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C VID-19
PANDEMIC SPECIAL REPORT
businessnews.com.au
F E AT U R E Digging in as pandemic pa
Spending $m December quarter 2019
Vehicle operation Food
Alcohol
Recreation & Vehicles Communications
Culture 2,805
580
Transport 2,442 Solid base Health
959 466
Furnishings
and household Pain points 1,319 2,170
equipment
1,155 1,474
Clothing &
footwear
9,925 545
909 434 2,174
Hotels, cafes and
restaurants 1,815
Electricity,
gas, fuel
Construction Education services
(business) (domestic)
Uncertainty Government
Construction investment
and alterations 1,902 4,258
(housing) Government
consumption
WA will be relying on strong export Hotels, cafes and restaurants
($1.8 billion) will be significantly
also be expected to remain rea-
sonably steady.
industries to keep its economy afloat affected.
Those figures are domestic
The biggest source of potential
demand growth in the months
as large parts of the services sector are spending, and so won’t estimate
the impact of tourism exports
ahead is from governments, with
recurrent spending and capital
shut down or put under restrictions. falling to zero while the country’s works from all levels combined
borders close off. worth $12 billion in the three
Other spending categories will months to December.
Matt Mckenzie services industry, according to the in a single week to be 72.2 points, be more steady or potentially With massive stimulus pack-
matthew.mckenzie@businessnews.com.au Australian Bureau of Statistics’ the lowest level since 1990 and have significant growth, such as ages unveiled in recent weeks,
@Matt_Mckenzie_ February update. about 17 per cent below the lowest food at $2.9 billion in the Decem- spending in the government
T
HE state’s strong export It is unclear at this early stage point seen in the GFC. ber quarter, and healthcare ($2.2 coloumn will jump.
power could prove critical how many people will be stood With the crash in confidence billion).
as the COVID-19 health down, lose jobs outright, lose and strict social distancing Supermarket chains Coles and Resources
crisis subsumes the economy, shifts or continue working. rules, the businesses most heav- Woolworths have hired staff (see Resources exports are the
with industries employing a total Sports, libraries, galleries, ily affected will include those page 16) to deal with a surge in single biggest contributor to the
of 250,000 Western Australians weddings and casinos have all focused on discretionary spend- demand for essentials in recent state’s economy.
having closed or severely reduced suffered major restrictions. ing, and those that involve social weeks, as shoppers prepare their Mining generated $100 billion
operations. About 22,700 people work in interactions. pantries for lockdowns like those of income in the 2019 financial
The response of governments arts and recreation in WA, ABS Other industries could be enforced overseas. year, more than 40 per cent of
to the pandemic has escalated data for February shows, while affected by uncertainty across Woolworths said demand was gross state product.
dramatically in recent weeks, with 137,200 are employed in retail the economy, with construction currently about double that of Much will hinge on the continu-
Australians asked to implement trade, parts of which are shutting a good example. an ordinary week, although it ation of iron ore exports, worth $76
social distancing and isolation as down. In the December quarter, West- would be unlikely to persist for billion in the 2019 financial year.
key mechanisms to reduce the Consumer confidence has also ern Australians spent $1.9 billion an extended period. The iron ore price has remained
spread of the virus and limit pres- taken a big hit. building and altering houses, Basics such as electricity and above $US85 per tonne for much
sure on the healthcare system. The Westpac Consumer Senti- while businesses spent $4.3 billion gas, and communications, would of 2020, despite a lockdown
The hospitality industry is in ment Index fell 3.8 per cent to be on projects, according to ABS data.
137,200
virtual shutdown, with venues 91.9 in March, the lowest level in Consumption categories likely
now only able to sell takeaway or five years. to be worst affected are shown
through home delivery. That was before the big in the graphic above, with rec-
To put that into perspective, shutdowns. reation and culture the biggest,
93,600 Western Australians work Roy Morgan data showed con- worth $2.4 billion in the Decem-
in the accommodation and food sumer confidence fell 27.8 per cent ber quarter. WA RETAIL EMPLOYMENT, FEB 2020 Source: ABS
in hits WAs biggest industries
by value added - 2019FY
Exports $m - 2019FY Industry $m
Looking solid Mining 103,295
Iron ore exports Construction 19,604
76,201
Health care & social assistance 15,707
Gold exports
16,626 Transport, postal & warehousing 14,697
Professional, scientific and technical 12,525
Tougher times
Manufacturing 12,171
Petroleum
exports Financial and insurance services 10,824
39,209
Retail trade 7,852
0 4 0,0 0 0 80,0 0 0
across China that was expected launched a coordinated campaign “It does run some risks.
to reduce demand. We are prepared to to ‘build a bridge’ for businesses “Imagine if this crisis is over
As that country gets back to through six months of uncer- and all of a sudden you get an
work, demand for WA exports transact in whatever quantity tainty (see table, page 17). inflation break out ... [the RBA]
should continue. The government’s policies may need to buy a huge amount
Bank of America head of Aus- is needed to meet this (yield) had been targeted to boost pri- of bonds.”
tralian economics Tony Morriss vate consumption and business But inflation would be a prob-
said it was possible WA’s heavy target - Philip Lowe investment in the $17.6 billion lem the bank would love to have
exposure to China might mean it first round, and then encourag- at this point, he said.
was less affected by the Austral- encouraging, both for exports and the company saying it needed to ing businesses to keep workers “That prospect is down the
ian shutdown than other states. for other countries hoping for a reduce the number of people on onboard and ease the impact road … their message is they’ll do
“Every state will be subject to rapid rebound when lockdowns site to stop potential spread of of job losses in the $66.1 billion anything,” Mr Morriss said.
the hit to services,” he said. were relaxed. the virus. second round. Deutsche Bank’s Mr O’Donaghoe
“[The] China rebound might But he warned there could be A big question will be around A major surprise was the RBA’s said there was great uncertainty
make the [WA] situation better a slowdown of export volumes in the impact of the lower oil price commitment to a yield target on from an economic perspective.
than the eastern states.” the June quarter because inven- on Woodside’s Scarbrough and three-year government bonds of He said the stimulus packages
Mr Morriss said Australia also tories had surged in recent weeks Browse LNG projects, worth more 0.25 per cent for three years, a big would help, although it was too
would have a buffer through its and would need time to be drawn than $40 billion combined. change from the usual policy of early to tell if the amount was
currency, where a depreciation down. Similarly, social distancing directly targeting the overnight sufficient.
made local exports more compet- Petroleum exports are likely to rules would add to the cost cash market. One issue would be around the
itive globally. be under pressure, with crude oil and complexity of project The move will give the cen- lending facilities and loan guar-
The Australian dollar has fallen prices dropping from more than construction. tral bank greater ability to keep antees, which were intended to
from about US70 cents at the start $US60 per barrel to be below borrowing costs low across the support loans for small and medi-
of the year to be buying about $US28/bbl at the time of writing. $189bn of initiatives economy. um-size businesses.
US60 cents at the time of writing. Contracts for LNG, WA’s second Predictions for the economic “We are prepared to transact “If you’re an SME and you’re
Mr Moriss said that would biggest export, are usually linked impact of the pandemic were in whatever quantity is needed seeing your revenue falling to
mean exporters earned more in to that oil price. dire even before shutdowns had to meet this (yield) target.” RBA zero … are you going to borrow?”
Australian dollars for each tonne Mr Morriss was reasonably opti- ramped up, with ANZ forecasting governor Philip Lowe said. Mr O’Donaghoe said.
shipped. mistic about the LNG industry, a contraction of 2 per cent in the Bank of America’s Mr Morriss But he praised the RBA’s yield
The iron ore price, for exam- with demand from Asia for gas as March quarter in Australia. said there was only one other target, which would have a
ple, is above $A145/t, while gold is a transition fuel likely to remain Some analysts now believe major central bank using a yield greater impact on interest rates
around $A2,700 per ounce. strong in the medium term. unemployment could exceed 10 curve target, with most pledging across the economy than simply
Deutsche Bank economist Phil Woodside Petroleum has per cent. quantitative targets instead. changing the cash rate.
O’Donaghoe said the emergence recently reduced its non-essen- The federal government and “I was really surprised they did
of a recovery in China would be tial maintenance activities, with Reserve Bank of Australia have that,” he said. Continued on page 4
Corporates
act to ease
pressure
Several big businesses have stepped up to the
plate during the current economic shock.
Matt Mckenzie These developments come after the rep-
matthew.mckenzie@businessnews.com.au utation of the corporate sector has taken a
@Matt_Mckenzie_ hit from Financial Services Royal Commis-
A HANDFUL of major businesses are plan- sion, and on the issues of climate change
ning to recruit at least 7,500 workers as and taxes paid.
unemployment spikes dramatically across Coles announced in March it would hire
the country. 5,000 new casuals to help stock shelves and
The new jobs at Coles, BHP and Telstra serve customers, and said it had 1,000 posi-
will help to offset the sweeping cuts made tions now available in Western Australia.
as a result of big sections of the retail and The company already has 12,500 workers
TO WORK: Supporting the economy during the downturn is critical.
Photo: Gabriel Oliveira
hospitality industries shutting down. in WA, making it the fourth largest private
$
10bn
sector employer in the state, according to
BNiQ biggest employers data.
Government of Western Australia WA’s biggest private employer, Wool-
Department of Jobs, Tourism, Science
and Innovation worths, has also announced hiring plans
for its supermarkets, although the com-
pany was forced to stand down 8,000
NAB PACKAGE
workers in its pubs and hotels division Contractors in the resources sector have
after the federal government declared a also been affected by spending cutbacks.
shutdown in the industry.
About 2,650 of those workers would be
Banking
offered roles in other business units, Wool- With support from the Reserve Bank
SHARE IN A PRIZE POOL OF worths said.
Telstra is planning to hire 1,000 tempo-
of Australia pumping liquidity into the
economy, big banks have committed to
$140,000
rary workers, while BHP will be hiring 1,500 supporting customers, promising around
staff across operations in four states for six $36 billion of economic impact.
months’ work, with at least 400 to be in WA. NAB announced a package it said would
Those roles will be in addition to BHP’s inject $10 billion into the economy, includ-
APPLICATIONS OPENING SOON existing hiring plans, and will include
machinery operation, cleaning, electri-
ing cuts to interest rates for new and
existing business loans.
for the WA Innovator of the Year cians and boilermakers. “Business customers experiencing
Both BHP and oil and gas producer financial difficulty can defer their pay-
• Overall Winner will receive $70,000. Find us on
Woodside Petroleum have improved pay- ments on a range of floating and variable
• 16 Semi-finalists will receive pitch presentation training;
ment terms for suppliers. rate business loans for up to six months,”
one-on-one mentoring; financial planning tools and more.
• Eight finalists will also receive a professionally edited BHP said it would start paying invoices NAB said.
video of their innovation. within seven days, down from 30, and “Home loan customers experiencing
@WA_IOTY Woodside said it would move from 30 days financial challenges will also be able
APPLICATIONS OPEN to a target 14 days. to pause their repayments for up to six
WEDNESDAY 8 APRIL 2020 The largest job losses have been in the
travel, discretionary retail and hospitality
months.”
Commonwealth Bank of Australia sim-
www.newindustries.wa.gov.au/opportunities/ioty sectors. ilarly offered a package it said was worth
PRIMARY SPONSOR P L AT I N U M AWA R D S P O N S O R S
Qantas and Virgin have stood down $10 billion, while ANZ said it would inject
20,000 and 8,000 staff respectively, while $6 billion. Westpac offered similar meas-
Flight Centre has cut 6,000 workers. ures without a clear number as to the
GOLD SPONSORS S I LV E R S P O N S O R S Crown Resorts was one of WA’s larg- impact.
est employers with 6,000 people but has Westpac also pledged $10 billion of sup-
closed most of its operations. port for new homeowners.
WA digging in as pandemic pain hits
From page 2
Mr O’Donaghoe said the fed-
Battle stations: Main policy measures
eral government package was
FEDERAL GOVERNMENT RESERVE BANK OF AUSTRALIA
less reliant on cash handouts
$31.9bn to boost cash flow for SMEs and NFPs, payments of up to $90bn liquidity facility for business loans.
than had been the case during
$100,000 based on staff wage tax withholdings.
the GFC, and the tilt to ensure Yield curve target to lower interest rates across economy.
smaller businesses retained staff $20bn to guarantee 50 per cent of new SME loans, up to $40bn.
Overnight cash rate cut 25 points to 0.25 per cent.
made sense. $15bn to buy asset backed securities from smaller lenders.
“The trouble with helicopter $3.9bn for instant asset write off and accelerated depreciation.
money (the cash hand outs), if
WA GOVERNMENT
$1.3bn for wage subsidies of 50 per cent for apprentices and trainees. Payroll tax threshold increase from $950,000 to $1 million
we’re all stuck at home, how do
we spend it?” he said. $22bn in payments through the social security system. brought forward to July 2020.
Higher threshold for creditors issuing statutory demand, personal $114m for SME grants.
Global challenge liability relief for insolvent trading.
The economic pressure is A $40bn finance minister’s advance approved by parliament for
$91m to double energy assistance payments.
growing across the world, and
further unspecified action. $402m freezing household charges.
inspiring phenomenal interven-
tions by governments and central
banks. Deutsche Bank said US GDP cent in the March quarter during industry fund. wages for people unable to work,
Bank of America forecast a would fall 13 per cent in the three- the lockdown, it is likely to grow The US Federal Reserve has up to £2,500 per month for three
global recession for 2020, with month period, while the Eurozone 34 per cent in the three months to also committed to pump trillions months.
growth to be just 0.3 per cent would contract 22 per cent. June, according to Deutsche Bank. into money markets. It was in addition to £330 bil-
across the year, while Deutsche But the news coming out of In the US, the government In the UK, the government lion of loans and guarantees for
Bank predicted the global econ- China tells a different story, approved a $US2 trillion support promised to pay 80 per cent of businesses.
omy will grow just 0.8 per cent with a big bounce expected post- package, reportedly including
over the year. COVID-19 after the draconian $US367 billion for small business .com.au
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Due to public advice from the government and the relevant authorities,
Business News has postponed the 40under40 awards for the safety and
wellbeing of our community.
We look forward to welcoming you in September for a night of fine dining
and entertainment when we will announce the 2020 40under40 winners
U pdate
and celebrate the outstanding young businessmen and women that are
defining the future of our great state.
Venue Grand Ballroom – Crown Perth
Date Wednesday 16 September
www.40under40.com.au
For more information contact events on 9288 2100 or email
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Recognising excellence among WA’s young business elite since 2002.
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PANDEMIC SPECIAL REPORT
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