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Targeted, smarter regulation and workplace reform, enabling industry to upskill the labour force, digitising operating models and improving our supply chains can drive productivity and economic growth for Australia in the post-COVID-19 world.
Immediate societal pressures will likely influence decision-makers to make choices that look inwards and push towards creating a more secure, self-sufficient nation. These choices come with an economic cost.
Australia can grow its way to economic recovery, and use this growth to help pay the premium required to build a more resilient Australia.
Whether you’re an individual respecting social distancing laws, an intensive care department treating COVID-19 patients, a financial institution finding space to help mortgage holders, a business adapting to new ways of working, a community organisation embracing new technology, or a policy maker deciding on economic and public health outcomes, the nation can choose to Reboot Australia to drive prosperity for all.
PwC Australia modelling suggests that there should be a path to maximise community outcomes by prioritising the growth of Enterprise Australia. In the long run, GDP in Enterprise Australia will be $1100 per person higher than under Fortress Australia.
However, significant shocks to the system - economic, environmental and social - create concerns that need to be addressed. Hence, it is likely that immediate societal pressures will lead us to make choices that result in investment to address our insecurities, even if they do not reach the levels implied by the Fortress Australia scenario.
In other words, the nation might not go all out for growth.
Sacrificing some potential economic growth might be a willing price to pay to achieve broader self-sufficiency outcomes.
In this respect accommodating broader objectives by ensuring that, at a minimum a series of no-regrets changes and reforms are embraced:
Australia’s response to COVID-19 has clearly accelerated consumer uptake of digital platforms for shopping and doing business, and has forced businesses and governments to scramble to be more digitally nimble internally and externally. It is difficult to see these behaviours reverting entirely back to pre-COVID-19 ways, there needs to be regulation realignment to support this shift.
The agility shown by government and business in responding to the challenge of COVID-19 should be embraced as the default. While reflection and a slower pace of change would be welcomed, the challenge is not reverting unconsciously.
A continued focus on reducing persistent unemployment and underemployment. With unemployment, and particularly youth unemployment, likely to be stubbornly higher for years, governments and businesses will need to embrace a new round of digital upskilling to equip people for the jobs of today, let alone the jobs of tomorrow. The Future of Work has been a discussion topic for the last few years but what appears now to be clear, is that this future is now very soon if not here already. Market forces will drive people to this employment future, but for the the unemployment challenge to be met government will need to step up with:
workplace reform to support employers, particularly small business; and
skills programs for those unemployed from industries that will not recover.
Broader conception of risk needs to be embedded into corporate and public policy planning. COVID-19 has exposed breaches in our reliance on international supply chains, and global markets for education, tourism and key exports, deficit in national technology architecture, lack of digital skills and dependence on skilled migration to supplement our skill gaps, among other aspects.
To enable governments to support the economy back to health requires rebuilding the tax base with efficient growth-supporting taxes. Such tax reform will require a new compact with the public; inefficiencies and inequities will need to be forsaken for a tax system that supports a broader prosperity.
Australia can grow its way to economic recovery and should embrace the growth orientation of Enterprise Australia. However, where there is a need to invest in additional insurance for self-sufficiency goals, this needs to be consciously undertaken and balanced against diminishing growth aspirations.
This report is not related to the Australian Manufacturing Workers Union (AMWU) pre-COVID-19 report of March 2019 titled 'Australia Rebooted' and PwC is not affiliated with the AMWU.
COVID-19 Market Response Leader, PwC Australia
Tel: +61 2 6271 3229
Chief Economist & Partner, PwC Australia
Tel: +61 (2) 8266 4611