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  • Renee Cluff

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    Cairns among worst hit amid concerns COVID-19 job losses are being underestimated


    "When it comes to the economic impact, we’re on the frontline of it in Cairns."

    That is the stark assessment by a leading Cairns business advisory specialist who has issued a dire warning that the dramatic impact of the coronavirus crisis will be felt much harder than government economists and politicians are predicting.

    Halpin Partners Director Shaun Donaldson told Tropic Now the Cairns region has been among the first to feel the brunt and will continue to be among the worst hit.




    Mr Donaldson estimated that up to 10,000 people lost their jobs in Cairns on Monday, with "every restaurant, tourism business, accommodation provider in town shutting their doors overnight".

    “Then there’s a flow-on effect through other industries. We’re still in this surreal state, the impacts really haven’t been felt yet.

    “We’re in a situation now where it doesn’t matter how good or hard a worker you are, it’s no good, there are no jobs and it’s going to have a severe mental impact on people.

    “If we can’t get people back into jobs longer term, it’s distressing to think what that means.”

    The gloomy predictions come as Cairns records it’s sixth and seventh COVID-19 victims.

    None of the infections were transmitted locally.

    One person is in isolation in far north Queensland, while the other is a Cairns resident being treated in Brisbane after arriving from overseas.

    Last night, further movement restrictions were announced by the Prime Minister, affecting the events, arts, recreation and health and beauty sectors.

    From midnight tonight, the following will be banned:

    • Galleries and museums
    • Public swimming pools
    • Amusement parks and arcades
    • Indoor and outdoor play centres
    • Community and recreation centres
    • Auction houses, real estate auctions and open house inspections
    • Beauty and massage parlours, including waxing and nail salons

    Furthermore:

    • Shopping centre food courts will only be able to sell takeaway
    • Hairdressers and barbers can only see clients for 30mins
    • Outdoor personal training and boot camps are limited to 10 people
    • Wedding parties can only have 5 people present
    • Funerals are limited to 10 people

    Economist Bill Cummings has estimated that at the peak, the Cairns region will have an unemployment rate of 18%.

    “That’s probably spot on and so that would amount to 26,000 people out of work,” Mr Donaldson said.

    “Last official figures for a 5.8% trend unemployment amounted to 6,500 out of work we’re looking at an extra 20,000 people.”

    Mr Donaldson said the problem is that Governments who are determining stimulus measures are currently being advised by projections of a peak national jobless rate of around 9%.

    “It is a lot worse than some of the national media are reporting and businesses if you haven’t been impacted yet you need to be ready,” he said.

    “There’s got to be some economic responsibility with the policy and getting the balance right is going to be important.

    “On the current trajectory the damage, nationally we could have two million unemployed for some time.

    “It’s going to ripple through everywhere, even the big cities with white collar workers.”

    Where are government stimulus measures falling short?

    Mr Donaldson says stimulus measures aimed at helping small businesses continue paying staff aren’t helping, including a promise of grants of up to $100,000 for small businesses.

    “At the moment the government packages effectively reduce employers’ liabilities so PAYG or payroll tax, which is a good thing but it doesn’t provide direct cash flow to keep people employed,” he said.

    “It’s not a cash payment and if you’ve got no cash flow you can’t pay staff.

    “Say you lodge your BAS (business activity statement), you’d get an offset on your activity statement, so instead of paying $40,000 you’d pay $20,000.

    "But a lot of businesses at the moment can’t even pay $1.

    “Also, it’s triggered through the March BAS so payments won’t be made until five weeks on from the shutdown, so won’t help anyone basically.

    “Laying staff off is better for everyone because they can then get unemployment benefits.”

    The UK has introduced a model in which the government will pay up to 80% of an employee’s wage to protect jobs.

    Mr Donaldson was non-committal on whether such a model would work in Australia, accepting that it is an extraordinary move.

    “Two weeks ago that sort of measure would have been unimaginable, it would cost an incalculable amount of money and increase government debt significantly,” he said.

    “But who knows, two years down the track if you’ve managed to preserve jobs if it’s worth the trade-off.

    “We do need to have capacity to rebound.

    “There should be a recovery but if we don’t have the capacity in Cairns we won’t be able to benefit from that recovery as much.

    “Perhaps Cairns becomes an attractive place people want to live, with a smaller population and agriculture at our doorstep.

    “But if we don’t have the business and jobs, we might not be able to capitalise on that.”

    What’s the advice for business?

    Apart from getting good advice about accessing stimulus measures and planning for the future, Mr Donaldson said there are some things businesses can do straight away.

    “The advice for business first and foremost is preserve any cash you’ve got for any non-essential payments.

    “Defer all loan payments, whether its home mortgage, car loan.

    “Priority number one is maintain cash so you can put food on the table and keep employing people if possible.

    “You might actually be better off putting staff off so there is a business for them to come back to in three month’s time.

    “I never thought I’d tell anyone to do that.”