Australia, and particularly the ACT, are in a much healthier economic position than most estimates predicted despite the COVID-19 pandemic, a new report by Deloitte Access Economics suggests.
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In fact, Deloitte partner and the report's lead author Chris Richardson said the ACT, along with the Northern Territory, appear to be best positioned for a successful rebuild.
Deloitte's Business Outlook, released on Monday, points to the ACT's high proportion of public sector workers as the primary reason Canberra has weathered the storm so successfully, along with the lack of locally acquired cases.
However, it hasn't all been plain sailing for the ACT, with women and young people hurting the most from job losses, tourism dollars drying up wiping out a lot of private sector growth with it, and hospitality and retail taking a big hit, as they did nationally.
But Mr Richardson said the forecasts were "healthier and happier" than those from Treasury and the Reserve Bank for one critical reason: consumers have spent much more than anticipated.
"The central bit of the economy, and the spot where the fear may have showed up the most, has actually done surprisingly well," Mr Richardson said.
Retail sales in May increased 5.8 per cent on the figures from May last year, which Mr Richardson labelled "bloody miraculous".
It's a shocker of a year, it's just not nearly as bad as it looked as though it might have been.
- Deloitte partner Chris Richardson
The Reserve Bank predicted consumer spending to drop by 15 per cent in the June quarter, compared with the March quarter, but May's strong figures suggest that drop is unlikely to eventuate.
"To be clear, I'm making a relative point," Mr Richardson said. "It's a shocker of a year, it's just not nearly as bad as it looked as though it might have been."
Public sector wages won't be growing any time soon and nationally there will likely be a slowdown in public sector hiring. However, the outlook predicts Canberra will be somewhat impervious to this trend, as the federal bureaucracy will be responsible for steering the country out of the pandemic.
"Even though there will be restraint nationally in public service numbers - state, local and federal - here in the ACT chances are the pendulum swings a bit the other way," Mr Richardson said.
"This is where we set up the new programs and organise the administration, that's going to be something of a hive of activity for a while."
Wages across the board are at least a year away from seeing any growth, the report suggests, and it will require a shopping list of favourable pre-conditions, primarily staying on top of the virus.
Infrastructure will be critical to the rebuilding process, with state and federal governments already expediting many projects to help stimulate the economy.
"With interest rates at record lows and unemployment rates at the highest they've been in some decades, the costs of infrastructure are lower than they were, and the benefits are higher," the report reads.
However, it warns this doesn't warrant an "open slather" approach, but does mean the benchmark for whether a project is worthwhile has dropped.
Government is going to have to do the heavy lifting when it comes to rebuilding the post-pandemic economy. As the report makes clear, Australia is beginning from a difficult position.
"We'll begin recovery with unemployment high, the private sector scared, the Reserve Bank tapped out, and prices for our key exports weak," it reads.
This then requires government to switch tactics from a "virus sprint" to a "recovery marathon".
Key among this is to avoid stopping JobSeeker, JobKeeper and other stimulus measures at the same time, which the authors contend would be a mistake.
Mr Richardson said the recession was changing shape and therefore government spending had to change along with it.
"The longer [JobKeeper] goes on, if you're only keeping businesses alive, and hence jobs alive, that won't be there on the other side of government support, you're not really helping anybody there," he said.
"That doesn't mean spend less, that means spend differently."
However, if stimulus payments were to be decreased it was absolutely critical to do so gradually to preserve consumer confidence which ultimately was responsible for Australia's better than expected position.
He also noted Deloitte has been a longtime advocate for a permanently higher unemployment benefit.
