Coming Off Jobkeeper Will Be the Real Challenge in 2021
With borders reopening and some states looking to welcome international students in 2021, the Oceania region has provided a bright light to the rest of the world whom more than likely will have to medicate their way out of the COVID crisis via a vaccine.
Returning to normal will be an incredibly tough ask for policy makers currently dealing with balance sheet that have significantly expanded to support demand in the economy.
The levels of support extended by the Federal government in particular has seen borrowings from the Commonwealth approach a trillion dollars. The only comfort being that Australia's gross debt at 60% of GDP compares somewhat favourably to the United States, United Kingdom and the European Union.
The key point here is that governments at both a local and federal level cannot maintain support levels like the policies of Jobkeeper and Jobseeker that have supported workers in 2020. In other words it is time to get back to work.
The question is how and what will the economy look like?
When jobkeeper is finally turned off in March, the real effect of so called 'Zombie companies' will be felt in the economy along with those businesses who will struggle to attract staff as the Jobseeker has provided many people with income that would not have been there in Pre-Covid times.
For Queensland, the state's 450,000 businesses face an incredibly difficult 2021 with the unemployment rate currently stuck at 7.7% and forecast to go as high as 8% according to Queensland Treasury.
The key challenge for politicians across the political divide is ensuring that businesses have incentives to employ, can bid for local contracts and are ably supported by the tax system to write off new assets and equipment.
May 2021 be kind.