Treasurer sees way ahead

NSW Treasurer Dominic Perrottet sees a way ahead in the darkness of the tunnel of lockdowns and economic woes.

NSW Treasurer Dominic Perrottet in his Sydney office. Picture: Britta Campion

NSW Treasurer Dominic Perrottet is in talks with officials on how to ease COVID-19 restrictions as his state Treasury predicts the NSW economy will contract by up to 10 per cent over the remaining months of 2020.

The Treasury modelling of current lockdown restrictions predicts about 219,000 extra people are expected to be out of work if ­social restrictions are not eased.

But as dire as these numbers appear, they would have been higher if the federal government had not introduced its $130bn JobKeeper wage subsidy, which will commence payments to businesses from the first week of May.

Providing the first insights into how the state has weathered the pandemic, Mr Perrottet told a ­recent Coalition partyroom meeting that unemployment was forecast to rise well above 10 per cent without JobKeeper, equating to about 374,000 extra people out of work in NSW. The current unemployment rate in NSW is 4.8 per cent; it is 5.2 nationally.

Instead, joblessness is likely to rise to between 7 and 10 per cent in NSW, The Australian has learned, though Mr Perrottet said this scenario — one of several in the modelling — was contingent on a six-month lockdown with current restrictions left in place.

It is this challenge posed by the COVID-19 pandemic — reversing restrictions without compromising the health of the population — that stands as one of the defining tests for the 38-year-old treasurer.

In almost daily discussions with his advisers and health officials, with the NSW Premier and the Health Minister, Mr Perrottet has been itching to ease the economy out of its straitjacketed conditions. The core of these discussions is more ethical than fiscal: balancing the price of human happiness and flourishing with the price of human life. “I’ve been advocating with health officials for certain restrictions to be relaxed, but the health impacts need to be front and centre; I’m working every single day with health to find where those ­opportunities are.”

Ordinarily, the NSW economy is diversified enough to withstand the headwinds of a natural disaster; the state has a long-term growth average of 2.5 per cent each year, according to government figures. But COVID-19 is no ordinary crisis.

Exports such as international education and tourism have been decimated by travel restrictions. The retail sector, dependent on a legion of casual workers, has been wiped out by social restrictions.

Revenue has also flattened — taxes, duties, fees, licences and other charges, all worth billions of dollars to the government, have been deferred or waived to keep industries solvent. What remains has been spent on doubling and tripling intensive care unit capacities, or providing $10,000 grants to crippled small businesses.

Compounded by drought, bushfires and a property market expected to lurch over the next 18 months, the challenge for Mr Perrottet is how to recoup this lost income. Short-term fixes may include selling state assets, such as WestConnex or borrowing money while debt is still cheap.

“If we can reopen these businesses in a way that they can function, while practising social distancing, then we can get them up and running in a way that doesn’t have a poor health effect on the public. Every job and every business that is saved will make a massive difference to peoples’ lives,” Mr Perrottet said.

During a recent visit to a bike store, Mr Perrottet noticed that only six customers were permitted inside at one time, a model that, he suggested to health officials, could be replicated across the restaurant and cafe industries. “That’s the new way,’’ he said. “Social distancing is the cure to keep our economy open and moving.’’