With all the lockdowns happening in Australia, it is very hard to keep a positive, optimistic, future-focused perspective.
Of course we need to remember that compared to all other areas of the globe we are managing pandemics extremely well.
Oceania has 35 COVID deaths per 1 million residents.
This compares to around 15,000 COVID deaths per 1 million residents in the US or in Europe.
South America even has 2,600 cases of deaths per 1 million residents.
So we are doing incredibly well from the ‘save a population’ perspective.
We are, of course, hurting our economy with all those lockdowns.
In order to keep recovery in mind, I focus on 3 specific issues that make me optimistic when I look into the future of Australia.
The first one is actually a demographic profile.
We have this big millennial cohort that saves us from the immediate impacts of the pandemic simply because the millennial cohort, the largest cohort happens to be on this stage of a life-cycle where they purchase housing.
This is the highest spending phase of a life cycle — so we do have at least very high spending in the economy at the moment that saves Australia quite a bit.
International students will return, as soon as the pandemic is over, to Australia that is very important because they bring money but also because they are re-living the inner cities.
The inner cities are, of course, the areas of the cities that suffer the most because we work from home, we don’t go to the city centers to work anymore.
International students in Australia happen to live in the inner cities overwhelmingly.
And now, when they are gone, the inner city is a little bit of a ghost town at the moment.
International students will return simply because the demand for international education hasn’t shrunken over the pandemic.
The kinds of jobs that we recruited during the pandemic were knowledge work jobs that require a university level of education.
Overall, the whole world is actually shifting towards more knowledge work that needs you to have an education.
The US lost ground as an attractive university or college educational destination — you just need to listen to the entire immigrant rhetoric under President Trump that frightens away a couple of international students.
Those guys go elsewhere — largely Canada and Australia — once this will return back to normal.
So, that’s good news for the economy.
The other idea is that international talent will come back.
And that’s a difficult question because in a sense that we decide how much international talent we let into the country, how many skilled workers do we need in order to grow an economy.
At the moment we experience massive skill shortages in Australia.
Our federal budget allowed for quite a bit of investment into big-scale infrastructure that at the moment we do not have workers to fill all of those jobs.
Sure enough, we can throw the TAFE system, make sure that we upskill certain people, a couple of unemployed people into these sectors; we can ensure that the current cohort of high-school graduates as fast as possible goes through high-quality TAFE program to fill those jobs but there is a time delay with this so we will need international talent back rather soon.
Will international talent want to come to Australia?
The answer is probably ‘yes’ simply because there are other areas that are not managing the world all that well.
If I think of Hong Kong for example, if I am a youth or relatively young worker and I see how my freedoms are being depleted I am probably keen to leave.
Similar trends are the case for other regions of the globe.
If I am a young worker in my 20s or 30s in Europe and I am seeing the aging population there, absolutely no interest in increasing migration into Europe, I am thinking, “I am the one who’s paying for the aging population that is not willing to shrink pensions”.
I am thinking, “Now I am going to be taxed to death there, so I might go to Australia where the tax regime is relatively more in the favour of the worker”.
So, that probably makes sure that we have the workers return.
What about international capital flows?
That’s the more complicated question.
International capital is super keen to invest a lot of money into a lot of different things around the globe.
Part of this is the Canadian Pension Fund, Norwegian Sovereign Wealth Fund — those guys have to invest billions and billions of dollars, and increasingly they try to take a look for investments outside Europe, outside of America simply because of border migration pressures on those countries become a bit more difficult.
All of those things probably point to the big investors seeking capital investments outside of the current TOP fields, so they go for relatively secure economies to invest in, ideally the industrialised democracies with decent population growth.
There are not that many around.
And just by that Australia is a TOP destination for international capital flows.
Overall, I do think that we have enough positives going on in Australia that we can actually focus on or take the focus away from the daily COVID update numbers, and concentrate a bit on what is ahead.
Because if you plan for the decade ahead right now you have an advantage because you move wherever one else is just trying to survive.
So right now is the correct phase to strategise, make investments, and boldly plan for Australia’s future.
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