OPINION: 'How do we fix the economy post COVID-19?'
The answer is, 'more infrastructure'.
Whether the question is how to increase job opportunities, how to improve liveability, how to grow the economy, how to retain talented youth, how to attract major acts, how to win the election; increased infrastructure spending is pretty much the only answer being put forth.
Of course, you get an entirely opposite response to the other important question, that's not being asked as much by anyone, how do you decrease government debt?
'Stop spending' is the simple answer, but that would make things worse not better, wouldn't it!
Do we just have to accept the already huge state and federal government debt has to get bigger for things to get better, if more infrastructure is the only answer.
Thus, in trying to solve one problem are we creating another problem with bigger long-term implications?
More infrastructure is no doubt part of the solution, but is it the only solution?
Look at what is happening around the greater Rockhampton region.
Despite recession, pandemic, border closures, even a looming election there are businesses that are performing strongly.
Admittedly not all, but it is generally accepted that across the board this region is doing better than most others. Why?
No doubt there are and will be politicians and organisations taking credit for this.
And one should acknowledge the efforts of those who have played an active part in attracting major infrastructure projects happening in the region.
What I believe we are experiencing though is how a significant, constant, direct injection of additional cash, circulating in a community, can immediately stimulate it.
I feel statistics will later show that JobKeeper and JobSeeker payments did not just replace the total of lost income in this region, they boosted it and, by consequence, the spending that goes with that.
Under-employed casuals found themselves with bigger pay packets and still unable to get a home loan, spent it.
On top of this, the greater region is receiving greater visitation of intra and interstate tourists, who can get into the state, looking for new experiences they may have otherwise gone overseas for.
A market traditionally greater Rockhampton region has largely missed out on.
Again, not just replacing lost revenue but boosting it.
Yes, this is a generalisation and there are businesses either closed or still suffering, but the pandemic has provided an insight of this region if extra money is constantly being generated and spent.
As we near the reductions in JobKeeper and JobSeeker, plus a state election, shouldn't we be investigating ways we can generate extra money circulating in the community without increasing the government debt?
A lower income tax rate for regional Australians.
The immediate response could be, won't collecting less taxes increase debt?
However, if more people moved from heavily populated cities to regions which had existing infrastructure to comfortably handle an increase in population, less money would be needed to spend on infrastructure like the state government funded $6 billion plus Cross River Rail project or the now touted, more expensive fast train project for south east Queensland.
Now, as research indicates more people are considering moving from congested cities to smaller centres, it would be interesting if true independent modelling was done on a sliding income tax scale across regional Australia.
The regions with the smallest population paying the lowest tax rate.
Would government debt actually increase as regional economies are stimulated with more people and spending?
The Shop Local call during the pandemic has been helpful in keeping money local.
Can it go from just an emotive call out to an ongoing reward-based system like Woolies and Coles do, the more you shop local the more local reward points you earn?
Maybe a Chamber of Commerce could co-ordinate such a scheme, thus not increasing government debt.
The resilience, flexibility and adaptability of local businesses has been highlighted during the pandemic.
Examples of entrepreneurship, collaboration, going the extra metre, pivoting, improved online presence can be attributed to COVID-19.
Not wanting an ongoing pandemic to be the major stimulus, how do we encourage a local business to remain proactive and not stuck in a rut?
Would cutting red tape that restricts what, where, when, how a small business operates help? And the effect on increasing government debt to do this, minimal if anything, I suspect it could lead to reducing it!
Of course, not all infrastructure has to be funded by government (debt).
Can private investment in not just infrastructure but other government funded services be encouraged?
Social Impact Bonds is something we could all invest in, like buying shares in a company. However, SIB's are more specific outcome orientated.
A business (provider) raises working capital by issuing SIB's to perform a service normally funded and performed by the government.
If the provider meets the outcome objectives, they are paid a return by the government, which, after costs deducted, is distributed to the bond holders.
Basically, can a private provider do a more effective and efficient job than a government department in achieving specific outcomes?
If so, the provider is paid out of savings and/or the additional revenue the program provides and no additional government investment is required or risked.
Could some needed local services be funded in this manner and the community share in the financial returns that this may provide to the investors?
These are not new ideas and it dumbfounds me that they are not being publicly discussed in working out solutions to the challenges governments are currently faced with.
More infrastructure appearing to be the only solution offered.
How many people understand what a new Bradfield Scheme actually entails or costs (do even the politicians who propose it)?
Yet this big, bold project is now promised by both major political parties.
How long would it take to even start, let alone complete?
Having big ideas is fine and should never be discouraged, but small ideas should not be dismissed just because they are not bold, being small in size and cost.
In fact, asking first what is the smallest thing we could do towards fixing an issue can be the smartest thing to do, because often a small idea is quick and achievable, not needing the wheels of bureaucracy to move much, if at all.
Then people see progress not just words (and the endless expensive feasibility and business cases).
There is arguably no one perfect solution, perhaps not even a perfect part solution, however, the fixation on just 'more infrastructure' is narrow minded. Surely people who are paid to come up with solutions can do better than just this.
Unless we start demanding this though, more infrastructure more debt appears to be an ongoing double-edged knife, slicing deeper into the belly of our economy.
Let's start demanding and hearing some small ideas, instead of just the big, bold ones that takes years to materialise if ever.