This blog is part of a series relating to the economic and social impacts of the COVID-19, novel coronavirus outbreak of 2020.
As part of supporting community sector agencies during COVID-19, the Western Sydney Community Forum has developed a panel of experts to respond to questions through a central email helpline. The Q & A portal includes a panel of experts from university, health and business partner agencies; and across priorities such as service options and strategies, health and wellbeing, business operations, and human resources and workforce management. The following are questions answered as part of this initiative.
What do you think will be the impacts of expenditure for future generations? Will they be paying the debt in years to come, and how can the human services sector support them?
The coronavirus pandemic led to rapid and major changes to the amount and type of federal government spending. The federal government has spent about $214 billion on a range of measures to support the economy during the shutdown, on social safety nets such as JobKeeper and JobSeeker as well as social services such as free childcare, among others, many of which are set to run out in just a few months. While over $200 billion sounds like (and is) a lot of money, the economic impact of even a 1% fatality rate on our population of 25 million would have been over $1.1 trillion. This spending has been vital to protecting us through this crisis but it complicates the federal government’s own long-held priority to deliver a surplus in October’s budget (after being heavy critics of the opposition Government’s spending when in power).
Not all Debt is the Same or Bad
The reality is that when it comes to the nation’s economic wellbeing, not all debt is the same and not all of it is bad, especially when we are experiencing an economic downturn. For instance, the 2008 Global Financial Crisis saw the Rudd government take on debt to provide an economic stimulus of $51 billion and Australia narrowly avoiding an economic recession.
Even with the revelation that the JobKeeper scheme costs were overestimated by $60 billion, there are concerns, such as those raised by Labor leader Anthony Albanese last month, that economic expenditure on stimulus measures would ‘saddle a generation with $1 trillion in debt’. The fear underpinning this statement is one that relies on a false equivalence. Despite the easy comparisons, household debt and national debt are not analogous. While the level of sensible expenditure in a household is directly tied to cash flows, income and access to credit by its members, the Australian national economy is not simply a representation of our money, the debits and credits that make up our financial position. Instead, the real national economy relates more to our capacity as a country to produce and distribute goods and services, which is also known as our ‘productivity’. The level of national productivity is related to the level of employment as it correlates with the level of utilisation of available resources (human and otherwise), equipment and infrastructure. When more Australians are employed, more of these resources are being productively used to generate and distribute goods and services.
So public debt is not the same as debt like a mortgage, taken out against the value of an asset such as a home, but rather public debt is borrowed against the asset that is the productive capacity of the whole Australian economy, which is a very different situation. Even with the short- to medium-term disruption to our economy because of the pandemic, Australia retains its strong long-term position as a country with many natural and national resources, a capable workforce and a stable governance and regulatory framework for doing business. We are experiencing disrupted productivity but this is a temporary situation.
Importance of Government Spending During Crisis
Government spending in a crisis is able to stimulate economic activity in a generative and multiplicative way because every dollar received is either spent or saved. ‘Deficit spending’, or the $214 billion expenditure for support measures, can be understood as a “transfer of resources from one part of society to another rather than a cost. It creates neither direct costs nor benefits for society as a whole, other than the economic distortions coming from raising the revenue to service the spending.” The $130 billion in stimulus spending was intended to help curb the economic downturn by increasing the available resources and taking advantage of the marginal propensity for spending by those in receipt of the money. With the actual payouts being $60 billion less than was forecasted to be disbursed through the scheme, the economic impacts will likely be slower/less potent as a result because this is $60 billion less being directed back into the economy for productive use and we will not see that multiplier effect on that money.
The stimulus measures have been targeted to those who might have a higher propensity to spend or consume such as those with lower incomes rather than on those who have a higher propensity to save. The Australian Office of Financial Management (AOFM) has already raised debt of $105 billion by selling government bonds to the market and is continuing to do so at a rate of $5 billion per week. The government has denied plans for any further stimulus measures to be enacted with that money, despite the fact that the funds have been raised. There has been calls for an expansion of eligibility for support to more casuals and temporary migrants (many of whom are young people) and encouraged other spending initiatives to be implemented such as spending on schools and public infrastructure.
Impact Going Forward
The question of the impact of this crisis on future generations has no easy answers and extends beyond economics and servicing government debt. It has more to do with the emotional and mental effects of living, studying, working or becoming unemployed during a health pandemic. To have all elements of young persons’ world changed so quickly and dramatically and for extended periods of time with discussions of “new normal” are the concerns. The stimulus spending by the different levels of governments will provide, as designed, the financial safety nets for Australians and this debt will be reduced in the future. For young people, the stresses of what they had experienced and their ability to adjust will challenge more their system and personal supports and their resilience. In terms of how the human services sector can support young people, this centres on supporting them by funding continued studies in higher education through free TAFE and university courses for retraining and prioritising low skilled and disadvantaged youth for employment programs
The arts and hospitality industries have been severely impacted by COVID-19. What can be done to keep the arts and culture economy alive in Western Sydney?
Western Sydney is a vibrant region of New South Wales that houses an estimated 2.5 million people, which is approximately 30% of the state’s population and 10% of the Australian population (.id, n.d.). It is one of the fastest growing regions in the country and is expected to surpass the rest of the Sydney area by 2031, with an exceptionally rapid growing white collar population (Deloitte, 2015, p. 25). Western Sydney is incredibly culturally diverse, with over 290 ancestral ethnicities put forward by residents in the 2016 Census and more than 230 languages spoken in homes across the region (SGS Economics and Planning 2018, p. 34). It also has the largest concentration of Aboriginal people out of any region in the country (2018, p. viii). The rest of Greater Sydney will be referred to as Eastern Sydney that encompasses the remaining 20 LGAs and stretches to the Eastern coast, as far south as the Sutherland Shire and as far north as Hornsby Shire. This area encompasses approximately 1,620 square kilometres and has an estimated population of 2.8 million (Deloitte, 2015, p. 4; City of Sydney, 2020).
Challenges Facing Western Sydney
All art forms across Western Sydney, from visual art to music, are faced with the challenge of underfunded and undersupplied infrastructure. In particular, the areas of literature, dance, and film have little to no infrastructure designed specifically for the intended practice of these arts (SGS Economics and Planning, 2018, p. vii). This poses a massive issue for Western Sydney creatives who need spaces to train, collaborate, create and exhibit their work. Furthermore, while the regioni has five Creative and Performing Arts High Schools, there is no dedicated tertiary art school, which hinders the ability of young artists to continue to learn and develop their skills after secondary school (Deloitte, 2015, p. 51; Stevenson et al., 2017, p. 4). The Blue Mountains and Hawkesbury regions have the largest proportion of visual arts spaces, which are predominantly privately-owned galleries and studios, and Parramatta has the highest number of heritage spaces. Libraries comprise the majority of arts and culture spaces in most of the other LGAs. Wollondilly is particularly undersupplied, having no visual arts, multi purpose, film, or literature spaces as well as no leading arts organisations (SGS Economics and Planning, 2018, p. iii).
Overall, Western Sydney is gross regional product (GRP) is expected to drop by between 5% (Parramatta, the Hills Shire and Hawkesbury) to 10% per annum (Fairfield and Cumberland) (Duke & Wright, 2020). For the region, arts and culture comprises 1% of its GRP compared to the state at 2.6% of the gross state product. Funding for this sector is provided predominantly through the Australian Council for the Arts (federal), Create NSW and NSW Historic Houses Trust (state). Western Sydney received 1% and 5% from federal and state sources respectively between 2008 to 2014 compared to 36% and 87% respectively for Eastern Sydney (Deloitte, 2015, p. 14) with the majority for institutions in the City of Sydney. In addition, the focus in public discourse on Western Sydney’s arts and culture is predominantly focused on Parramatta diminishing the artistic and cultural landscape of the rest of the region (SGS Economics and Planning, 2018, p. 109).
The NSW government recently released a $50 million stimulus package called ‘Rescue and Restart’ aimed at supporting arts and culture organisations across the state. The funding package will be rolled out in two stages: stage 1 immediately to support organisations to ‘hibernate’, and stage 2 expected in the next several months that will allow organisations to re-open as the pandemic eases up (Create NSW, 2020). A further $6.34 million was allocated as specific COVID-19 relief for small- to medium-sized businesses in the cultural sector, totaling around $56.3 million from the state government (Eltham, 2020). On a federal level, Australia Council announced a $5 million Resilience Fund to help support artists and cultural organisations during the COVID-19 pandemic and an additional $27 million Relief and Recovery Fund aimed at providing assistance to areas of the arts and culture sector most affected by COVID-19, specifically regional arts, Indigenous arts and live music (Australia Council for the Arts, 2020; Australian Government, 2020). The JobKeeper Payment Scheme for businesses has been noted as having little relieve for the arts sector with many artists and creatives work on short term contracts or rely on royalties or advances compromising their eligibility for the scheme (Morrow & Long, 2020). Local Councils are also releasing funding packages such as Parramatta Council rolling out a $3 million relief and recovery package to support local businesses, including small business grants of up to $2,000 (Fulloon, 2020).
Where to from here?
Western Sydney’s arts and creative community can work together to secure as much funding as possible from local, state and federal coronavirus relief packages. The Relief and Recovery fund is aimed at supporting disadvantaged groups within the arts and culture sector. As the region has the highest proportion of Indigenous people out of any region in Australia, it would be beneficial to capitalise on the Commonwealth’s interest in Aboriginal art.
The industry can move to different forms of offerings to cater to the current climate by making online offerings and virtual tours. This has already started to occur with the Bankstown Poetry Slam, a huge monthly event that hosts international talent and draws an audience from all over Sydney, has moved to online virtual slams (Bankstown Poetry Slam, 2020). Additionally, areas such as the Blue Mountains that have a high number of private art spaces but rely heavily on tourism for income were hit hard by recent bushfires and have not been able to recover due to severe drops in travel resulting from COVID-19 (Carruthers, 2020; Patterson, 2020; Hennessy, 2020). Expanding into digital offerings would increase interest in the spaces, exhibitions, and artists, potentially driving up attendance when travel bans are lifted.
.id. (n.d.). Greater Western Sydney Region. .idcommunity. https://profile.id.com.au/cws/population
Australia Council for the Arts. (2020, 7 May). Grants. Australia Council for the Arts. https://www.australiacouncil.gov.au/funding/
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Bureau of Communications and Arts Research. (2018, October 19). Cultural and creative activity boosts Australian economy. Department of Communications and the Arts. http://communications.e-ewsletter.com.au/pub/pubType/EO/pubID/zzzz5976fe3908a3e171/interface.html
Carruthers, F. (2020, March 20). Blue Mountains tourism reels from coronavirus cancellations Australian Financial Review https://www.afr.com/companies/tourism/virus-leaves-blue-mountains-tourism-reeling-20 200319-p54bys
Create NSW. (2020). $50 million COVID-19 Rescue and Restart package announced for NSW arts and cultural sector. Create NSW. https://www.create.nsw.gov.au/funding-and-support/covid-19-initiatives/covid-19-rescue-and-restart-package-announced-for-nsw-arts-and-cultural-sector/
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Deloitte. (2015). Building Western Sydney’s cultural arts economy — a key to Sydney’s success. http://businesschamber.com.au/Sydney-Business-Chamber/Advocacy/Focus-Western-Sydney/WS-Cultural-Infrastructure-Report_Final
Eltham, B. (2020, May 26). Australia’s cultural sector is haemorrhaging money, but the federal government isn’t interested in stemming the flow. The Guardian. https://www.theguardian.com/culture/2020/may/26/australias-cultural-sector-is-haemorrhaging-money-but-its-not-the-federal-government-stemming-the-flow
Fulloon, S. (2020, May 16). Coronavirus restrictions are easing, forcing Australia’s migrant businesses to adapt. SBS News https://www.sbs.com.au/news/coronavirus-restrictions-are-easing-forcing-australia-s-migrant-businesses-to-adapt
Hennessy, K. (2020, February 10). Tourism after the bushfires: ‘The whole area is screaming for people to come back’. The Guardian. https://www.theguardian.com/lifeandstyle/2020/feb/10/back-to-the-bush-three-recovering-nsw-regions-eager-for-visitors
Marshall, C. (2020, March 18). Virtual holidays: How to travel the world while you’re stuck at home. Escape. https://www.escape.com.au/travel-advice/virtual-holidays-how-to-travel-the-world-while-youre-stuck-at-home/news-story/402c8b461c1ab419ef995a926ccc1091
Montoya, D. (2015). Western Sydney: An economic profile (Briefing Paper No 10/2015). https://www.parliament.nsw.gov.au/researchpapers/Documents/western-sydney-an-economic-profile_1/Western%20Sydney%20-%20an%20economic%20profile.pdf
Morrow, G., & Long, B. (2020, May 26). The government says artists should be able to access JobKeeper payments. It’s not that simple. The Conversation. https://theconversation.com/the-government-says-artists-should-be-able-to-access-jobkeeper-payments-its-not-that-simple-138530
Patterson, M. (2020, February 19). Coronavirus impact hits regional Australian tourism. Blue Mountains Gazette. https://www.bluemountainsgazette.com.au/story/6639511/coronavirus-impact-hits-regional-tourism/
SGS Economics and Planning. (2018). Mapping arts and culture in Western Sydney. Create NSW, pp. i-152. https://create.nsw.gov.au/wp-content/uploads/2018/12/Attachment-A-Mapping-Arts-and-Culture-in-Western-Sydney.pdf
Stevenson, D., Rowe, D., Caust, J., & Cmielewski, C. (2017). Recalibrating culture: Production, consumption, policy. Western Sydney University, pp. 1–71. https://www.westernsydney.edu.au/__data/assets/pdf_file/0006/1239999/recalibrating-culture-report.pdf