Coronavirus hangover cure rests on loosening of the purse strings

QUEENSLANDERS will have to shop their way out of the coronavirus economic shock, with warnings the hangover could last years should cash-strapped consumers remain in isolation mode.

QUEENSLANDERS are being urged to shop their way out of the coronavirus shock as business leaders say that the Government will need a “shovel-ready” project plan to kickstart the state’s ­economy.

While COVID-19 restrictions begin to ease across the nation and retailers get the go-ahead to restart trading, experts say uncertainty looms for businesses that are reliant on cautious consumers opening their wallets.

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Businesses are weighing up the cost of reopening against warnings of sluggish consumer spending in coming months in the face of rapidly rising unemployment.

And ongoing social distancing and other containment measures will likely further impede the return to normal levels of trade when restaurants and pubs are finally able to reopen.

“As we start to reopen businesses and the economy, consumers will be less inclined to open their wallets,” said Queensland University of Technology consumer behaviour expert Gary Mortimer.

He said consumers were going to be more concerned with paying their rent or mortgage and putting food on the table than buying a new pair of winter boots or a TV set.

Queensland consumer expert Dr Gary Mortimer

“Retailers and other businesses will be opening some businesses this weekend, but not all,” he said, “because you can open your store, but there’s no foot traffic so all you do is end up incurring more costs, wage costs and there’s still no revenue coming through.”

Industry groups and economists say governments will need to plough hundreds of millions of dollars more into stimulating the economy, warning that many businesses will collapse without it.

That includes doubling the $500 million budgeted by the State Government for concessional loans for small to medium businesses and allocating about $100 million for business grants of $10,000, according to the Chamber of Commerce and Industry Queensland’s business recovery plan.

High demand for the loan scheme has already led to the Government refusing new applications.

CCIQ also wants a “shovel-ready” infrastructure investment program, apprentice and trainee wage subsidies, and for the state to release its road map showing recovery steps as COVID-19 restrictions lift.

“I don’t think we’ve seen the full impacts yet,” CCIQ advocacy and policy general manager Amanda Rohan said. “We are still in hibernation.

“The telling tale will be how well businesses can be viable in sort of a staged reopening.

“Retailers can open from (this weekend), but if people aren’t going to the shops, because, of course, we still have social distancing and all these other things, it’s not viable for businesses to remain open.

“That’s where we are going to see some further shocks up until June, and even beyond.

“We are really strong on saying that we need to get this recovery package in place so businesses have some insulation and cushioning to enable them to weather the storm until consumer spending and activity in the economy really lifts.”

Veteran Queensland developer Don O’Rorke, of Consolidated Properties Group, has called for all levels of government to actively work on bringing forward shovel ready projects to create jobs.

A scarcely populated Queens Street Mall during coronavirus restrictions. Picture: David Clark/AAP

“The federal, state and local governments combined can identify projects that are either public projects or, alternatively, private projects that could be shovel-ready very quickly if they were proactive about them,” Mr O’Rorke said.

He anticipated a “slow thaw” in the retail sector for the rest of the year.

Also central to a recovery was lifting interstate travel restrictions as far as possible to boost domestic tourism, according to University of Queensland economics professor John Mangan.

Prof Mangan said the ability of government to continue to fund stimulus programs may “not be what people think it is”.

Former premier Peter Beattie has outlined a 10-point recovery plan, including boosting local manufacturing, fast-tracking public and private infrastructure projects, a national “holiday at home” tourism campaign for when domestic travel reopens, developing a specific strategy to cover New Zealand, and working with Qantas and Virgin on a post-virus Queensland tourism plan.

Some businesses have already overhauled their operations to find local suppliers for products rather than buying from overseas due to supply issues, according to the CCIQ.

While some retailers and other sectors, such as agriculture and mining, will quickly recover, businesses that depend on international tourist dollars could take years to fully recover should they manage to weather the storm, experts say.

Growth and unemployment rates will be patchy across Queensland, with tourism-centred Cairns, and the Gold and Sunshine coasts hit the hardest, says Conus Business Consultancy Services economist Pete Faulkner.

His modelling shows unemployment in Queensland could jump from 5.7 per cent to as high as 12.4 per cent by June – a loss of 187,550 jobs – with the Cairns jobless rate reaching as high as 16 per cent.

But unemployment in Queensland is expected to ease to about 8.1 per cent by December.