Summary

• The second lockdown in Victoria greatly affected the Australian economy but will be eased after midnight on 14 September 2020.
• Consumer confidence in the state of Victoria faced a 0.5% decrease, according to the ANZ-Roy Morgan Consumer Confidence survey report released in July.
• Dining in, takeaways and fashion retail suffered the worst collapse since the lockdown hit, with 59% and 60% less income, respectively.
• It has been predicted that this financial year in Victoria will bring a 1.6% dip in the total domestic economy, which will also be felt on a national level in regard to the current recession.
• The Victorian Government introduced the biggest stimulus package for businesses on Sunday, preparing A$3 billion for the companies in need.

Victoria imposed strict movement restrictions at the beginning of July this year, which will now be relaxed post-midnight of 14 September, after six weeks period.

Unlike most democracies that faced severe COVID-19 impacts and yet chose to keep their businesses open, Victoria needed to go into the second lockdown – a lot stricter than the first one, which occurred earlier this year.

As of 2 August, people living in metropolitan Melbourne were forced to go into the stage four lockdown, as the coronavirus cases were drastically rising in that area. Movement restrictions applied to all activities outside the house, excluding grocery and essential shopping, outdoor exercise for an hour a day and to work.

MP Daniel Andrews also introduced a curfew for the Melbournians, starting from 8pm and ending 5am every day. Wearing face masks was mandatory at all times while being outside unless people had an approved reason why they should not have one.

ALSO READ: Victoria’s second wave of COVID-19 is pulling down jobs and consumer spending

What does this mean for Australia?

Normally, the state of Victoria would annually bring a quarter of the Australia’s GDP (gross domestic product).

While the rest of the Australian states had semi-lockdowns for some businesses (hospitality, tourism, and others), Australia as a whole faced a great problem because of Victoria’s tough lockdown.

Earlier in July, ANZ Roy Morgan Consumer Confidence survey reported a 0.5% fall in consumer confidence, leading to 91.6 points, the lowest statistic since May of this year.

There was a reported 1.2% gain in current finances and a 1.4% drop in future finances, according to the survey. Current economic conditions fell by 3.4%, but future conditions increased by 1.8%.

Finally, less people expressed the wish for buying a property, a 1.9% decrease, while inflation anticipations remained the same at 3.2%.

MORE INFORMATION: Consumer Spending and Confidence dips due to COVID-19 outbreak in Victoria

What businesses were affected the most?

Due to the movement restrictions, the Melbournians could not dine in restaurants or have drinks at bars and pubs. A mandatory stay-at-home led to a record of 59% fall in dining and takeaway, as they are mostly night activities that were restricted.

Apart from hospitality, fashion retail industry was hit the most. A 60% downfall was recorded in fashion-spending, resulting in many fashion boutiques closing their doors.

It is predicted that the total domestic economy in Victoria will drop by 1.6% in this fiscal year, given that the lengthy second lockdown will not be lifted for four more weeks.

MUST READ: Impact of Coronavirus on Australian Economy and Way Forward

What next?

There are a few steps that should be looked at for the Australian recovery after reopening the Victorian businesses:

1. Government boost

An additional Government boost for heavily impacted businesses was announced on 13 September 2020.

Andrews’ Government introduced a new plan for the financial assistance for local businesses, involving A$3 billion aid stimulus for tax relief and cash grants. Small and middle-sized businesses that got severely hit by the second lockdown will have a chance of getting A$1.1 billion in cash. Alpine resorts that did not have visitors this snow season will be eligible for a A$20,000 recovery stimulus.

The state will spend A$1.7 billion for businesses that need to pay at least A$10 million annually to their staff by providing tax delays for up to 12 months.

An extra tax relief will be provided, of A$137 million on top of A$1.5 billion relief stimulus.

For the rest of the year, the Government promised to waive all liquor licensing costs, a value of A$27 million in total. An additional A$44 million will be offered to businesses that yet needs to implement COVID-19 safety precautions.

Treasurer Tim Pallas stated that coronavirus had not only impacted people’s health, but also the domestic economy, which Australians desperately need to get better in order to create more jobs. However, the Victorian government believes that health needs to be restored first in order to get the economy going.

2. Local spending

After everything goes back to normal (or a new normal), all Australians have been urged to boost the economy by supporting local businesses. Cafes, restaurants, or even local fashion boutiques desperately need more money to keep their businesses going, especially in metropolitan Melbourne.

Alongside hospitality and fashion, events and culture industry suffered a great loss of income. As large events are still not permitted in Australia, the events industry will need every bit of help from the Australian citizens.

ALSO READ: Morrison Government Announces $50 Million Relief Package for Business Events Sector

3. Domestic travel

Even though interstate travel is still not completely possible, all Australian states are looking at opening up their borders for fellow states. This step will be crucial towards the economic recovery, as tourism and the aviation industry had almost no income since the pandemic occurred.

PM Scott Morrison urged all states to open up their respective borders by Christmas this year.

MUST READ: Qantas Group Cuts Its International Capacity by About 90%

4. Investing in infrastructure

Investing money in infrastructure development could be a big step for the Victorians, and for Australia in general. Infrastructure development would create a lot of job opportunities for the citizens, as well as improve the already high quality of life in Australia.

The current government has a tendency of building and purchasing e.g. boats offshore, which should probably need to be done within Aussie borders, if the Government wants its people to get jobs.

5. Renewable energy

A few months back when the pandemic first started, the whole world experienced a drastic positive change in air pollution, especially Australia. Renewable energy could improve the current climate even more, by reducing CO₂ emissions, which are the main cause for climate change. Spending in renewable energy is believed to be the best investment of the future and would also create more jobs for the people.