It’s been a month since the start of the 2020 coronavirus pandemic financial crisis in Australia, and we’re learning very quickly some important financial lessons.
For most people in Australia, the coronavirus pandemic ‘hit home’ when Prime Minister Scott Morrison revealed on Friday 13th March 2020 that gatherings of people involving 500 or more would be banned, and everyone had three days of to conform.
The following ten days after this announcement were very important for all Australians. Additional bans and restrictions were introduced. We were told we could not travel overseas and indoor non-essential gatherings were limited to 100 people.
On Sunday 22nd March 2020, the nation learnt of new restrictions for clubs, pubs, cafes, restaurants, cinemas, casinos and gyms. These strict rules for the hospitality industry meant many couldn’t operate as they normally would and resulted in a lot of businesses being forced to close. Hundreds of thousands of employees very quickly either lost their jobs or lost a number of hours they worked each week.
For most Australians who lost their jobs, they found themselves joining long lines of the newly jobless outside Australia’s unemployment offices, Centrelink, from Monday 23rd March 2020.
“Leaders acknowledged that these new restrictions will change the way we live and expressed deep regret for those business owners and employees who will be impacted. The goal is to reduce the spread of the virus, to flatten the curve and to save the lives of fellow Australians” — Prime Minister Scott Morrison.
Suddenly, Australians started learning very quickly that the economy was changing dramatically. It was hard not to notice the immediate change.
There were less people using public transport. Less people lining up for coffee. Less people in our cities. And lots of businesses had erected closure signs.
Friends, colleagues, contractors and family members lost their jobs. The Prime Minister announced an expansion of welfare arrangements for the newly unemployed under the Job Seeker program — but, this would not be enough — employees were very quickly being dumped by their employers.
The lines outside Centrelink offices and stories of job losses were tough for Australians to swallow. Within 7 days, the government announced the JobKeeper wage subsidy — This would allow employees to be still kept on the books of the business they work for, earn a wage supplement and it meant they didn’t have to line up at a Centrelink office.
Everything was changing very quickly for everyone. And people began to realise that the pandemic experience was also becoming a financial experience.
Did our generation ever think a pandemic would hit during their lifetime? And would they be financially prepared for such a crisis?
The 1919 Spanish Flu, the 1930s Great Depression and the post-war boom meant that our parents, grandparents and great grandparents all had financial experiences that they passed onto generations orally.
Like the coronavirus restrictions placed upon the movement of people in Australia in 2020, there were restrictions in place in 1919. Theatres, churches, race meetings, auctions and schools were closed.
Just as the war and pandemic began to fade, Australia experienced high inflation in 1919 and 1920 — this led to a four year recession. In 1922, the construction of the Sydney Harbour Bridge was approved — this decision was seen as an economic stimulus for New South Wales workers.
In 1924 consumer credit became cheap. The ‘Roaring Twenties’ introduced Australia to buy-now-pay-later shopping, international & domestic passenger flights, radio, electrification, refrigeration and Holden starts selling cars. People also began loaning money to invest in stocks. Life was great.
Prosperity was everywhere. For the first time, for example, people began living in the home that I now reside in here in Sydney. The land had been on the market for 30 years, and in 1922 that the John Sands Directory began reporting the first people to live at our address.
After five years of gains, Wall Street began to crash on Thursday 24th October 1929. People who had never benefited from shares, became caught up in the financial crisis. The sequence of events afterwards led to the Great Depression.
At the peak of the Great Depression, in 1932, unemployment reached 32% in Australia. 60,000 of the poorest citizens received sustenance payments (“susso”) which helped families buy basic food items. All public works projects were suspended — except for one, the construction of the Sydney Harbour Bridge.
Economic nationalism led to trade wars and then another world war.
Following World War II, the Korean War commodity boom saw a dramatic rise in Australian exports during the 1950s.
The post-war boom lasted until the early 1970s in Australia.
The unemployment rate remained low from the mid-1940s until 1972.
Broadly speaking, Australia experienced economic success after World War II and before the coronavirus pandemic financial crisis.
The financial period between the 1910s and 1960s taught generations of Australians, our relatives and friends, some valuable financial lessons about frugality.
Some of those frugal lessons will help us all navigate beyond the coronavirus pandemic financial crisis.
Additionally, right now, we’re living a financial lesson that we’ll be talking about for decades to come. And let’s hope future generations learn from the pandemic that we’re experiencing.