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Ben Kingsley Blog post by Ben Kingsley

RBA Cash Rate June 2020: Swaying on the edge of an economic and property cliff?

Today, Governor Lowe and the Reserve Board met and they kept the cash rate on hold, which as we all know, they will be for the time being.

It has been an interesting couple of months. We’ve obviously gone through March and April with a lot of uncertainty, a lot of unknowns around what was happening. And that caused a lot of pessimism and fear in the marketplace. Well, it is pleasing to see that Australians are now starting to return to what is our default position, which is one of optimism and hope for the future. And it should be that way, because what better nation in the world to live in than Australia right now?

You’re seeing what’s happening around the world. You should be very thankful that you do live in this country. You should be thankful that we have the money in the budget to be able to invest in stimulus, to keep our economy moving during these health crises and an economic crisis as well.

And that’s part of what I wanted to share with you in this commentary today… it’s is really about, “Where do you sit?

Do you sit as a glass half full or do you sit as glass half empty? Because it really is going to require the majority of people – our economy is going to require the majority of people — who are going to be glass half full to see us through, and that will be the theme throughout my commentary here today.

So let’s look firstly, at what’s going on globally. According to the latest data added CPB’s World Trade Monitor, we saw world trade volumes fall by 1.4% over the month of March to be down 4.3%. Over the year, volume shrunk in the first quarter by 2.5%. So, world trade has obviously been impacted by the COVID-19 crisis.

Turning our attentions to America, while it’s fair to say so far, this hasn’t been Donald Trump’s year. He has got a lot of issues on his agenda right now. Obviously that the tragic and horrible death of George Floyd last week, and now the current race riots that are going on over there. The fake news battle that’s starting to evolve with Twitter in terms of calling out some of his alternative facts, as he likes to call them. Then obviously, that his mismanagement, and a tanking economy in regards to the COVID-19 pandemic, being the world’s epicentre of the virus and all of the challenges associated with that. Then topping it all off, obviously the challenges that he’s having and the battles he’s having with China on several fronts are not the least of the challenges around what’s happening in Hong Kong at the moment.

So a very challenging time for the Trump administration, and yet we are seeing obviously the central bank over there pouring trillions of dollars into stabilising the economy, and also supporting the equity markets, which is one positive sign over there. But in the lead up to the November elections, Donald Trump has a real battle on his hands in terms of maintaining control in the US.

Turning our attention to China, they’ve got to be congratulated. If we trust their numbers, for a population of over 1.3 billion people, it is incredible in terms of how they have been able to avoid a second wave to date and how they are going about restoring their economic activity. So we’re seeing a lot of data coming out of China, which is really supporting that outputs are moving very close to pre-COVID-19 levels, which again are extraordinary numbers. That’ll continue to put a bit more stimulus into their local economy as the demand for their exports continues to withdraw during these times. That said, China can probably be pulled up as… they’re not winning too many international friends at the moment with their strong language around defending trading partners and their COVID-19 origins investigations, and also how they’re managing the Hong Kong territories is obviously disappointing for the prospects of democracy in the Hong Kong territory areas. Now that bodes for a challenging geopolitical environment moving into the second half of this year, and these new developments are certainly going to dampen economic growth and the prospects of that, and also impact on the sentiment levels.

Now the central banks are doing everything that they came to continue that stimulation, but it certainly points to a slower global growth as we see most of the developed countries come out of the restricted restrictions from the COVID-19 pandemic. So it’s not a… it’s not necessarily a great new story across the global outlook.

But when we do turn our attentions back here to Australia, once again, it does cement the view, and we should trademark this, but we are truly the lucky country. You are absolutely blessed to be living here.

And so whilst the world has been fast approaching over 6.2 million confirmed cases and over 370,000 deaths globally from this horrific health issue, the Australian population has managed to handle the pandemic very well thus far with a little over a hundred deaths; so extraordinary.

Looking at those numbers in more detail – only 7,200 confirmed cases. Two thirds of those have been imported from overseas. And we, at the time of recording this, we currently only have 103 deaths reported. So if we put that into context for these standard flu seasons that we have coming through Australia in different times of the year, we see deaths in that range of hundreds, or even over a thousand on occasions with poor influenza coming through. So an extraordinary job for everyone who’s been able to help flatten the curve, and the impact has been obviously severe on our economy. So that is now the balancing act that we’re seeing.

Because make no mistake, we are definitely going to see an increase in infection rates. That’s only natural as we open the economy, but we are really well positioned now, in terms of setup with contact tracing and also with our ICU beds. So, we are ready for those increases. So we’ve got to remain calm and confident in regards to, if we start seeing those cases improve. It would be an amazing outcome if we didn’t see those, but we’ve got to be realistic about that because the economic impact has been severe to say the least, over 600,000 job losses. And so as we emerge out of hibernation, we obviously we’ll be looking at that in more detail at the moment.

Now we are still seeing mainstream media be very cautious, or maybe even some would say negative in terms of their tones, and the sentiment and the messaging that they’re putting out to the public, keeping a certain level of fear for some. And that is, whilst understood, and it can be unproductive in terms of building the confidence that we need. And so whenever I see information like that, I do go to the business leaders in Australia, and I also go to the RBA in terms of looking at their data. So I look at the bank’s data, and I also look at what the RBA Governor is saying in regards to this time.

And it’s fair to say that there is certainly a level of cautious optimism, and confidence is definitely returning.

Now by way of example, I want to read to you a short statement that was released by Dr. Lowe at the Senate standing committee last week in regards to the COVID-19. Let me just… bear with me as I talk you through this particular statement, “The past three months have been extraordinary ones in the loss of our nation, and there has been unprecedented policy response. On the economic front, there has been very close coordination between monetary and fiscal policies, as there should be at times like this. As part of the RBA’s contribution to dealing with the pandemic, we announced a comprehensive package in mid-March. The goal is to support the economy by keeping funding costs low and credit available, especially for small and medium-sized businesses.

“As banker to the Australian government, the Reserve Bank has also processed many billions of dollars in government assistance to households and businesses. We’ve also made sure that the payment system is working well. And that bank note supply is maintained, and we’ve done this with around 90% of our staff working from home.

“The evidence so far is that our mid-March package is working as expected, and is helping to build a necessary bridge to the recovery. The shape and timing of this recovery depends not only on when restrictions are lifted, but also on the confidence that Australians have about their own health and their finances.”

Governor Lowe

With the national health outcomes better than earlier feared, it is possible that the economic downturn will not be as severe as earlier thought. Much depends on how quickly confidence can be restored. But as the recovery gets underway, they will still be a shadow cast by the pandemic.

“As a country, we’ll need to turn our minds as to how we move out of this shadow. Our reform agenda that makes Australia a great place for business to expand, invest, innovate, and hire people would certainly help. For its part, the RBA will maintain its expansionary settings until progress is being made towards full employment. And we are confident that inflation will be sustainably within the 2 – 3% target band.”

That was Governor Lowe’s message last week, and it’s consistent in the message statement that he’s released today in terms of being more optimistic. And that’s the way we need to be. We need to be glass half full. That is the takeaway that I get from these leaders in terms of what they’re telling us to do.

Now in terms of the talking points for the remainder of my opinion piece, I want to cover off:

  • The Government blunder
  • The equity markets
  • Current spending
  • Employment levels
  • Credit growth
  • Private credit expenditure
  • Consumer confidence

… and take a deeper dive into the property market, and also the Economic and Property Clifff dialogue that’s out there with those naysayers and doomsdayers.

Starting off firstly, with the economic forecasting blunder; it’ll go down in history as the biggest. I don’t think there’ll be any bigger of this. Unfortunately, treasury got their modelling wrong, and that has led to potentially three million less people being on the JobKeeper package. That means that the JobKeeper package is only around 3.5 million, not the 6.5 million that was originally forecast. And that’s meant that the government hasn’t had to borrow an extra $60 billion, so that the cost of the JobKeeper package and all the stimulus they’re putting out there may no longer be that 130 billion as originally forecast. It’s only going to be 70 billion.

Now, you can give them some leeway there in regards to the fact that, obviously it was a difficult time to be forecasting. There was lots of information around them, but it’s true to side, the government has made that mistake and they need to rectify it. Of course, that also means that there will be potentially some more money to go to, but it is a delicate balancing act in terms of that type of stimulus and where you direct that stimulus. So, we’ll come back to that shortly during this presentation.

In terms of the equity market rebounds, it has been quite extraordinary to think that, basically that the overall equity markets around only three percent off their peaks from last November, extraordinary in regards to those sort of levels around three to five percent. What we are seeing in the equity markets, and this is giving me a little bit of confidence in the fact that the average Joe, public thinks that the stock market’s a good place for their money because there’s no returns to be held anywhere else. And their optimism is returning. They actually think that we will get through this, which we will. Then on the other side of that, those businesses will continue to improve and perform. Now, whether they’re right or wrong, only time will tell. Or whether this is a dead cat bounce in terms of, and it still remains a bear market is also going to come out in the next weeks and months ahead.

That being said, it also is evidenced by the amount of money that has been pumped into the equity markets as we currently stand. So there has been a strong bounce there, and that could be giving some people some confidence. So keep an eye on those world equity markets, and also the local ISX market in regards to that.

In regards to the spending story, this one has been a fascinating one to watch.

So, not interested really in the lag data. Again, it’s going to be old news when it is reported and people will make what they make out of it in terms of the media reports. But the data that we’re also looking at is the banks leading reporting around what people are spending on. So let’s go to the retail spending story and it has been, again, quite extraordinary. Just by way of example, retail spending during the month of… sorry, the week of May 22 is now 22.4% higher than the same time last year, with groceries and pharmacy spending is 23.9% higher year on year. That’s all good news… That’s not all good news. Obviously, travel and also entertainment category is down a whopping 53% on this time last year. So, what is that really telling us?

It’s potentially telling us we’re not necessarily spending money on going on holidays, nor potentially taking our money off shore. We’re keeping that money here, and we’re doing more around the house and spending locally. And hopefully, that will be also a good news story for our domestic tourism and our travel bubble that we’re looking to establish with New Zealand and Australia as well. So, it really is quite fascinating. The recovery is clearly occurring. If we look at the official, our retail figures showed that spending has collapsed in April, but we’re basically back from that point of view.

Now let’s take a look at some of that data — so credit and debit card spending data from Commonwealth bank and ANZ shows consumer spending has recovered so much so now that it’s above where it was this time last year. Again, week ending May 22, personal spending on credit cards was up 2.3%, according to ANZ’s merchant data. And up 4% percent, according to CBA’s data. Context there: no one’s using cash cause potentially. Cash might have the virus attached to it. So you’ve got to probably put some type of a waiting on the minimum amount of cash that’s being used in the economy, but still extraordinary numbers. And we’re seeing, obviously that spending deviate as well.

ANZ reported the surge in spending might reflect increases in card uses of cash, which is what we just talked about. But yet, regardless of that, ANZ observed retail spending is still stronger than we may have expected before the reopening of the economy. And we haven’t even seen the economy reopen yet. As we record this, this week, Victoria, they’re still miles behind every other state in terms of reducing their restrictions. And that is definitely having an economic impact. So we really do need to wait another two, or three or four weeks for Victoria to potentially catch up because we really don’t… we aren’t seeing the whole economy in terms of what’s happening around spending. So that’s a positive news story there.

In terms of the weekly index of consumer spending compiled by Alphabet, and also Illion suggests that the consumer spending is now running at about 97% of its normal levels, which is just extraordinary, which also points my attentions to the comments that I made a couple of months back in regards to the banks and their provisioning of doubtful debts. One may argue why the bank shares have been doing so well of late is because remember, they are provisioning for doubtful debts. If those doubtful debts don’t materialise, that’s billions of dollars of profits that are going to be re-reported back into those banks. So that could be one of the reasons why we saw the bank rally last week.

In terms of employment, we got last week, the Australian Bureau of Statistics released the Payroll Jobs and Wages Index data for the week between March 14 and May 2. So it was quite an interesting period, and there’s quite an interesting sort of numbers here.

Jobs decreased by 7.3%, and total wages paid decreased by 5.4%.

And that’s not too bad considering all things considered on. Only a 5.4% decrease in money going out in the economy when we’ve got all this record stimulus, that’s also coming through from the governments. The fourth edition of the Bureau of Survey measuring the impact of COVID-19 on businesses released this time for the May 13 to May 22 week, 74% of businesses said they have changed the way they operate, 72% said their revenues have declined as a result, understandably. So more than half, 55% of businesses said that they’ve received wage subsidies and 38%, that they had accessed other forms of government support. We are included in that.

16% of business in the survey said they had deferred loan repayments, and 11% said they’d sought additional funds to cover the COVID-19. So not too bad at around 10%, so 90% are not looking for additional funds at the moment. The greater proportion of small businesses deferred loan payments 16%, and there was a smaller portion received property rental deferral. So this is commercial rent, 18% compared to 27% for medium size and 32% for large sized businesses. What is that telling us? That the big businesses are definitely asking for a rental reduction, not so much the small businesses. 71% of businesses, they expected social distancing measures to negatively impact their operations in some way over the next couple of months, makes complete sense. And 63% said trading restrictions would continue to impact, and 50% said travel restrictions would dampen their operations. So, are we going to get those borders opened?

Overall, businesses, we asked… required the business with the COVID-19 and aside from the relaxation restrictions, 35% said they require a revival in demand highlighting the critical need of confidence in new recovery. So 35% do want restrictions relaxed because it’s critical for their recovery and again, that makes perfect sense to me. So, what do we want to measure and monitor? Not so much the unemployment rate, but hours worked. That is the real clear measure, that’s going to be the difference in terms of people returning to work, and hopefully those businesses being in a position to provide that opportunity for them to do so. So, still some challenges in regards to the employment story.

In terms of credit growth, owner occupied housing was up and investment lending was down. So overall, 0.2% increase month and still 3.6% up year on year in terms of housing credit growth. The owner occupied was at 0.5 and is up 5.3%. So really there is… there’s a lot of people out there who are owner occupiers looking at property at the moment. And the investors are probably retreating a little bit where we saw them down -2 for the month and down -0.6 for the year on year.

Probably, the most negative data or most concerning data that was released over the last few weeks has been the private credit expenditure, which is effectively the CapEX plans.

It fell by 1.6% in the March quarter, and it’s very fragile. So the business confidence area is quite fragile at the moment, understanding so that they’ve got so much uncertainty out there around that. So, we do expect that to be challenging.

Where do we see the falls? 5.2% was really in the sector, the service sector, I should say. And it’s been the largest quarterly decline in four and a half years. So services areas where you do need to have that interaction with people have certainly been struggling, and that has been true. So it’s also been an unfortunate time where businesses are doing their budgeting for their spending budgets for the next 12 months, and they’re doing it right in the middle of this COVID crisis. That normally starts to take shape in March and April. So you can imagine all of those cautious people in boardrooms who were basically limiting the amount of CapEX plans for this year until they basically see a brighter future, so that is going to be problematic. And that is effectively what the reserve bank is saying; we do need to see small and medium-sized enterprises, get access to credit and believe in themselves to be able to recover their businesses or create new businesses, which will ultimately create the jobs for the rest of Australia.

In terms of consumer confidence, we’re getting the weekly rating from ANZ-Roy Morgan. And last week, the rating increased again. There’s been eight straight weeks in which the rating has come off its historical lows. The rating was 92.7, so there’s still a bit more pessimism than optimism. So we need to do some work on that as well, but certainly pointing in the right direction. And as hopefully the economy’s open, and we are a little bit more calm about the fact that there will be higher infection rates over the coming weeks and months, but manageable, we should basically be able to get to the back to some sort of COVID normality.

That being said, there’s still a lot of media and radio chat about the doomsayers, and what’s happening. And they still are getting click bait, and certainly helping the media outlets in terms of getting traffic, not so much helping them get advertising dollars. I wouldn’t have thought that, because obviously with those businesses not performing well, who’s going to pay for the advertising? But that’s just a little message to our media outlets. In terms of falling off a cliff

… it’s a silly assumption that by the end of September, we’ll be falling off a cliff. And I want to sort of prosecute my reasoning behind that.

Firstly, it’s silly; it’s counterproductive and it’s totally unnecessary. For those who ally their fears in this whole doomsday, there’s really no relevance to it at all because the governments are not going to let the economy — after all the great work that’s being done — they’re not going to let the economy slow down, but they’ve got a challenge here. If they were to come out tomorrow and say, “Hey everyone, yep, we’ve got this extra 60 billion. We’re just going to basically put it back into the economy, you’re all good for another six months.” It breeds complacency. It breeds inertia in terms of our businesses wanting to have a go, or our belief that the government should be basically helping everyone. So the communication, and the language and the signalling that you’re getting right now is consistent with what a good government should do, which is basically saying, “No, no, we want you to get on with it. We don’t want you to be relying on us. We want you to basically get back to work, get back to doing what you were doing safely, securely and keeping under the COVID-19 measures.”

But that’s what we want because the reality is, if everyone gives up or a portion still give up, or they have this inertia in the economy, that’s not good for anyone. So, the signalling is right for now. When they get closer to the time, they will have a look as part of their review in terms of the industries that are still being impacted. And those industries will be, obviously accommodation and also hospitality, and potentially a little bit of retail in there as well. And they will do targeted measured stimuluses or continuations of JobSeeker and JobKeeper packages appropriately.

But what they also don’t want to do is create a reliance on government welfare. That is sensible too, in terms of trying to make sure that people realise that you don’t just necessarily want to stay at home. You want to get out there and try and find employment to do that. So, it is a delicate act. The politics will be playing out in this particular space. But as we get closer to that end of September deadline, we will start to see announcements made in regards to what stimulus programs will be available. And what that all showed then should mean that the fear-mongering that is going on around that area should start to settle down. And I understand you’re helping these people in terms of giving them a voice, I get that. That makes sense to me, but don’t think it’s not coming. It’s definitely going to be targeting the right air.

Will it get everyone? Of course, not. Like all of these things, there’s not an unlimited pile of money. It’s going to be targeted where they can target to that, and they will unfortunately be people who don’t get on with it.

So, what have I always said to people? In this situation, don’t rely on the government, rely on yourself. If it is to be, it’s up to me. That’s the messaging that I’ll always say.

Now in terms of the property market… and all the “the property market’s going to fall off a cliff and the repayment holidays all stop, and there’s going to be an absolute mayhem” in terms of probably market, just simply unsubstantiated. No factual base in that at all. In fact, this week, most likely we are going to see a stimulus package released by the Federal Government, which is purely based on property. It’s very clear that the construction industry has been impacted by COVID-19 and the confidence of buying properties, so you will see some form. We don’t know the monetary value yet, but it’s going to be for the building of new constructed properties and brand new properties. So, it most likely will be a grant. It’s talk of that funding being around $20,000 of additional money to get the economy and the construction industry stimulated.

So all of those people like, “Oh, I didn’t factor that into my assessments of what’s going to happen.” Well, you should have. I mean, ultimately you’re…

It’s naive to think that the economy isn’t going to be supported by any type of stimulus in regards to the property market because it’s too big to fail, which I’ll talk about a bit more in a minute.

The other thing that they’re. – let’s talk about the second concern that they had — it was around the imminent offering of these repayment pauses. Well, the reality is that banks are also going to play their role in this. So, how are they going to play the role? Well, it’s really clear, APRA and also ASIC have cleared the why from a regulatory point of view, which will allow the banks to switch people from repayment pauses, to interest only repayments. Or allow banks to negotiate depending on the hardship with each customer, whether they will extend the repayment pause, or they will get some type of minimum repayment program coming in; whatever you can afford to pay, keep paying it cause obviously the interest is capitalizing.

So we won’t see a complete cut off in regards to what the banks are going to do. We are seeing record low interest rates, we are seeing affordability measures or repayment affordability better than it’s been in a long time. So, we’re going to see just a managed process of extending out the support that’s being given in the mortgage space. So please, for those people who keep talking about the property market’s going to fall over —”fall off a cliff in September” –and I say this also to sellers and buyers, if every buyer thinks that they’re going to get a bargain come that time period, you are solely mistaken. Think of everyone else who’s basically doing exactly what you’re thinking, and times that by 10, times that by a hundred, times that by a thousand. And that’s the amount of buyers who, potentially are thinking that they might be getting out in the marketplace at that time. So it bodes well for a pretty positive story for the property market in the coming months, and certainly into the new year.

In concluding this story around the mortgages, Westpac have already come out and confirmed that they will be offering the interest only. That will be matched by the other lenders. Again, they will be coming back to a case by case model where they’ll work out the best fit for you in terms of getting you back into a repayment program where it’s appropriate. They will be not forcing distress sales. They’ve learned a lot over the last 20 to 30 plus years in terms of how to treat mortgage customers and default mortgagee people. So that’s important to note.

Let’s turn our attention now to the property market around the latest results…

CoreLogic released their home value index results for May, and it was, again a really, really solid result, all things considered. So the national index was down 0.4% over the month. And in terms of that story, let’s just go through them because five of the eight Capital city regions recorded a fall, that obviously means that three went positive. So, Sydney is down point four for the month. For the quarter, it’s still up 1.1%. Melbourne was down point nine for the month. For the quarter, it’s up point eight. And again, this is a product, unfortunately of the restrictions here in Victoria.

Brisbane was negative point one for the month, but positive point eight for the quarter. Adelaide was not only positive, positive point four but it’s positive 1.1 for the quarter. Perth, negative point six for the month, but positive point one for the quarter. Hobart, positive point eight and positive point five for the quarter. Darwin, negative 1.6 for the month, but positive 2.1 for the quarter. And Canberra, positive 0.5, and also positive 1.2 for the quarter. In terms of overall, as we were talking about before capital cities, negative point five, but plus point five for the quarter. And combined regional areas was flat for the month of May, but 1.1% up for the quarter.

Now, they are not numbers to be fearful of. And when we’re hearing all these doomsday stories of negative 20, negative 30% crashes in the property market. The stimulus will obviously go a long way to building confidence in this particular market, which we anticipated would happen. And we definitely know that volumes are starting to increase, so the number of transactions was up 18.5% for the month of May. So as I’ve been talking about #OZPropertyAlive

We did want to get that message out there, that the property market is open, and we’re starting to see that come through. I refer to the head of research, Tim Lawless. We’re basically seeing the downward trajectory of the house process could be milder than first expected, so that’s also a little hint from the person who has all the data at their fingertips.

I’ve got a message here, and it’s a consistent message. It’s the same message that I had when people were saying, “I hear you are talking up the property market?”

Well, the reality is, is that the naysayers are either naïve, they’re too stubborn in their own biases, or they’re just ill-informed in regards to what they know about the property market.

So, it’s all well and good to get on the social media and have your voice. Everyone has a voice, go for it, go for your life. But the property market, the residential property market was always going to be protected and supported by these fundamental things.

The first one is jobs are so important, employment is so important. It is the biggest employer both directly and indirectly in our country. If you think about everything that has linkages back to residential property in a home or a rental property, whether that be retail, whether that be utilities, whether that be services, house and contents. Whatever that may look like, it is the biggest employer of people through construction and alike. That’s one thing, the government wasn’t going to let that industry die.

Two; taxes. It’s enormous. The amount of the revenue – the billions, the tens of billions of dollars that come in through taxes, capital gains tax, stamp duty, GST on some sales, general development levies and duties, local council rates. Tens of billions of dollars of tax receipts that are critical to the government coffers; they weren’t going to let the property prices fall and see those revenues deteriorate as well. So every dollar that they put in, they obviously are going to recoup in terms of those additional tax receipts that they’re going to receive, so too big to fail.

Number three, in terms of confidence, the property market and generally the Great Australian Dream of being in property has a lifestyle, living standards, and finally what we’ve been talking about for a long time, a wealth effect. If people’s property prices are stable or growing, they spend more money and that’s good for the economy. Again, a message to those people who are thinking about buying property: If you want to do so, make sure you’re in stable employment, make sure you understand the risks and rewards, but it’s definitely going to be a positive story for the property because we’re not falling off a cliff. There will continue to be resources and energy put in to making sure that the property market survives and thrives, because owner occupier appeal and 70% of the market is controlled by owner occupier. So please, always remember that for those people who are learning about why property prices don’t go down in those times.

In terms of my final observation, I do absolutely want to acknowledge that there are people still doing it tough in the economy. And that’s fair enough. And my heart goes out to those people who are doing it tough. But I also think right now, we have definitely turned a corner, and there should be reason for cautious optimism. That’s what everyone wants to see. The Governor of the reserve bank – business confidence needs to return. We need to be well led. We need to see our politicians doing the right thing. A whack to the liberal party in terms of their immigration policy and their students; international students’ policy. I’ll come back to that next week. But it’s fair to say that we’re moving more towards what the Deputy Governor of the Reserve Bank says, a squeezed-U recovery, where we could see as much as 85% of the economy returning to some level of normality.

Whilst that said, we realise that the final mile is going to be difficult. That will be challenging to get back to that final level whilst we still have a virus out there in the community, which is very deadly and very dangerous. So, be mindful that we will not get back to the way things were until such a time as we have a vaccine or treatment program for that. Be mindful also that the governments will continue to have targeted spending. So the JobKeeper package will eventually go back to some form of assistance, probably not at the same levels that it is. But an adjustment back to the new start allowance of some description because they want to encourage people to get into work.

In terms of JobKeeper, a lot more targeted than what it has been for these first six months of the stimulus that they put out there. Expect to see the banks continue to support their customers. Banks don’t want to profiteer out of being forced selling people’s homes. They don’t want to see the devastation that, that does to those family units in terms of losing their Great Australian Dream. So they’ll continue to keep working beyond the current environment, and continue to keep giving the borrower plenty of options in terms of how they move forward.

With all of that said, reminding you that there’s still a high probability that we will see increases in COVID-19 cases as we move to more mingling and more people mobile. So don’t panic when you see those numbers starting to increase. And as Dr. Lowe stated, it’s all about keeping a level head and getting that confidence, so we can move forward in regards to that.

So, there is a lot more to be optimistic about right now in Australia than there has been over the last few months.

We are absolutely blessed to be living in this great nation where we have our freedoms, and we have a standard of living, a health system, a social net that catches almost everyone at the moment. So it’s really, really powerful.

The other point I want to make is, don’t forget, even though there’s money flowing into households or not necessarily on spending, we are seeing some of it but we do know that there is money flowing into those households. So that’s hitting their balance sheet. If they’re not spending it, it’s reducing their debt levels and we expect to see household savings improving as well. So there’s a lot to be really, really positive about in regards to this story. With that in mind until next month, remember Knowledge is empowering, but only if you act on it.

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