Could care sector play key role in rebuilding the economy? RMIT experts share insights on post pandemic recovery

Could care sector play key role in rebuilding the economy? RMIT experts share insights on post pandemic recovery

As the focus shifts from health to the re-opening of society and the economy, RMIT experts chart a path forward across business, jobs, the property market and sport.

Business

The Australian Government has outlined its three-step plan to re-opening the country by July, turning attention to the economy and society.  

However, there would be no snap-back of the economy School of Management’s Warren Staples and Andrew Linden warned.

“Recovery is likely to be slow because of the problems that were already evident in the economy before the onset of the pandemic such as corporate debt, lack of re-investment, wage stagnation, rising precarity and declining productivity,” they said. 

Added to that were very high levels of consumer debt and questionable credit quality of bank loan books, highlighted in the Banking Royal Commission.

“Bank decisions to defer loan payments and grant credit card interest rate holidays will only delay a wave of defaults,” they said. 

Looking to the way forward, the adoption of corporate governance reforms would help address these pre-existing systemic problems over time.

Nevertheless, the Commonwealth appeared to be pursuing a future reform agenda that would only exacerbate these existing problems, they said.

Jobs and the economy

The Government’s welcome decision to begin opening our society and economy raises important questions about whether we should try to go back to where we were prior to the virus or instead pursue a different direction, Emeritus Professor David Hayward said.

“Expect infrastructure to be high on the list of priorities, even though population growth will slow to a trickle,” he said.

“A better idea would be to pump money into our care economy — already the biggest employer in the land — by boosting jobs, pay, conditions, and training in aged care, disability, child care, family violence, health care and social housing.

“European research shows a much higher payback for each dollar spent on care compared to infrastructure — in the order of five jobs for every one.  

“A post coronavirus world will put a very high value on governments getting this right,” he said.

 

Commercial property market

Asset Managers and Valuers have a critical role to play in the market driven correction, according to Associate Dean, Property and Valuation, in the School of Property, Construction & Project Management Dr Judith Callanan.

“Asset Managers and Valuers must help to keep residential and commercial real estate markets rational, so that assets are not discounted at extraordinarily low prices,” she said.

“With a moratorium on rents, valuers will also be required to help broker catch up rents and negotiate new pathways from breach of covenants, particularly in the commercial sector, where pre-COVID-19 property valuations had climbed.”

Building defects and safety issues due to flammable cladding were also a concern in the ongoing management and valuation of buildings, with the close-down and now delay in VCAT hearings.

“Buildings with defects must be properly managed and maintained by professional property managers, or face grave safety issues, and ultimately, financial pain for individual lot owners, as well as institutional investors.”

With global pensions funds taking a big hit, “continued trust in Melbourne high rise building assets would be essential in the recovery period,” which would only be achieved by ensuring stock remained “attractive to local and global investors,” Callanan said.

Sports marketing

The road back for sport will be fraught with numerous marketing challenges, some of which may be insurmountable, according to School of Economics, Finance and Marketing Associate Professor Con Stavros.

And the effects of the pandemic had potentially changed the sporting landscape forever.

“Sport has not been missed as much as many sport administrators may have thought,” he said.

“They had once, understandably, imagined fervent demand from fans would provide them with the leverage to navigate a return.”

Despite this, there were two certainties going forward.

“One is that sport in front of passionate crowds is not on the agenda anytime soon.

“The price sport will pay is the very absence of what once fuelled them, adoration from the masses who huddled for a glimpse of their heroes.

“The second certainty is that what now fuels sports, the chequebooks of media conglomerates, is what will hasten the return.

“The challenge for sports when they return, including our parochial interests in the NRL and AFL, is creating a semblance of normality to their offering,” he said.

 

Story: Diana Robertson

13 May 2020

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13 May 2020

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