RESTORING CONFIDENCE! It’s the latest buzz phrase doing the rounds from all those commenting and advising on the present state of the economy.
The Premier’s Economic Recovery Advisory Council brought down its interim report recently, and as a matter of priority referred to the need to build confidence, in order to restore demand and jobs. “Tasmanians need to regain their confidence to re-engage in the economy, to reconnect to community and to take a step forward in business”.
It acknowledged a significant downturn in economic activity, particularly in the hospitality and entertainment sector, and recognised that it will be the private sector that will be relied upon to restore demand.
The Council recognised that the public sector has a fundamental role to play in restoring confidence by behaving as a partner to the private sector and that it needs to streamline its actions and behaviour. That is to be welcomed. The public sector should be an ally, and not an adversary.
Making decisions on time, paying bills on time, releasing contracts for works on time, and the provision of financial support for those businesses that have been adversely affected by government decisions are all immediate measures that should be taken to stem the flow.
At the same time, a more middle-term outlook suggests a more connected training regime to ensure the skills required to bring about renewed business activity will be available as required.
We hope the government takes note of the report and acts on it, and that it maintains the level of support required while restrictions are in place.
It needs to be said that Councils also have a duty of care to ensure that unnecessary restrictions on trade are minimized. It is a very simple equation. A sale involves a buyer and a seller. Encouraging buyers to get in front of sellers and buy should be the major concern of those in authority. Disappointingly, we are not sure we are seeing any particular urgency in so doing as yet.
In the property game, there are buyers and sellers, lessors and lessees, and each of these four categories of person has their own drivers, their own interests and their own concerns.
The move by government to develop more community housing is welcomed as not only will this resolve a housing shortage for those who are at the lower end of the rental market, but it will be a boost for employment.
The Real Estate Institute of Tasmania has advised house sales are steady. Paramount for buyers of course is the reliability of access to funds, and the capacity to service any borrowings. In this regard, we are somewhat bemused by recent reports that suggest a Catch 22 situation for new homeowners trying to access government housing grants. It seems that government won’t approve grants without a bank loan, while the banks won’t agree to a loan without the government grant being in place.
This is obviously an absurd situation, comical even, except that at this time, when wanting to restore confidence, such machinations do the exact opposite.
A landlord wants their tenant to remain and pay rent, the lessee wants to ensure that their capacity to pay that rent is met. All this seems so obvious, and a range of government programs, federal and state, have gone some way to ensure stability in these markets.
In the residential rental market, recent advice from CoreLogic suggests rental levels in some affluent suburbs have fallen, suggesting some over-pricing and the move away from short-term rentals, and the move by government to construct new homes may have some dampening effect on demand.
Many smaller businesses, faced with a fall in turnover, have adapted to the changed circumstances and have developed new approaches to their businesses to drive increased activity, whether that be novel product, online presence or some other activity. Food businesses in particular have been hard hit by the slowdown. This has been exacerbated by the move to many people now working from home, and we believe it is important that office workers should return to their place of work as part of a normalization process.
On top of this, the Federal government has foreshadowed its intention to draw back on JobKeeper and Jobseeker, and although these decisions might seem logical, there will be a level of hardship caused by these decisions.
All of which goes to suggest a continuing level
On the positive side, the recent quarterly CommSec State of the States Report has Tasmania in the top spot on the economic performance rankings, coming first in 4 of the 8 separate measures of activity, and second in two others.
Restoring confidence – it is indeed easy to say, but it is going to take a concerted effort to bring it home.