GDP figures and coronavirus underscore need for effective economic stimulus targeted to those with greatest need

4 March 2020

Following the release of the National Accounts today, ACOSS CEO Cassandra Goldie will address the Australian Investment Council this evening to outline key measures to boost the economy while acting on poverty, inequality, homelessness and climate change.

“The way we choose to respond to the current economic situation will have serious impacts not just on incomes and jobs but also on the level and extent of poverty and inequality in our communities,” Dr Goldie will say.

“It was clear before the coronavirus and bushfires hit that economic growth was very weak – over the last year unemployment rose, wages were flat, people were reluctant to spend, and interest rates were close to the lowest they can go.

“This is reflected in today’s figures showing GDP grew by just 0.5% in the December quarter, with flat investment and consumer spending.

“This leaves us in no doubt that the tax cuts failed to stimulate growth in spending and economic activity. Now the combined impact of the fires and the virus increases the risk of a serious downturn.

“The Government needs to take timely and comprehensive action to stimulate the economy and it can effectively do so while dealing with key challenges holding our economy and society back – poverty, homelessness and climate change. Support for industries directly affected is needed now, but it’s not enough. The Government must lift its own investment and spending to compensate for weak investment and spending elsewhere in the economy.

“We propose the Government take four steps now to ease the worst hardship, and help guard against a wider downturn later this year.

“A Newstart increase of $95 a week would deliver a $4 billion boost to the economy and generate thousands of jobs. Through a Newstart increase the stimulus would flow directly where it is needed most, including those regional communities grappling with high unemployment in the wake of the bushfires and drought. It would mean people in greatest need would immediately spend on the basics in these local economies.

“Australia has some of the highest housing costs in the world and people on low incomes are being priced out of the rental market and on to long social housing waitlists while they face homelessness. We can act on homelessness, while creating construction jobs through a $6 billion social housing construction program to build 20,000 homes over the next three years. For every dollar invested, direct public investment in social housing is estimated to boost GDP by $1.30. Importantly, this would lift housing construction which has been falling for some time, and can be undertaken more quickly than major road or rail projects.

“Our horror summer has made it all the more clear that climate change drives and entrenches poverty. To reduce emissions, cut energy bills and create jobs, we’re calling for the Government to implement a 3-year plan led by social housing providers, local governments and community organisations to improve energy efficiency in low-income households, worth $2 billion over the first two years.

“To assist with the huge remediation task in bushfire affected regions, we call on the Government to introduce a three year scheme to subsidise the paid employment of local people who were already unemployed or lost jobs after the fires. Unlike ineffective Work for the Dole-type schemes, properly paid jobs would also lift the incomes of local people who are struggling to get by, and stimulate growth in the affected regions.”