be young, to be women, to be low-income workers or to be immigrants. On 9 May George Megalogenis wrote:
Almost a third of the 950,000 jobs lost across the economy since March 14 have been in accommodation and food services.
Before the coronavirus, accommodation and food services was the sixth-largest employer in the country with 940,000 workers ... Today, it sits in ninth place, with around 630,000 workers.
Before the lockdown, the arts had been ranked 15th of the 19 sectors measured by the ABS, with 250,000 jobs in total. To put that part of our lives in perspective, we had more people in the arts than in mining, or real estate, or information media and telecommunications. Now the arts are ranked second last, with only the electricity sector below it, after losing a quarter of its workforce since March 14.
That is the scale of the challenge in the night-time economy. The ABS has gone on to produce these new rapid surveys to assess the impact of the pandemic. Those surveys confirm that these were the largest changes recorded by any industry. I call on the New South Wales Government to recognise the sharp impact on these night-time economy sectors, which were the first to be hit and will be the last to have restrictions released. Many in these sectors have missed out on the JobKeeper payment from the Federal Government because of the nature of employment in these industries. These industries will require special attention and special assistance if they are to survive.
I will deal briefly with one other industry: property and construction. In these bills there are property measures, including extending to seven years the time that a development approval might take effect under certain circumstances. The Government has also proposed speeding up construction generally. But there are no powers for the Building Commissioner to maintain building standards across New South Wales despite that construction stimulus. That is a yawning gap that I urge the Government to close as rapidly as possible. I look forward to the Government doing so.
I will speak briefly on health. There are unanswered questions about the Government's health response on testing. On 24 April 2020 the Premier announced a target for testing in New South Wales of 8,000 tests per day. Since then, testing has been consistently lower. As of last Thursday we had only hit that target twice—once on 1 May and once last Thursday. Victoria is testing more of its citizens. What is the problem here? Is it a lack of test materials? Is it a lack of laboratory processing facilities? Is it a lack of an appropriately trained workforce? Is it a communication problem with the community or is it a lack of accessible clinics? We simply do not know.
There are further questions around asymptomatic testing. On7.30 on 16 April the Prime Minister spoke about broader testing including random or sentinel testing. Victoria is doing that; that is how they discovered the cases in the meatworks and in the aged-care facility which they subsequently closed. Meanwhile, testing advice in New South Wales published on 24 April but still current requires patients to show symptoms. Random or sentinel testing could be central to economic recovery. Why is it that nearly four weeks after the Prime Minister discussed this, this practice is not central to the health response in New South Wales? We simply do not know the answer to that question. Finally, I come to modelling. None of the modelling released in Australia shows a second wave; meanwhile, Imperial College modelling in the United Kingdom—even the early versions—refer to a potential second wave. Why does the Australian published modelling not show a second wave? Has New South Wales modelled a second-wave effect? Why has New South Wales not released its own modelling? They are health questions that still are unanswered.
Returning to the economy and the night-time economy, I support the call made by my colleagues for the Treasurer to update the Parliament. I believe the Treasurer should do so in relation specifically to the night-time economy, given the scale of the economic impact on those workers and businesses. I support the call for a road map detailing the path out of lockdown, but I call for a specific road map for the night-time industries, given the scale of the challenge. I support the call for proper parliamentary oversight; it should bolster not seek to diminish the Government's response, but I have no doubt that it will bolster and support the community response to this crisis.
If there was a single moment that brought home the scale of the economic damage to the night-time economy it was the announcement that Carriageworks was going into administration. It was a devastating blow. Sitting on the former site of the largest industrial workshop in the Southern Hemisphere, a key site in the great railway strike of 1917, and now a groundbreaking contemporary arts institution, it was reportedly sent into administration after its routine funding was not guaranteed next financial year.
The Hon. Don Harwin: That is rubbish, complete rubbish.
The Hon. JOHN GRAHAM: Reportedly. If that is true, that is terrible.
The Hon. Don Harwin: Yes but it is rubbish.
The Hon. JOHN GRAHAM: A proud Labor government initiative now in economic ruins, Carriageworks faces an uncertain future including a potential takeover by the Opera House. There is an irony in that, of course. The Opera House itself was a part of the reconstruction efforts in the shadow of that other great economic shock, the Second World War, and it was the work of Premier Cahill, who led New South Wales from 1952 to 1959. Nationally it was Curtin and Chifley who led post-war reconstruction. In New South Wales the task fell to McKell up to 1947, to McGirr between 1947 and 1952, and then to Premier Cahill, each of whom led the reconstruction here. We now face an economic challenge on the scale of the challenge they faced.
Those leaders understood the damage that long-term unemployment causes. Bill McKell learnt that lesson as the newly elected member for Redfern in 1917, representing many of the striking families during the Great Strike. Joe Cahill worked at the Carriageworks site in Eveleigh. Those Premiers would have been upset to hear of the uncertain future now facing the Carriageworks site, but their first concern would have been the uncertain future facing millions of workers and hundreds of thousands of businesses stalked by the spectre of unemployment and bankruptcy. Those pressing concerns should be our first thought too.