Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

Joel Robinson

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

First look: Vinnies files for 20-storey Lavender Bay apartment tower as North Sydney housing pocket heats up

When the opportunity arose for South Australian developer Palumbo to return to Kent Town, where it had previously delivered East Park Apartments and the East 
Rundle Apartments, it wasn't one the longstanding developer-builder was going to pass up.

The decision was quickly vindicated, with more than 30 apartments sold within the first month of launching <a href="https://www.apartments.com.au/new-apartments/royal-apartments-kent-town-2-8-north-terrace-kent-town-sa-5067">Royal Apartments</a> to the market.

The 206-apartment development, which will bring significant new supply to Adelaide's tightly held eastern city fringe, also gives <a href="https://www.apartments.com.au/developers/palumbo">Palumbo</a> the opportunity to bring new life to one of Kent Town's most recognisable watering holes.

[smartcode_project:default project_id=6109 project_image_fid=376073]

Royal Apartments incorporates the historic Royal Hotel, a venue Palumbo Managing Director Daniel Palumbo said has a longstanding connection with the local community.

"Everyone in the area has history with the Royal Hotel," Palumbo told Apartments.com.au.

"It was quite an active pub and social gathering place for locals. We want to bring it back to its former glory."

[smartcode_project:default project_id=6109 project_image_fid=376072]

The wider development will comprise two residential towers alongside the restored hotel, sitting on North Terrace opposite the Adelaide Park Lands.

For Palumbo, the project also marks a return to familiar territory.

The developer completed East Park Apartments next door more than a decade ago and jumped at the opportunity to develop in Kent Town again when the Royal Hotel site became available.

"The opportunity emerged, and we moved to secure the site," Palumbo said.

"We were approached by the previous landowner, who said they had extensive commitments in Sydney and weren't in a position to deliver the project.

"We took over the site and within six months recut the design scheme to be more in keeping with the type of development we want to bring to Adelaide.

"Now we're on the market and those changes have really resonated with local buyers."

That has translated into a strong start to sales, with 33 apartments transacting in the project's first 35 days.

Palumbo said the early purchaser profile had been consistent with the group's traditional focus on owner-occupiers rather than investor-led apartment stock.

"Local owner-occupiers have always been our market," he said.

"There are always some investors, but we've never developed what would be called traditional development stock. Owner-occupiers are very much our market."

[smartcode_project:default project_id=6109 project_image_fid=376068]

The buyer mix has been diverse so far, with downsizers and younger professionals both accounting for a significant portion of early sales.

South Australia's current stamp duty settings, which allow&nbsp;eligible homeowners in South Australia aged 60 savings of up to $103,830 on stamp duty when they downsize to a new property valued at up to $2 million,&nbsp;have helped encourage downsizer activity, while younger buyers in their late 20s and early 30s have been attracted to the opportunity to live immediately outside the CBD while still being able to walk into the city.



Location has been a major part of the proposition for both buyer cohorts.

[smartcode_project:default project_id=6109 project_image_fid=376075]

Royal Apartments sits on North Terrace directly opposite the Adelaide Park Lands, with residents able to walk through the parklands toward the East End, Rundle Street and Rundle Mall.

Apartments have been positioned to capture views across the parklands, Adelaide skyline, Botanic Gardens and Adelaide Hills.

Palumbo believes the scarcity of developable land along this section of the Park Lands makes the site particularly difficult to replicate.

"There's very few allotments on that side that can be developed," he said.

"If this location was in New York and you were sitting on Central Park, you'd be talking about a $60 million apartments."

Royal Apartments will offer a broad mix of residences, ranging from one-bedroom apartments through to four-bedroom sub-penthouses and penthouses.

Current listings include one-bedroom apartments from $680,000, while larger three and four-bedroom residences are priced around $2.5 million.

Residents will have access to a swimming pool, gym, barbecue and recreation areas, residents' lounge and dining space, and a communal deck.

[smartcode_project:default project_id=6109 project_image_fid=376067]

The apartments will feature generous balconies, while secure parking, bicycle storage and storage cages will also be provided.

A porte-cochère-style arrival and drop-off area has also resonated with buyers, particularly those attracted to being able to walk into the CBD during the day while retaining secure vehicle access at home.

Palumbo is acting as developer, architect and builder on Royal Apartments, continuing the vertically integrated model it has used across its South Australian portfolio.

The group was also behind the $150 million Sofitel Adelaide, the 251-room five-star hotel and residential tower which opened in 2021.

Palumbo said Royal's launch had come at an interesting time for the broader Adelaide apartment market.

Buyer confidence had initially been impacted by uncertainty surrounding the Federal Budget and broader economic conditions, but Palumbo believes sentiment is beginning to improve against a backdrop of significant investment flowing into South Australia.

He pointed to increased activity across defence and resources, including Olympic Dam, as potential long-term drivers of the state's economy and housing market.

"Money is starting to flow into Adeliade, significant amounts as Adelaide bucks the trend of the rest of the country.," Palumbo said.

"There's a lot of activity in the economy over the next decade. I think more investment will come into this market."

Early works on Royal Apartments are expected to commence this year, with major construction activity and cranes anticipated on site from early next year.

[smartcode_project_cta:default project_id=6109]

Palumbo's return to Kent Town strikes early chord with buyers

Go-to builder-developer <a href="https://www.apartments.com.au/developers/graya">GRAYA</a> is continuing to bulk out its already impressive and diverse apartment portfolio across South East Queensland. Their latest milestone is securing development approval for Silk, its boutique riverfront apartment development in St Lucia.

The approval clears&nbsp;the way for the team to begin construction planning for the 22-residence project.

<a href="https://www.apartments.com.au/new-apartments/silk-st-lucia-16-18-sandford-street-st-lucia-qld-4067">Silk</a> will rise 15 levels from an 810 sqm site at 16-18 Sandford Street, occupying a prominent bend of the Brisbane River with a prized northern aspect across Orleigh Park toward the Brisbane CBD.

The approved scheme will comprise 16 split-floor and six full-floor residences, continuing GRAYA's move into larger-format apartment developments targeting Brisbane's prestige owner-occupier market.

The project has been designed around the site's broad river frontage and dual-direction views, with GRAYA prioritising larger residences, privacy and outlook over apartment yield.

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="aa5c2349-f96c-4914-a812-1f2cd6827af8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.44%E2%80%AFAM.png?VersionId=WY0vEU_7vYjeRJKQHiCwFdMxu8PvFh52" />

GRAYA Co-founder and Chief Executive Officer Rob Gray said the project had been shaped around local homeowners wanting to remain in St Lucia without maintaining a traditional family home.

"St Lucia is one of those suburbs people do not want to leave," Gray said.

"They know the river, the trees, UQ, the golf course, Toowong and Indooroopilly, and that familiarity is hard to replace.

"True riverfront opportunities here are exceptionally scarce. What we have designed at Silk is a way to stay in the suburb people love, with the scale and privacy of a private home and far less to maintain.

"This is not typical apartment product. It is a proper home on the river, and that is exactly what this market has been missing."

The approval comes as new apartment development continues to increase across the St Lucia and neighbouring Toowong corridor, although direct riverfront sites remain considerably more tightly held.

GRAYA Co-founder and Managing Director Andrew Gray said securing the approval had removed a significant element of development risk from Silk.

"Genuine riverfront sites of this quality in St Lucia are not something that comes up regularly," Gray said.

"The approval removes a substantial layer of execution risk, and the location underwrites demand in a way very few inner-city sites can.

"The fundamentals here are as strong as anything we have assessed in Brisbane."

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="d0f3d734-65e1-48e8-8ed3-2e0715ffcdd9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.56%E2%80%AFAM.png?VersionId=sOLSs_jdHkXLWbBKzRyayf5BfTb2vPsD" />

Silk will see GRAYA return to a stretch of the Brisbane River where it already has recent construction experience. The vertically integrated group recently completed ARC in neighbouring Toowong as builder for developer Spyre, delivering the riverfront project on a constrained site.

GRAYA will take a different role at Silk, controlling the project from design and development through construction and aftercare under its vertically integrated model.

The development will include a gym and resident leisure areas at ground level, integrated with the river's edge.

Silk joins a growing pipeline for GRAYA across Brisbane and the Gold Coast, which includes Enclave, The Gallery, Coral and Ripple.

The developer-builder has also recently lodged plans for its largest project to date, <a href="https://www.apartments.com.au/new-apartments/the-silo-19-chester-street-newstead-qld-4006">The Silo</a>, a proposed <a href="https://www.apartments.com.au/news/qld/graya-buys-frasers-newstead-site-plans-the-silo-between-james-street-and-gasworks-precincts">$700 million mixed-use development</a> in Brisbane's James Street precinct.

Silk is expected to predominantly target local owner-occupiers and prestige buyers seeking a permanent riverfront home in Brisbane's inner west.

Registrations of interest are now open, with further details on the project and construction program to be released as it progresses.

<hr />
<h2>SILK PROJECT FACTS</h2>

Developer-builder: GRAYA

Project: Silk

Location: 16-18 Sandford Street, St Lucia

Apartments: 22

Built form: 15 levels

Site: 810 sqm riverfront holding

Mix: 16 split-floor and six full-floor residences

Status: Development approved

Next step: Construction planning underway

[smartcode_project_cta:default project_id=152168]

GRAYA greenlit for riverfront St Lucia apartment development, Silk

Economy

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The novel coronavirus sees Australia facing major unprecedented health and economic crises. The key to preventing a downward spiral of the economy is to avoid a collapse in incomes of newly laid-off workers who won’t be able to afford what they normally purchase, and temporarily closed businesses which won’t be able to pay rents or other fixed costs, nor buy goods and services to trade.
It is likely that once a vaccine is delivered by science, or even before, the economic recovery will begin. Thus the question: what are the most equitable ways to handle this major short-term trauma?
There is an instrument that should be used to add to the size and efficacy of the necessary fiscal boost. Income contingent loans provide extra financial support without threatening future fiscal solvency.
<h2>What are income contingent loans?</h2>
Most people in Australia would be familiar with our HECS (Higher Education Contribution Scheme) for tertiary education fees. Students take a loan from the government to cover the cost of their university now, and pay it back when they are earning over a certain threshold in the future.
In what was a world-first, Australia implemented this style of loan scheme in 1989 and it has now been copied in <a href="https://www.sciencedirect.com/journal/economics-of-education-review/vol/71/suppl/C">around ten other countries</a>.
For those with a HECS debt, when incomes are low in certain periods, such as from unemployment, looking after an infant or caring for aged parents, no repayments are required at that time.
The government gets the money back later when the debtor’s financial situation has improved. This is known as an “income contingent loan”.
<h2>How could we use these loans for the COVID crisis?</h2>
It’s useful to distinguish three categories of financial stress that have emerged and which an income contingent loan could assist:
1) for individual employees recently, or soon to be, laid off
2) small businesses forced by health rules or insufficient trade to suspend activity
3) large businesses forced by health rules or insufficient trade to suspend activity.
Income contingent loans can be designed for all three cases although each is quite different.
1. Now jobless employees
For employees now jobless, a HECS-type system could take the form of the government providing a fixed payment (for example $5,000) per person. Some part of that payment would be required to be repaid according to existing (or new) HECS parameters.
Those people whose incomes do not recover repay nothing, or much less than those who regain their financial security (who would repay fairly quickly). The experience of 30 years of efficient HECS collection, including lessons learned, has shown us this would all be administratively straightforward.
2. Affected small businesses
In the case of an income-contingent loan for business, a different approach should be used, that doesn’t involve personal incomes. What is needed instead is a revenue-contingent loan – a system designed and promoted by Linda Botterill and Bruce Chapman nearly 20 years ago.
The reporting of business revenue is a quarterly legal requirement of business through the existing Business Activity Statement which is used to collect the GST. Unlike profits, revenue cannot legally be manipulated to suit the timing of repayments. The revenue-contingent loan obligation would be linked to the Australian Business Number.
In the case of a small business, the government could provide a loan, which would be capped at a level reflecting a firm’s capacity to repay when revenues recover. This could be a fixed amount (for example 25%) of the average of the past three years of annual revenue.
To minimise the chance of non-repayment, eligibility could be restricted to firms that have a good chance of future solvency as reflected, for example, in them having been around for a fixed number of years (for example three years).
The government would need to set a repayment rate, and past modelling has revealed small rates of say 5% to 8% of future annual revenues would be sufficient.
To make sure all this would be equitable for business and healthy for future budgets, the government would need to now model different loan amounts, and different collection and interest rates.
Modelling the different assumptions for budgetary planning would be required to be more precise about the policy details.
3. Bigger businesses
In the case of assistance for not-so-small business, the sums of money needed for the current situation necessitate the involvement of the banks in cooperation with the government.
Government is not equipped to take over large-scale commercial borrowing. But a revenue-contingent loan would still have an important role to play in such a partnership with commercial banks for current not-so-small financial borrowing needs.
The arrangement of joint bank and government lending would be the government providing a revenue-contingent loan which is a proportion of the bank loan. The government loan could repay the bank loan in the very short-term until business reopens and recovers.
A partnership of this kind would be ideal for business, which then has the capacity to repay the normal loan even when there is no short-term revenue coming in.
It would also be beneficial for the banks, which would then have far higher prospects of full loan recovery. It also provides a future return to the taxpayer for the government support of banks during these difficult economic times.
The provision of income contingent loans to individuals, and the revenue contingent loans for business, would have major potential to sustain the Australian economy during a sharp temporary downturn, while not putting additional pressure on future fiscal solvency. This is a bridge to a sustainable recovery.
The authors are fellows of the Academy of the Social Sciences Australia. However these views are their own and not representative of the Academy.<img src="https://counter.theconversation.com/content/134998/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/linda-botterill-92314" target="_blank">Linda Botterill</a>, Professor in Australian Politics, <a href="https://theconversation.com/institutions/university-of-canberra-865" target="_blank">University of Canberra</a>; <a href="https://theconversation.com/profiles/bruce-chapman-2186" target="_blank">Bruce Chapman</a>, Director, Policy Impact, College of Business and Economics, <a href="https://theconversation.com/institutions/australian-national-university-877" target="_blank">Australian National University</a>; <a href="https://theconversation.com/profiles/glenn-withers-12585" target="_blank">Glenn Withers</a>, Professor of Economics, <a href="https://theconversation.com/institutions/australian-national-university-877" target="_blank">Australian National University</a>, and <a href="https://theconversation.com/profiles/warwick-mckibbin-9129" target="_blank">Warwick McKibbin</a>, Chair in Public Policy, ANU Centre for Applied Macroeconomic Analysis (CAMA), <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292" target="_blank">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/give-people-and-businesses-money-now-they-can-pay-back-later-if-and-when-they-can-134998" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Give people and businesses money now they can pay back later (if and when they can)

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EXPERT OBSERVER
Economists just love to forecast. And forecast often. Indeed they can’t help themselves – even when there is a paucity of past experiences to provide guidance, economists are out there forecasting.
At this stage, clearly it is near impossible to make accurate predictions. Much depends on how quickly the number of COVID-19 cases can be controlled. Also much depends on how quickly treatments and a vaccine can be found for the virus.
These are extraordinary times with no exact precedent.
The best approach to forecasting is shown by the International Monetary Fund, expressing in general terms the likelihood of a global recession in 2020 but not speculating on the size of the fall.
Australia is also at risk of recession. But it is important to note that the Reserve Bank and Federal, State and Territory governments are providing massive support for the economy and financial markets. The economic impact of COVID-19 is also quite variable across businesses and sectors. Travel, recreation and hospitality businesses have been most affected. But supermarkets, electrical goods stores, some transport businesses and sporting goods retailers have noted firmer demand. And infrastructure construction has been little affected.
Notably, in past recessions caused by an external shock (such as 1975 due to the oil price shock), the Australian economy has bounced back quickly. But again, much depends on how quickly the virus can be contained.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%201.png" target="_blank">Click here</a> to enlarge: 
 <img src="https://www.urban.com.au/images/2020/3/27/recessions%201.png" alt="">
Source: CommSec 
The Global Financial Crisis (GFC)
The keenness for economic forecasting was certainly a feature of the Global Financial Crisis (GFC) – an economic event with few parallels. Economists were certain that Australia would follow the world into recession. But recession was avoided. (A recession is typically defined as two consecutive quarters where economic activity (gross domestic product or GDP) declines.)
In October 2008 and February 2009, massive stimulus was provided by the Government and central bank, and it worked to stabilise the economy. In fact when we look back at the GFC many actually believe that the economic support measures were too generous. The economy contracted 0.5 per cent in December quarter and GDP bounced back by 1.0 per cent in the March quarter. The economy didn’t experience another quarterly contraction in output until March 2011 (Cyclone Yasi) even including the period of the 2009 swine flu.
Past recessions
But this period is different. It has been caused by an external shock – and indeed a medical, not financial shock. Most downturns or recessions – both here and abroad – have occurred through financial means, basically policy mistakes. That is, central banks have responded to periods of “irrational exuberance” by lifting rates too far, causing people to cut spending, and causing businesses to trim spending, hiring of staff and investment.
So when have recessions occurred in Australia? There have been seven periods of recession since quarterly records were first maintained in 1959: 1961, 1971/72, 1975, 1977, 1981/82, 1982/83 and 1991 (many observers view the period from 1981-1983 as one event). Clearly there were also economic downturns before 1959 such as the Great Depression.
The common finding is that most of these periods of recession also occurred in advanced nations, notably the US. Most recessions occurred after a period of tighter financial conditions.
One downturn of note was 1975. And the US and other advanced economies also experienced recessions at that time. The US was in recession from November 1973 to March 1975. And a key cause was an external “shock” – a financial rather than medical event – the first oil shock in 1973 when oil prices soared by 400 per cent in response to an oil embargo. Central banks responded to soaring inflation by lifting interest rates.
In January 1973 the 90 day bank bill rate was 4.70 per cent. Rates steadily increased over 1973 and 1974, peaking at 21.75 per cent in May 1974. Ahead of the 1975 recession, 90 day bills still stood at 9.8 per cent.
Interestingly the Australian economy contracted by 2.6 percentage points over the September and December quarters of 1975 and then rebounded 4.4 per cent in March quarter 1976, expanding over the next year.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%203.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/27/recessions%203.jpg" alt="">
Source: CommSec 
Medical emergencies
Three medical emergencies that are most cited are SARS (Severe Acute Respiratory Syndrome) in 2003, swine flu in 2009 and the 1919 Spanish influenza. The SARS epidemic first appeared in late 2002 in Guangdong, China and ended in July 2003. Swine flu appeared in April 2009, extending to August 2010. 
The main impact SARS had on the Australian economy was on the travel sector. Australian GDP was weak in 2003, rising just 0.4 per cent in the first half before rebounding 3.4 per cent over the second half of the year.
Assessing the impact of the 1919 Spanish flu is complicated by the end of World War 1. It has been estimated that real aggregate gross domestic product declined by 9.5 percent between 1914 and 1920. The loss of 60,000 service people in the war depressed economic activity, and extended through the early 1920s.
Unemployment
In past economic downturns, unemployment has understandably lifted. But, as stressed, no two periods are the same. While Australia didn’t experience a recession in the GFC, the unemployment rate did lift in the slower economy – lifting from 4 per cent to 5.9 per cent in the space of 11 months. 
In the recessions of 1990-1991 and 1981-83, unemployment rose from 5-6 per cent to 10-11 per cent in around a two-year period.
In the current period, the jobless rate stands at a near 8-year low of 5.1 per cent. As the downturn has been caused by an external ‘shock’ the jobless rate will likely rise more quickly. A raft of retail, hospitality, arts and recreation staff have been stood down. However, job creation is occurring in supermarkets, grocery stores, some health businesses and delivery/courier businesses.
While unemployment will likely lift quickly to record levels, the government has lifted cash payments to prevent broader job losses. It is anticipated that jobless rates will fall quickly when the virus is contained and businesses are allowed to re-open.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%204.jpg" target="_blank">Click here</a> to enlarge: 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/27/recessions%204.jpg" alt="">
Source: CommSec 
<h1>Sharemarket impact </h1>
It may sound like a broken record but these are extraordinary times with no exact precedent. The volatility has been breath-taking as has the speed of sharemarket falls from highs.
After hitting record highs on February 20, the All Ordinaries index entered a ‘bear market’ 12 days later, down 21.3 per cent from highs. A bear market is generally defined as a fall of more than 20 per cent from highs.
The US Dow Jones index took 18 days to fall by more than 20 per cent from the February 12 record high. 
The key issue for investors has been the difficulty in valuing companies in response to a largely unique external shock.
Past sharemarket downturns have been induced by economic or financial factors. 
The speed of the current sharemarket contraction has similarities to the October 1987 sharemarket crash. On both occasions, sharemarkets were perceived to have become expensive, raising the prospect of corrections or a period of market consolidation to restore value for investors.
Interestingly, in the current period, sharemarkets initially were supported despite news of COVID-19. The initial perception was that the virus would be confined to China and the economic impact would be limited to ‘supply chains’ across the globe.
In 2007, it took 84 days for the All Ordinaries index to fall more than 20 per cent from the highs. In 1987, the sharemarket hit highs on September 21. It took 20 days for the All Ords to fall 10.9 per cent off its highs, before the massive 25 per cent fall on October 20.
Compared with 2020, again there was nowhere near the speed of falls in sharemarket declines over periods such as 1970-74, 1981-82, or 1990/91 when there were times of economic downturn.
Looking back even further
Data on the Australian sharemarket goes back to 1875 although the first sharemarket was formed in Melbourne in 1861. There have been numerous events and shocks over time to affect the sharemarket including wars, commodity price shocks (oil, wool), financial crises and the technology crash. 
But in terms of the severity of the downturn and volatility of the sharemarket, the COVID-19 virus crisis has few parallels. It is good to know that there is such a rich history of data to research. The important point is that each experience is different, especially in times of recovery from lows. But experience shows that it can take time for the sharemarket to regain highs. While no two periods are exactly the same, the sharpness of the current decline in share prices may lead to a quicker recovery process.
In relatively recent times, in 1960, it took 42 days for the sharemarket to fall 20 per cent from the September 16 high. It actually took 717 days for the sharemarket to regain its 1960 highs.
In the Great Depression, it took 6½ years for the Australian sharemarket to regain the February 1929 high. And it took more than 6 years for the September 1875 high to be exceeded.
Still, in weak economic times and affected by the Spanish flu, the sharemarket actually rose 19 per cent over 1919 and 1920.
Residential property prices
In Australia, consistent data on home prices goes back to 1980. It is also important to note that there can be marked differences in property cycles. For instance in the current environment, Perth and Darwin are at different points in the cycle from, say, Hobart or Canberra.
In the 1982 recession, house prices peaked in April 1982 and fell 6.4 per cent over the next year. It took 21 months to regain its previous highs.
In the 1990/91 recession there was no appreciable downturn in house prices.
In the 2007/08 GFC, house prices peaked in February 2008 and then fell 8.5 per cent over the next 11 months. It took 21 months for house prices to regain previous highs.
In the current period, house prices fell 9.3 per cent in the 21 months from October 2017. In the recovery since August 2019, house prices have lifted 7.8 per cent.
<h1>What are the implications for investors?</h1>
These are extraordinary times. Australia and the globe are experiencing a shock like no other. But it is important to note – unlike periods such as the Great Depression – governments and central banks are ‘doing all that it takes’ to support businesses, workers and the more vulnerable members of society. 
Labs are working on vaccines and treatments such as those for malaria and tuberculosis are showing promise in killing the virus.
Economies were in good shape ahead of the crisis, in fact it was hard to find better economic ‘fundamentals’ in Australia.
While it will be hard to avoid recession in Australia, it is not impossible. Sharemarkets will settle when virus cases peak (the curve flattens). And while unemployment will likely lift to historic highs, people will quickly return to work when businesses are allowed to re-open.
<a href="https://www.propertyobserver.com.au/images/2020/3/27/recessions%202.png" target="_blank">Click here</a> to enlarge: 
 <img src="https://www.urban.com.au/images/2020/3/27/recessions%202.png" alt="">
Source: CommSec 
CRAIG JAMES is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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COVID-19: Making sense of the economic impact: CommSec's Craig James

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EXPERT OBSERVER
To date, the USA has close to 100 deaths due to coronavirus, Italy has more than 1,100, Iran has more than 600, Korea has more than 70 deaths. Australia now has 3.
Meanwhile, China is reported to have contained the coronavirus, achieving what many public health experts thought was impossible: containing the spread of a widely circulating respiratory virus.
Having spent my time in China for a month early this year and seeing it with my own eyes, I think China has rolled out the most ambitious and extreme disease containment effort in history.
Perhaps the most dramatic effort was the lockdown of Wuhan city and nearly the entire Hubei province, effectively putting at least 50 million people under a mandatory quarantine since 23rd Jan. This prevented further exportation of infected individuals to the rest of the country/world. In other regions of China, people voluntarily quarantined themselves and were monitored by appointed leaders in the neighbourhood.
In February, Chinese authorities also built two dedicated hospitals in Wuhan in 10 days. Health care workers from all over China were sent to Wuhan, where more than 1,800 medical teams traced tens of thousands of contacts of confirmed cases.
Sports events were cancelled, cinemas were shut, schools and universities extended breaks, businesses closed down, people stayed at home and when they had to go outdoors (to do shopping etc) everyone had to wear a mask.
In contrast, despite the stimulus package, Scott Morrison has been encouraging people to keep attending mass gatherings as coronavirus continues to spread in Australia... until Peter Dutton gets it.
China has moved on. Close to 70,000 people were treated and recovered. Many of the hospital beds are now empty. China is eyeing "new infrastructure" projects to offset the economic impact of the coronavirus, and boost sustainable growth, e.g. accelerate the construction of new infrastructure such as 5G networks and data centres.
Instead of simply turning to the old playbook of investment stimulus, it is widely believed that China should promote a new round of infrastructure construction through reform and innovation.
Investors have already jumped on the bandwagon. In China's A-share market, stocks related to 5G networks, industrial internet, inter-city transit systems, vehicle charging stations and data centers -- all considered as new infrastructure -- saw continued fund inflows, with exchange-traded funds linked to these shares registering gains in the past weeks.
While policy incentives have guided market funds into the sector, the Chinese government is also expected to encourage new infrastructure via special bonds, public-private partnerships and credit support. About 714.8 billion CNY ($152.7 billion AUD) of special-purpose bonds were issued in January, 10 times the amount of general bonds issued.
So how is this going to impact the Australian economy?
Well, China is Australia's biggest trading partner mainly due to China's strong demand for iron ore, coal and liquefied natural gas. Many major Australian mining companies rely heavily on China. Australia's GDP growth could be reduced by 50% in a worst case scenario of China reducing its demand for Australia's exports.
Simply put, if China's economy crashes then Australia will be hit hard.
With China's new round of infrastructure construction, Australia will be one of the major beneficiaries, economy-wise. This could mean a contribution of $200 billion worth of imports and exports to the Australian economy, just like 2017-18.
Industry sectors such as education and tourism might still continue to suffer because of flight restrictions. However, flights might not be needed for cross-border property purchases. There might be a drop-off in open for inspection and auction attendance, but Chinese buyers do not have to come to Australia to purchase properties.
In my Chinese social media WeChat, I can see at least 20 people (buyers, that is) showing off their property purchases in Australia, while they are physically in China. They included private sales, off-the-plan or nominee sales, and "remote auction" - asking their friends/family to attend auctions on their behalf.
This trend will probably continue in the months to come. At GiFang, we will be sending further messages to our 200,000+ Chinese subscribers that if they require 'buyer assistance', we can act as an intermediary between them (no matter where they are) and the Australian agents, on properties listed on GiFang.com.
Michael Yang 杨霄羽 is the CEO of <a href="http://www.gifang.com" target="_blank">GiFang</a>.
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Post coronavirus how will China's economy impact Australia: GiFang's Michael Yang

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EXPERT OBSERVER
The worsening coronavirus outbreak and associated rout in financial markets have had a major impact on sentiment this month. The Index has hit a five year low. In fact it is the second lowest level of the Index since the Global Financial Crisis when the Index bottomed out at 79, (with an average read of 86.8 over the period).
Therefore, while clearly very concerned, consumers are, for now, taking a more balanced approach to the situation than we saw during the GFC. 
Other evidence of this can be found by comparing the ‘family finances’ and ‘time to buy a major household item’ components of the Index which registered 63.7 and 88.2 respectively at the low point of the GFC compared to the current reads of 82.7 and 111.4 respectively.
The survey detail shows consumers are rightly concerned about the near term outlook for the economy but are less perturbed about their finances or the longer term outlook for the economy. That is consistent with the notion that virus-related disruptions will be large but temporary.
At the time of last month’s survey, there were just over thirty thousand confirmed cases of COVID-19 with over 99% in China. A month later there are well over one hundred thousand cases globally with a quarter of these recorded outside of China, with infections rising rapidly in many countries.
Financial markets have also reacted sharply. After showing little change in February, the ASX dropped 11.5% between the February and March surveys (and by a further 4.5% since the latest survey closed). These falls have been despite a 25bp rate cut from the RBA and an emergency 50bp rate cut from the US FOMC. 
Responses to additional questions on news recall show by far the highest recall was for news on the economy – 45% of consumers recalling news on this topic with over 85% saying that news as unfavourable. News on ‘international conditions’ also had a relatively high recall rate (25%) and was also assessed by around 85% of respondents as unfavourable. 
About 20% of consumers recalled news on ‘interest rates’. The RBA cut rates by 0.25% at its March meeting. However, we again saw consumers assess this news more negatively than usual. As we have noted previously, the favourable/unfavourable mix on ‘interest rate’ news following rate cuts over the five years to 2016 was around 50/50 but has been closer to 30/70 for cuts in 2019 and 2020. That lukewarm response is despite the major banks passing on the rate cut in full to mortgage interest rates.
Across the five component sub-indexes, the biggest fall was around expectations for the economy, particularly over the near term. The ‘economy, next 12 months’ sub-index recorded a spectacular 12.8% drop taking it to 77.9, a five year low but still comfortably above the GFC low of 62.9. In contrast, the ‘economy, next 5 years’ sub-index only fell 1.3%, to 90.4. Clearly consumers expect very challenging conditions near term but are less concerned about medium term prospects.
Assessments of family finances were relatively stable. The ‘finances vs a year ago’ sub-index rose 1.8% although at 82.7 it remains 6.6% below the historical average. Despite the recent carnage in equity markets respondents were balanced about the 12 month outlook for their finances with ‘finances, next 12 months’ sub-index down by only 1.7%. Notably, despite the RBA’s 25bp rate cut and that move by major banks to reduce mortgage rates by the full 25bps, sentiment amongst consumers with a mortgage declined 2.8% in the month.
At the same time, sentiment amongst older age groups fell more sharply, particularly those aged over 65 (–13.8%). This likely reflects several factors including the impact of lower deposit rates on incomes, the hit to superannuation from the sharemarket sell off and perhaps also a higher degree of concern about health risks from the coronavirus, which has a markedly higher fatality rate amongst those in older age groups.
BILL EVANS is Westpac's chief economist
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Consumer Sentiment falls to a five year low: Bill Evans

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EXPERT OBSERVERS
The COVID-19 coronavirus is spreading across the world - Initially the epicentre was China, however there are now at least four further epicenters: Iran, Italy, Japan and South Korea.
Although the World Health Organisation believes the number of cases in China has peaked and should fall, case reports are climbing from countries previously thought to be resilient due to stronger medical standards and practices.
In a strongly connected and integrated world, the impacts of the disease will go beyond mortality (deaths) and morbidity (people incapacitated or caring for the incapacitated and unable to work).
Companies across the world, irrespective of size, depend on inputs from China – much more so than during the 2002-04 China-centred Severe Acute Respiratory Syndrome (SARS) pandemic.
In 2003 China accounted for less than one twentieth of world trade. It now accounts for one seventh, making it the world’s biggest importer and an integral part of most global production chains.
Just as important to the world economy, panic is distorting spending. Global stock markets have plunged.
Entire cities in China have closed and travel restrictions have been placed on people entering from infected countries.
The fear of an unknown deadly virus is similar in its psychological effects to the reaction to terrorism threats and produces a high level of stress, often with longer-term consequences.
A large number of people feel at-risk at the onset of a pandemic, even if their actual risk of dying is low.
The International Monetary Fund expects COVID-19 to knock 0.4 points off China’s economic growth target of 5.6% and 0.1 points off global growth, an assessment it will continue to update.
On Monday the Organisation for Economic Co-operation and Development sliced 0.8 points off its forecast for China’s growth and 0.5 points off its forecast for Australian growth.
As part of a large research project in the Centre for Excellence in Population Ageing Research (CEPAR) at the Australian National University, we have applied experience gained from evaluating the impact of SARS for the World Health Organisation in 2003 and 2006 to seven scenarios for COVID-19:
The scenarios vary the attack rate (the proportion of the total population contracting the virus), the mortality rate (the proportion of total population who dies), whether epidemic is a one-off (essentially temporary) or recurrs each year (essentially permanent), and whether it spreads globally or is largely confined to China.
We find that in the four scenarios where the epidemic goes global, Australia’s GDP which in the 12 months to December grew just 1.7%, would suffer a hit in the first year of between 2% and 7.9%, most likely sending GDP backwards (a recession).
In all countries the sharp hit to growth would be followed by a gradual recovery.
The results are very sensitive to the assumptions used, including government responses in each country.
In the short term, central banks and treasuries will need to make sure disrupted economies continue to function.
While cutting interest rates is an option, the shock will require a mix of monetary, fiscal and health policy responses. Quarantining affected people and reducing large scale social interaction would be an effective response.
Wide dissemination of good hygiene practices can be a low cost and highly effective response that can also reduce the extent of contagion and keep down the social and economic cost.
The longer-term responses are even more important.
Many governments have been reluctant to invest sufficiently in their health care systems, especially in public systems in less developed countries where many infectious diseases are likely to originate.
The idea that any country can be an island in an integrated global economy is being proved wrong.
Poverty kills people. However, the outbreak of COVID-19 shows that diseases, potentially generated in poor countries due to overcrowding, poor public health and interaction with wild animals, can kill people of any socioeconomic group in any country.
There needs to be vastly more investment in public health and development in the richest but also, and especially, in the poorest countries.
Our study suggests big economic costs in countries such as Australia can be avoided through global cooperative investment in public health in all countries.
We have known this for decades, yet politicians continue to ignore the scientific and economic evidence about the role of global public health in improving the quality of life and driving economic growth for us all.
 
Warwick McKibbin is a Chair in Public Policy in the ANU Centre for Applied Macroeconomic Analysis (CAMA) in the Crawford School of Public Policy at the Australian National University (ANU).
Roshen Fernando is a PhD Student in Economic Policy, at the Australian National University.
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Economic modelling of Coronavirus fallout paints grim picture for Australia; Warwick McKibbin and Roshen Fernando

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EXPERT OBSERVATION
Australia’s three-decade run of near continuous economic growth is set to end, according to Visiting Fellow at ANU’s Crawford School of Public Policy, Peter Martin.
The treasury has warned a hit to growth of “at least” 0.5% in the first quarter of this year, potentially followed by a “prolonged downturn”.
If it came to pass, treasury’s preliminary assessment would most likely mean economic growth vanished and went backwards for several quarters, producing what is commonly known as a “technical recession” – two quarters or more in which income and spending shrink.
Providing the assessment to a Senate estimates committee on Thursday morning, treasury secretary Steven Kennedy said the COVID-19 coronavirus would take “at least half a percentage point” from economic growth during the current March quarter and more beyond that.
In recent quarters economic growth has been about half a percentage point.
<img src="https://www.urban.com.au/images/2020/3/10/GDP.png" alt="">
Treasury’s preliminary estimate of a hit of at least half a per cent took into account only the direct impacts of the virus on tourism and education, and some exchange rate effects.
It did not take into account broader economic effects or the impact of the coronavirus on supply chains.
The half a percentage point hit to growth would come on top of a hit of 0.2% from the summer bushfires, most of which would be felt in the March quarter.
Dr Kennedy, a former nurse who retrained as an economist, stressed that the impact of the bushfires would extend well beyond the immediate hit to economic growth.
“Evidence from past episodes suggest bushfires can lead to long-lasting physical and mental health effects and destroy cultural heritage,” he said.
“Research by the University of Melbourne after the Black Saturday bushfires in 2009 found mental health problems continued for three to four years.”
The bushfires made clear the increased probability of such events in a world of climate change.
“The CSIRO predicts climate change will make bushfires more likely, as fire weather patterns worsen as a result of an increase in weather patterns with hot and dry winds and fuel becoming drier.”
As of Wednesday there had been 91,868 confirmed COVID-19 cases worldwide and 3,131 deaths, most in China. COVID-19 had spread to 77 countries.
When the virus first emerged in China in December, the treasury saw it through the lens of the 2002-04 Severe Acute Respiratory Syndrome (SARS) pandemic.
It was now clear COVID-19 would be different.
The impact of SARS took on a V shape, a relatively contained reduction in activity, mostly in Asia, followed by a quick bounce back.
The economic impact of COVID-19 is likely to be deeper, wider and longer when compared with SARS.
It will create more risk of a prolonged downturn, and fiscal support will be needed to accelerate the recovery of the economy, especially once the health and health management effects of COVID-19 begin to fade.
The first phase of the economic support package to be delivered next week would target assistance to the businesses and sectors most affected in order to keep people in jobs.
After that, support for aggregate demand (overall spending) would become more important.
“A very substantial part of the impact is actually confidence among consumers and the business sector because of the uncertainty,” Dr Kennedy said.
“Frankly, effective health management will be very important. The economy is actually quite solid. One of the key things will be to to explain to the community how well placed the economy is to manage such a short-term shock.”
The shock would last for some time but the economy would “recover on the other side”.
Keeping workers employed would be very important.
 
PETER MARTIN is a Visiting Fellow at ANU’s Crawford School of Public Policy
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Three-decades of economic growth set to end; Peter Martin

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The credit squeeze, and its impact on home building, weighed heavily on the Australian economy last year, according to HIA senior economist, Diwa Hopkins.
Figures from the ABS show that $65.35 billion worth of construction work was done on new Australian housing in 2019 - 8.5 per cent less than the record-setting heights of 2018.
“This home building contraction has just about run its course. Confidence returned to the overall housing market at the end 2019, buoyed by interest rate cuts and house prices returning to growth,” Hopkins said.
“The coming home building cycle is likely to be a fairly modest affair, with growth in home building forecast to be slow.”
“We estimate the industry commenced construction on 174,770 homes in 2019, and we are forecasting for activity to rise only marginally (by 0.6 per cent) in 2020.
“International factors may however impact on the volume of home building in Australia over the medium term,” she concluded.
Nationwide, the total value of construction work done on new housing in 2019 declined in New South Wales by 15.5 per cent, in Queensland by 10.1 per cent, in South Australia by 7.4 per cent, and in Western Australia 14.0 per cent.
Elsewhere the value of work done on new housing increased, with 0.1 per cent of growth in Victoria, 5.4 per cent in Tasmania, and 9.6 per cent in the Australian Capital Territory.
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Real Estate construction experiencing significant contractions; HIA economist

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EXPERT OBSERVER
The Australian National Accounts, to be released on Wednesday March 4, will provide an estimate of economic activity for the December quarter, including any boost to date from recent policy stimulus. This is ahead of the substantial disruptions from the coronavirus outbreak.
The economy appears to be stuck in the slow-lane after decelerating sharply through the second half of 2018, when the home building cycle swung from boom-to-bust.Moreover, growth is lopsided, centred on public demand and exports, while private demand is weak.
Powerful headwinds persist: construction activity is contracting; weak wages growth and a lack of confidence are impacting consumers; and the global backdrop is challenging.
Tail winds are from: brisk government spending (in the form of public demand), with a focus on health and investment; and the export uptrend, supported by the lower dollar.
Policy stimulus has been deployed - with 3 RBA rate cuts and modest tax rebates. Housing is responding, with prices rebounding sharply. But the flow-on effects to the real economy are yet to emerge. The tax rebates seem to have been largely saved.
The severe bushfires this summer have disrupted activity, across construction activity, consumer spending and possibly business investment. The impact in Q4 may be about -0.1ppt.
In Q3, real GDP growth was 0.4%qtr, 1.7%yr. The arithmetic being: domestic demand +0.2%; net exports +0.2ppts; inventories, +0.1ppt; and the statistical discrepancy, -0.1ppt. For Q4, real GDP growth is a forecast 0.5%qtr, 2.1%yr, with risks tilted a little to the downside. The arithmetic: domestic demand 0.1%; net exports +0.2ppts and inventories +0.1ppt, as well as the statistical discrepancy, +0.05ppt.
Private demand, on our figuring, contracted further, -0.1%qtr, -0.5%yr. Home building is contracting, so too business investment and consumer spending is soft. The last time private demand expanded was 2018 Q2.
On the consumer, accounting for 57% of domestic demand, the national accounts provide us with a detailed update on spending, saving and incomes. Notable is the softness in incomes (wages and non-labour income). Households are income constrained and the savings rate has declined in recent years, to a low of 2.7% in June 2019, then spiking to 4.8% in September 2019 as tax rebates were saved.
The labour market was on the softer side in the December quarter. Job numbers increased by 0.3%qtr, 2.0%yr and hours worked by 0.3%qtr, 1.8%yr. Productivity remains weak, exacerbated by the severe drought.
National income has been running at a 5% plus annual pace of late, supported by higher commodity prices. That changed in Q4, with commodity prices moving into reverse and the terms of trade down an estimated 4.7%. Nominal GDP growth is a forecast -0.3%qtr, 4%yr.
For 2020, our assessment is that output growth will remain stuck below trend, at around 2%. The coronavirus will have a material impact, particularly in the March quarter, when overall activity may stall, with a sizeable hit to trade, particularly tourism and education.
Read the full report <a href="https://westpaciq.westpac.com.au/Article/42327/14186/" target="_blank">https://westpaciq.westpac.com.au/Article/42327/14186/</a>
ANDREW HANLAN is a senior economist for Westpac
 
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Economy stuck in the slow-lane with coronavirus impact yet to come: Andrew Hanlan

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EXPERT OBSERVER
The past week has seen a renewed escalation in concern that the coronavirus outbreak (Covid-19) has become or is becoming a global pandemic. This is first and foremost a human crisis and our thoughts are with all those affected and those trying to combat the outbreak.
Naturally though investment markets are starting to become increasingly concerned about the disruptive impact on economic activity. A
As a result, while most share markets recovered their initial decline on the back of the virus with some hitting new highs last week, we are now seeing renewed sharp falls. This note updates our initial analysis from three weeks ago as to the impact of the outbreak.
Scenarios
Our assessment three weeks ago saw as our base case with 75% probability that the outbreak would be contained within the next month or two. This could still see more downside in share markets &amp; bond yields but there would be a rebound by the June quarter as growth rebounds.
The downside case saw a full-blown pandemic with delayed containment resulting in sharp drawn out slump in economic activity, the risk of recession and a 20% or so fall in share markets with the $A falling to around $US0.60. Of course, there are lots of variations around this. We thought the key things to watch are the daily number of new cases and the spread of new cases in developed countries.
Where are we with the Covid-19 outbreak so far? 
First, while the total number of reported cases is now around 80,000 worldwide there has been some good news in that the daily number of new cases is down from its peak earlier in February. This is due to a sharp fall in the reported number of new cases in China.
This has been confused by definitional changes in China – with Hubei initially reporting lab confirmed results, then including clinically tested results, then reverting to lab tested results only. However, both approaches have issues &amp; even if it’s roughly right it’s good news if China is starting to get the outbreak under control.
Against this, the number of new cases outside China has spiked – particularly in South Korea, Japan, Italy and Iran.
The mortality rate has increased to 3.3% - although there is uncertainty about it. Some argue it’s higher because it’s wrong to divide deaths into all cases as there is a lag from getting the disease to dying. Others argue it’s much lower because only those who are seriously ill are showing up for help and being measured. The mortality rate does look to be below the 9% for SARS but above that for swine flu though and it’s mainly the old and sick who are most vulnerable.
There is still much uncertainty about how it’s spread – with leaky plumping and aerosolising of toilet water or contaminated water possibly playing a role in the spread of the virus in the Diamond Princess cruise ship in Japan.
Containment measures in China have been aggressive and if the declining number of new cases in China is correct maybe they are working. Australia’s quick toughening in entry and quarantine conditions may also have helped in contrast to other countries that now have many more cases. However, some governments may not be able to implement and enforce such tough measures.
The spread of cases beyond China has raised increasing concerns that Covid-19 is become a global pandemic. While we and others have made comparisons to the SARS outbreak of 2003, the swine flu pandemic of 2009 is also relevant. Despite efforts to contain the disease it is estimated to have ultimately infected 700million to 1.4billion people but because its death rate was low at around 0.02-0.04% it doesn’t get referred to much.
Partly due to this swine flu had little impact on the global economic recovery of 2009 although it did occasionally rattle share markets. Though Covid-19’s mortality rate looks to be greater than that of swine-flu its worth noting that swine-flu’s mortality was initially reported to be as high as 9.5%
A big hit to global growth
Whether Covid-19 is soon contained, turns into a re-run of swine-flu or something a lot more deadly remains to be seen. Our base case remains one of containment by the end of March. But the risk of it taking longer is significant and in any case it’s increasingly clear that the economic impact will be quite severe as containment measures spread globally disrupting supply chains and spending. 
Some estimates suggest that as much as 50% of China’s economy has been locked down for the last three weeks which means nearly 12% knocked off Chinese GDP this quarter.
While the Chinese Government is refocussing on efforts to restore economic activity outside Hubei and highrisk areas, so far there is only mixed evidence of that. Coal consumption at power stations, migrant flows to cities, property sales and steel demand are up from their lows but remain well below normal levels for this time of year. And there has been no pickup in traffic congestion.
Numerous companies globally are reporting disruption to supply chains or reduced demand flowing from Covid-19.
Containment measures including travel restrictions in countries like Japan, Korea and Italy will spread the economic disruption globally.
Our rough estimate is that March quarter global GDP could now be zero or slightly negative. 
Australian GDP is likely to go backwards this quarter (with our current estimate being -0.1%) thanks to the bushfires and the hit from coronavirus. The vulnerability of the Australian economy to China is apparent from the next chart. Exports to China make up nearly 9% of Australia’s GDP including hard commodities at nearly 5%, tourism at 0.2% and education at 0.6%.
For other major countries it’s less than 3%. Chinese tourist arrivals stopped with the travel ban, education is under threat although there is a bit more time and bulk commodity shipments are showing signs of being impacted (although this has been distorted by storms).
Clearly the longer it drags on and the more the outbreak and disruption spreads globally the bigger the impact on Australia including the risk of two negative quarters, ie recession. The rising threat to the Australian economy from coronavirus is adding to the likelihood that the RBA will cut rates in March or April and the pressure for more fiscal stimulus in the May budget is increasing.
Concluding comments
The increasing global spread of the coronavirus has increased the risk of greater economic disruption for longer resulting in say a 20% fall in share markets. However, our base case of containment is that Chinese, global and hence Australian growth will rebound in the June quarter (avoiding recession in Australia’s case) although the risk of a delay is significant.
Against this background share markets, commodity prices and the $A remain at high risk of more downside in the short-term, but assuming some containment and a growth rebound in the June quarter markets should rebound by then. Easier than otherwise monetary and fiscal policies - with ever more stimulus measures announced in China and more monetary and fiscal easing globally - would add to this.
The key things to watch for remain a further downtrend in the daily number of new cases globally and a peak in new cases in developed countries. In a big picture sense, the fall in share markets should be seen as just another correction after markets ran hard and fast into record highs this year from their last decent correction into August last year.
Finally, for most investors given the obvious difficulty in trying to time any of this – whether it’s a further share market fall of 5% or 20% or no further fall at all and then when to get back in - it makes sense to turn down the noise around the virus and stick to a long-term investment strategy.
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital
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The increasing spread of Coronavirus and its economic implications: Shane Oliver

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EXPERT OBSERVER
Coronavirus continued to make headlines this week; but for the economy, sentiment was the focus.
While Australian consumer sentiment firmed in February according to our <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/February/er20200212BullConsumerSentiment.pdf" target="_blank">Westpac–MI survey</a>, at 95.5 the index remains well below its long-run average, suggesting consumers remain pessimistic. This downbeat mood has been in place since mid-2019 and has coincided with a pronounced deterioration in consumer spending momentum.
Economic conditions ‘next 12 months’ and ‘next 5 years’ both bounced back in February but remain below the level of November 2019 and are only in line with their respective long-run averages. This is despite continued strength in employment growth as well as the considerable policy easing undertaken by both the RBA and Federal Government in 2019.
Given this policy context, more concerning still is that ‘family finances versus a year ago’ fell again in February to be back near its recent low and well below average. ‘Finances, next 12 months’ is almost 11% below the average of first-half 2019, and also materially below its long-run average. Unsurprisingly, the ‘time to buy a major household item’ index is depressed, 8 percentage points below average.
Interestingly, ‘time to buy a dwelling’ reversed January’s gain to be back near its recent low in February. On a longer view, at its current level of 112, this index is well below 2019’s peak of 127 but still materially above 2017’s low of 90. At play here is arguably a reduced belief amongst households that further interest rate cuts will be seen in 2020 as well the impact of housing affordability.
House price growth expectations remain strong nonetheless, having surged 70% over the nine months to January 2020. The <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42085" target="_blank">December housing finance</a> data points to strengthening demand amongst owner occupiers, the value of loans up 23% since May and back near 2017–18’s peak. Investors are more circumspect. While 16% above the May low, the value of loans is still comparatively low – in line with the 2012 experience.
Turning to the business sector, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/February/er20200211BullAustralianBusinessConditions2020Jan.pdf" target="_blank">the NAB business survey</a> indicates confidence remained absent and conditions weak in late January. There are clearly a number of global and domestic headwinds for confidence. However, the greater concern is conditions. Profitability is weak, while trading conditions and forward orders are poor. The employment index has also lost momentum to now point to job gains circa 16k per month compared to 25k in mid-2019. Assuming flat participation, this would see the unemployment rate grind higher in 2020 – the opposite of what the RBA needs to see to have confidence that wages, growth and consequently inflation will firm as set out in their February Statement on Monetary Policy and Governor Lowe’s appearances last week (summarised in our <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42109" target="_blank">February Market Outlook</a>).   
Following the RBA last week, the latest MPS from the RBNZ set out their view of the outlook. On the assumption of a very mild coronavirus impact, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2020/February_2020/MPS_Review_February_2020_-_Westpac_NZ.pdf" target="_blank">the RBNZ are sanguine on the outlook</a> and expect to keep the stance of policy unchanged hence. This is as our New Zealand economics team anticipated, but more optimistic than markets were positioned for. Both the labour market and inflation views support this adjustment, but the most prominent rationale for the change of stance is the Government’s plan to increase spending. A cash rate cut is still expected in August by Westpac New Zealand, but this will principally be as a result of a weaker global backdrop which will put sentiment and growth at risk. A stronger New Zealand dollar, which we expect, would also weigh on inflation.
Moving to the rest of the world, our latest Market Outlook expands on t<a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42083" target="_blank">he key economic effects of coronavirus</a> and encapsulates all of the changes seen in the global and domestic economies since our last edition back in December. Succinctly for Australia: we anticipate our economy will be materially weaker in 2020 than the RBA currently anticipates; importantly, this is only partly attributable to summer’s bushfires and the coronavirus outbreak. Further, for the global economy, risks are clearly skewed to the downside.
Developments in <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42131" target="_blank">global commodity markets</a> highlight both the immediate loss from coronavirus as well as the risks to global production. <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42113" target="_blank">Global FX markets</a> however view this uncertainty as being contained in Asia, arguably because central banks elsewhere are seen as both willing and able to act. This is particularly the case for the US which has received a solid bid as a safe-haven. While <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42132" target="_blank">the Australian dollar</a> has taken a tumble in line with commodities, it will likely find a base and could strengthen in late-2020 if the RBA does not counteract the US rate cuts we forecast with concerted monetary easing here. Absent this step, Australia’s competitiveness and corporate profitability could become impaired, reducing the probability of the lift back to trend GDP growth we currently anticipate in 2021.
ELLIOT CLARKE is a senior economist at Westpac 
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