On April 27, the Business Council of Australia (BCA) said the Australian economy could take a $400 billion hit if lockdown restrictions continue for six months.
They urged the federal government to act on comprehensive reforms needed to get the post-pandemic economic recovery on the right track—fast.
The research summary, quoting modelling by Ernst & Young, illustrated how the duration of restrictions will impact the path of an economic rebound.
According to the recovery profiles chart, if restrictions stay in place for 6 months, Australia’s gross domestic product (GDP) would suffer a loss of $402.6 billion (US$259 billion) or 20.7 percent in the 2020 calendar year—under a “U-shaped” recovery profile.
In comparison, the loss would be reduced to $278.3 billion with a three-month “V-shaped” recovery, and a $197.3 billion if the lockdown restrictions last for only one month.
Making the Right Choice
Business Council chief executive Jennifer Westacott, while confident that Australia is in a good position to plan for a strong recovery, said that the government needs to act on quick reforms covering taxation, industrial relations, and training to make sure that no one is left behind in the recovery.Westacott argues that one of the key questions the government needs to ask when making decisions about the recovery is: “Does this create a new job, a secure job, better-paid job, or does it get someone back to work?”
A United Sense of Reform Urgency
The call from the BCA reflects a sense of urgency for broad changes to the economic system shared by governments and businesses recently, as the nation looks to rebound from the crisis amid a consistent flattening of the CCP virus infections curve.“We are going to have to have economic policy measures that are going to have to be very pro-growth, that are going to enable businesses to employ people, that will enable businesses to invest and businesses to move forward, ” he said.
Lowe said the crisis would have “reverberations” through our economy for some time to come and that the best way of dealing with these was to “reinvigorate the country’s growth and productivity agenda.”
“As we look forward to the recovery, there is an opportunity to build on the cooperative spirit that is now serving us so well to push forward with reforms that would move us out of the shadows cast by the crisis,” Lowe said.
Treasurer Josh Frydenberg has started to consult with businesses about reform options during a video conference meeting with corporate leaders on April 22.
He admitted that the Australian company tax rate is still very high by international standards, indicating that “we’ll look at tax reform as an area of interest because we’re always looking for opportunities to cut taxes.”