ECONOMIST Deacon Adam Walk said if he remembered anything about his grandparents’ generation, it was that they saved their incomes and did not borrow too much.
Most of them grew up through the Great Depression and the Second World War, he said, when times were tough and saving money could be the difference between eating and going hungry.
With coronavirus (COVID-19) impacting on business revenues and household incomes, a return to saving might be part of a “new normal” for the Australian economy, Deacon Walk said.
“This might change our outlook on a lot of things; saving might become popular again now,” he said.
In bad times, people were precautionary savers.
This meant people would be more likely to save the next dollar they earned, rather than spend it, which could have a dampening impact on government stimulus.
Usually, savers were bad news for a government implementing a stimulus package because if the hand-outs were saved, then the money would not stimulate economic activity.
But because the Federal Government’s $130 billion stimulus package was largely aimed at struggling businesses and unemployed Australians, the money was likely to be spent and stimulate the economy, Deacon Walk said.
The virus has hit the hospitality and retail sectors particularly hard, he said, and the burden was borne by small businesses and their employees more than anyone as they were either laid off or simply not given shifts.
The casualisation of the workforce and the gig-economy, as it’s called, meant lots of people did not have any job security.
It was also a time for businesses to re-assess their contingency plans and risk management practices.
Once the economy had adjusted back to “normal”, he said, the society and the economy could face a “different normal”.
That was because this crisis was different to any other.
While the 2008 Global Financial Crisis struck hard, the recovery had led to few fundamental changes.
People went back to work and where old restaurants stood, new restaurants opened.
After this crisis, people might not set foot in an office space again, instead choosing to work from home, and local restaurants might switch to a delivery-only model.
Deacon Walk said this crisis was different to the GFC or any other economic crisis in living memory because it was caused by a virus.
That meant it was a personal crisis for most people – anyone could get sick.
But it was also a unique crisis because there was no one who was necessarily at fault and so no one was necessarily responsible, Deacon Walk said.
“For example, in the GFC there was much more conversation about whether businesses should be bailed out, (taking into account) what they had done to get themselves in their own situation,” he said.
“I think everyone would want to be able to go to the pub or go to the restaurant, but we can’t because we’ve been told not to do that.”
The wider economic impact could be felt in the small-scale at parishes, too.
“The knock-on impact into the economics of a parish is a question mark in my mind,” he said.
Parishes had lost one of their main sources of income without the collection plate each Sunday.
The loss of income might mean parishes had to look at new ways of staying open and ready to serve the needs of the community.
The closures of churches announced last week had already meant Deacon Walk’s home parish at South Brisbane had switched to delivering Mass online.
Deacon Walk’s first baptism last weekend had been cancelled, too, but he is set to assist at the 9am Mass this weekend.
“Having said all that, I think it definitely will all turn around, it will definitely feel one day like we’ve come back to something like normal even though that normal is likely to be different,” he said.
“And so, I don’t think there’s a reason to lose hope, there’s lots of bright people at work at the moment trying to solve all the problems we’re facing, be they medical, societal, or public policy.”