In the midst of the most unprecedented downturn in our economic history and with the flood of stimulus measures and booster payments being announced to alleviate the worst impacts from the COVID-19 pandemic, it can be difficult to see the bigger picture. However, world renowned economist Jonathan Pain is urging governments not to lose sight of life after the pandemic as they grapple with the more immediate pressures that are facing them.
Mr Pain correctly predicted the economic downturn we would face two months ago when he spoke at a UDIA WA lunch on the topic of our economy in a global context. A prediction that many of us may have thought pessimistic at the time.
UDIA WA spoke to Mr Pain more recently, in the midst of heightened restrictions and closed borders, to discuss what he thinks can be done to mitigate the significant economic impacts of the pandemic in the longer term.
He says governments are the only entity that has the monetary and fiscal fire power to underwrite the economy and he applauds the actions taken so far by the Federal Government in effectively providing a bridge over the economic chasm beneath us.
While he is supportive of the actions taken, he says we need more than just booster payments and subsidies, we need hope for the future, which can be generated through infrastructure projects.
“There’s no better time for targeted infrastructure projects,” he said. “I’ve always been a big fan of infrastructure anyway but in the environment we’re in now, it amplifies the benefits of infrastructure spending.
“Infrastructure investment has a series of very powerful multiplier effects so for every dollar spent, you get more than $1 in economic gains.
“Furthermore, infrastructure spending historically enhances productivity. It is a win-win-win across so many different spheres. First and foremost, you’re employing people and there’s a benefit and positive multiplier from that because if somebody is employed then they can spend money.
“If the community sees infrastructure projects being announced and going ahead that in itself provides confidence, it provides some certainty.
“What we need governments to do now is to provide the community with a road map that says we’ve got your back and infrastructure is a very powerful weapon that we can deploy in this fight, in this war.
“The great thing about infrastructure is its visible, people in the community can see something is happening, something is being done, jobs are being created and that investment in the future enhances productivity. It may often enhance a sense of physical pride depending on what the infrastructure project is. This for me is extremely clear in my mind that that’s the pathway forward.”
Although Mr Pain says governments need to lead the charge and provide the fiscal firepower, the fight against the pandemic requires a whole of community response including businesses in the private sector assisting in the creation of or investment in infrastructure projects.
“Leaders in the business community, this is their time to stand up. Leaders in the political community, this is their time to stand up. Leaders in the community, this is their time to stand up.
“We have to do this collectively, one million per cent. There is absolutely no doubt in my mind, we need greater energy, we need greater clarity, we need greater focus and we need greater passion.
“We’ve seen leadership from Andrew Forrest announcing all kinds of things and this is when those that have proven to and have benefitted from all the great economic dividends they have enjoyed over the past decades, this is their time too to stand up.
“Every citizen on planet earth needs to stand up and fight this together.
“We’re all in this together, that’s the principle here.”
For anybody interested in listening to Jonathan Pain’s presentation at UDIA WA’s first Industry Luncheon on 14 February, click here or to read an overview of his presentation, click here.