It’s a shame people have to learn the hard way but there it is. Via Domain:
What’s to become of us, Melbourne, this once-humming city so open to the world, now stalled and shuttered?
…We’d opened ourselves to the world, embraced globalisation and remade ourselves as a smarty-arty economy based on knowledge and services. We’d reinvented the old CBD as a place to eat, drink, and play in boutique bars and eateries often tucked away in “secret” laneway locations.
We’d built a city on the very things that closed borders and COVID-19 have denied us: people, immigrants – international students in particular – gathering in number in narrow spaces.
Melbourne’s long economic boom is now over, or least seriously interrupted. And with the city’s boundaries stretching 150 kilometres from Bunyip to Wallan, the ongoing impacts are likely to be as profound in Berwick as they are in Little Bourke Street.
The last cycle was anything but “normal”. It was two decades of insanity (the last 10 years especially) as various immigration rent-seekers – including government, media, universities, property, banks and retail – shoved their dystopian population growth vision down Melbournian throats. Melbourne’s population ballooned by 50% in just 20 years.
That vision was for a low wage, part-time, capital shallow, crush-loaded, hell hole in which no local child could afford to buy a house. Good riddance to it.
What comes now? The great adjustment. There will be no return to the immigration levels of yesteryear. Not even when the virus passes. The other great buried truth about Melbourne’s passing abnormal is that it was hooked on Chinese Communist Party largesse and that is gone permanently. The students and tourists will never be back as Australia finally finds its voice in pushing CCP’s agents of influence out, and the CCP pulls out everybody else.
The truth has set in:
Treasurer Tim Pallas boasted that Victoria was the “powerhouse” and the “engine room” of the nation. Population growth underpinned it and, as Melbourne sprawled outward and upward, property taxes fed strong state budget surpluses.
But others were less glowing. On a per-capita basis, Victoria’s booming economy actually went backwards in some years after the global financial crisis, prompting economist Saul Eslake to declare Victoria a “poor state”.
Critics warned that an economy built on perpetual population growth, including students from China and India, would eventually be found out, like a Ponzi scheme. Nobody tipped the test would come in the form of a weird, worldwide virus.
Perhaps not, but we predicted it would come and about the time that it did. Business cycles do not die of old age.
The fallout:
Almost 8 per cent of food businesses have permanently shut their doors, another 8 per cent say they are on the brink, and nearly one-third of businesses have applied for the JobKeeper wage subsidy program, scheduled to wind up in March.
…Unlike the recession of the early 1990s, when abandoned building projects left the city scarred by “bomb sites”, the current downturn is more likely to result in vacant apartments and offices and what one senior property expert described as half-filled “ghost” towers.
In the outer suburbs…and especially in the south-east and west, that the majority of migrants eventually settle, especially those with young families. And with the migration tap turned off, a slowdown in fringe development seems inevitable.
The anus economy we have identified for so long has prolapsed and burst. And, oh yes, the McMansion fringes will be as bad as the CBD itself. They are driven entirely by mass immigration both in terms of demand and supply. The Melbourne economy is entering a donut-shaped collapse as the centre and fringe implode simultaneously. To wit:
In analysis for The Age, economists and planners at SGS estimate metropolitan economic growth will slump 5 percentage points through 2020 and 2021, but this forecast assumes a vaccine. Forecasts excluding a vaccine are dire. In its worst-case scenario, accounting giant PwC estimates the City of Melbourne alone will lose $110 billion in economic output and 79,000 jobs each year for the next five years.
…The SGS analysis also indicates that, with ongoing health concerns and social distancing in workplaces, shops and restaurants, the city’s daily foot traffic will struggle to return to the level of 20 years ago. Even when lockdown ends, people will be nervous about travelling in public transport and elevators, and sitting in cosy restaurants.
…Senior government figures and bank executives predict a major reduction, possibly by half or more, of the city workforce on any given day, with employees working at home more often or, in the case of the public service, possibly in suburban office “hubs”.
And, everything old is new again:
While Victoria is unlikely to abandon its education and services economic strategy, there is broad agreement that the economy needs to be more diverse and self-reliant.
…SGS economist and planner Marcus Spiller says there is a palpable shift in “sentiment” about manufacturing and that business is increasingly prepared to pay a little extra for local content in products and confidence in their supply chains.
…He heads a regional lobby pressing to boost manufacturing’s share of current GDP from less than 7 per cent to 10 percent by 2025. “That would pretty much wipe out unemployment,” he says.
Like it or not, the education and services strategy is dead. Manufacturing will be automated into the future so employment will be slow to recover even as it grows the economy.
Which only goes to show that Melbourne will keep on deflating. The great empty hulks of CBD ghost apartments and offices will drift endlessly lower – paced by zombie economy cheap credit and fiscal support. The McMansions will resume deflating when the stimulus passes. The middle suburbs of the complacent bourgeois will see property deflation for decades. Already smashed wages will keep going down. Some of this will be in real terms, some nominal.
It took twenty years for carpetbaggers to destroy the cheap and vibrant creative community that was Marvelous Melbourne at the millennium.
It will take about as long to fix it.
