The impact of the Coronavirus financial crisis will be felt across Australia until at least the year 2100.
And this will result in a poorer quality of life for a large part of the Australian population.
I’ll explain why.
Over the last month, I’ve been sending private messages to close family and friends telling them about what to expect as the Coronavirus crisis unfolded. I wanted them to be prepared for the massive change that was coming their way. On one occasion, I forwarded to them video of an extremely boring media conference — it was a banking representative speaking about postponing loan repayments by six months — for me this was good enough evidence that things were about to ‘get real’, non-essential businesses were about to shut and I needed to urgently explain that to my friends.
Which is the reason for this very public post on Medium. Over the last 4–5 days I’ve been privately explaining to these friends why this crisis will impact our quality of life forever.
This is what I’ve been telling them…and I think everyone needs to be aware.
Firstly, if a person aged 25-years-old draws down part of their superannuation in the year 2020, it will eventually impact their available funds on retirement in the year 2060. This will most likely require them to access government welfare during their retirement years. This person would then be retired from the year 2060 to the year 2100 (when they be aged about 100-years-old). A person on welfare will also require to access a properly funded public health system. And, for example, they’ll expect to access pensioner discounts on travel. More people on welfare = more people with a poorer quality of life. (Governments have been modelling for a long term future without retirement welfare and pensioner concessions).
Secondly, why has our Prime Minister been fighting hard to keep children in school? One reason is because taking children out of school would disrupt society. He’s correct. But, being a former Federal Treasurer, he would also be aware that having teens graduate from school at age of 19 (instead of 18-years-old) would result in one year’s less tax income as they graduate — times that scenario for 12–13 years) ie as soon as a student becomes an employee they immediately become a customer of the tax office. The Australian Taxation Office needs customers. And at the end of each year the Australian education system produces hundreds of thousands of people who instantly become revenue generating tools for the Australian tax office. If the government has less revenue, then it immediately impacts their spending.
Finally, why were our parents, grandparents and great grandparents so frugal? Why did my grandparents have chooks and a veggie garden in their backyard in Hornsby? The reason can be found in the financial history of Australia. For example, my grandparents were born at about the time of World War I and at the time of the Spanish Flu (1918–1920). They were born into a pandemic financial mess. When they reached their early teens they watched their parents tackle the Great Depression (late 1920s) and another World War in the 1940s. By the time the 1950s arrived, they would have been aged in their 40s and had children of their own. The experience of their first 40 years would have taught them to be cautious with money. Their parents would have instilled in them that they needed to be self sufficient ie chooks and veggie garden. Fast forward to the 2000s, and most of our grandparents would have experienced property boom #1. (My grandmother survived long enough to watch the property boom #2 two years ago). Their whole life experience with money taught them to be prepared for a financial crisis caused by a global pandemic or a another world war.
There are always lessons in history.