The three-step plan might get Australia’s downwardly spiralling economy off the critical list, but it will need to remain in intensive care for a long time to come.

When you’re on life support, any improvement in your condition is welcome. That’s what Australian governments have delivered today with their three-step plan to reopen most of the economy by July.
To continue the health analogy, today’s announcement isn’t a cure for businesses knocking on death’s door from the coronavirus shutdowns, but it is hopefully the first stage in getting them off the ventilator and, eventually, out of intensive care.
Prime Minister Scott Morrison announced the plan to gradually wind back social distancing measures after today’s National Cabinet meeting.
Coronavirus update: Follow all the latest news in our daily wrap.
To cut to the points relevant to business:
Stage one allows up to 10 people to gather in a public place. In his words, this means “retail and small cafes and restaurants reopening”.
Except, in many states, such businesses have remained open throughout I have watched at least half a dozen people walk past my suburban front window today with takeaway coffee cups in hand. In fact the rise in takeaway is creating a rubbish problem.
How does this compare to the ‘recession we had to have’?
It’s close to 30 years since Australia’s last recession, which saw vast numbers of people lose their jobs or struggle to break into the workforce, as another recession looms, writes Stephen Long.
Read more
Despite this patronage, cafe sales last week were down 51 per cent on normal levels in data compiled by AlphaBeta and illion.
The same figure shows food delivery was up 156 per cent, which has been great for some restaurants that specialise in it but many traditional dine-in restaurants simply can’t swap hurriedly to takeaway or delivery.
Even those that can are sitting on massive fixed rent costs that haven’t disappeared and can’t be compensated for by a smattering of take-out orders.
In this context, the move to allow up to 10 people to gather in a public place, at a spacing of one person per four square metres, will be welcome for some but meaningless for many.
Stay up-to-date on the coronavirus outbreak
Sure, if you’re a small cafe, you might do a little more trade by having some dine-in, but it will probably be small compared with what you’re already doing takeaway.
If you’re a small restaurant trying to survive on takeaway, 10 eat-in diners might provide a modest boost but it’s unlikely to shift the dial.
If you’re a big restaurant focused on dine-in, then step one is irrelevant to you you’ll almost certainly stay shut.
Commonwealth chief medical officer Brendan Murphy was realistic about the business benefits.
Your questions on coronavirus answered:
“That means many won’t be able to open, but many doing takeaway may want to put up enough distance tables to start gently serving 10 people at a time.”
Unless they’re already being paid through JobKeeper which many casual or international hospitality staff are ineligible for cafe and restaurant owners are not likely to put on an extra staff member to serve 10 people.
Possibly the biggest business winners are personal trainers, who will again be allowed to run (appropriately distanced) boot camps.
However, in practical terms, step one is more about ending social isolation which itself is a worthy end than the crippling economic shutdown.
Steps two and three where the real action begins
Step two is much more significant.
Allowing gatherings of 20 or, as Brendan Murphy noted, “potentially in some states, they may look at some venues to go more than that”, will make dine-in viable for many small and medium restaurants and cafes.
This stage will also allow the reopening of businesses such as “gyms, indoor fitness centres, beauty parlours, cinemas and galleries”, according to Professor Murphy.
Coronavirus questions answered
Breaking down the latest news and research to understand how the world is living through an epidemic, this is the ABC’s Coronacast podcast.
Read more
Although, a similar caveat applies as with restaurants and cafes. If you’re a very small fitness studio, great. If you are a big gym or fitness centre, 20 clients at a time is unlikely to make it economic to reopen not to mention the logistics and diplomacy required to ration those 20 precious visitor slots.
The same quandary applies to cinemas or larger galleries.
However, stage two does deliver a potential lifeline to hard-hit tourism operators and accommodation providers, many of whom were hit first by fires last summer, then by lockdowns and travel bans ahead of Easter.
“Some interstate travel, we think, may recur in that stage,” noted Mr Murphy.
All things going well, that should be in time for the winter school holidays regional tourist destinations must be fervently hoping that parents cooped up with their kids for months are desperate for an escape from the house!
Renter’s paradise
For those renters who still have their jobs, thousands of former Airbnbs hitting the long-term rental market mean bargains can be had in top locations.
Read more
This brings us to stage three, which will allow most businesses, including pubs and clubs, to reopen with public gatherings of up to 100 people permitted.
By itself, this would have most restaurants back up to, or near, full capacity. But there’s a catch social distancing of 1.5 metres will remain, so a restaurant that might normally seat 100 may be lucky to accommodate half that.
Perhaps more significantly, it is anticipated that all interstate travel would be allowed to resume along with possible cross-Tasman, and Pacific island travel.
It is also possible that international students would be allowed to return to resume their studies in Australia, with strict quarantine on arrival, providing a major boost to the ailing university sector, along with all the landlords, retailers and services that rely on this population.
Economy still in intensive care by July
By stage three, the Commonwealth estimates that $9.4 billion per month of economic activity will have returned.
Economy won’t look the same post COVID-19
The “road out” of coronavirus may head in an entirely different direction to the one we travelled towards the chasm and the bridge to cross it may need to be much longer than many now imagine, warns Ian Verrender.
Read more
However, that still leaves a nearly $7-billion-per-month hole in the economy, given Treasury’s recent assessment that the lockdown is currently costing $4 billion per week.
It leaves an even bigger employment hole.
Treasury is estimating the three steps together will see 850,000 people return to work.
“Those 850,000 jobs, I’m advised by Treasury, that includes those who may be on JobSeeker or JobKeeper now,” Mr Morrison explained.
“People stood down, going back to full employment.”
Getting the better part of 1 million people back to work within the next two months is nothing to be sneezed at.
Find out more
However, figures released by the Federal Government this week show 4.7 million Australians are on JobKeeper, while data provided to the Senate last week revealed another 1.3 million are on JobSeeker, with 300,000 claims still being processed.
Around 750,000 Australians have joined the dole queues since the COVID-19 restrictions ramped up in March.
Neither of these figures capture hundreds of thousands of temporary visa workers who are out of work but ineligible for either payment.
Don’t count on a quick coronavirus recovery
As efforts to control COVID-19 appear to be gaining traction, many analysts and traders are hoping for a quick return to business as usual. They’re likely to be disappointed, writes Ian Verrender.
Read more
By step three of the process assuming all things go well and COVID-19 outbreaks remain controlled the economy might be off the critical list but it still won’t be breathing without government assistance and a long way from leaving intensive care.
There’s no mention of a stage four a full relaxation of restrictions, large crowds and international travel that would see the economy leave intensive care and genuinely begin its road to recuperation.
That means it seems highly improbable that the Government will be able to suddenly withdraw the economic oxygen JobKeeper and JobSeeker that is keeping the patient alive, as it currently plans to do in September.
As with the health battle against COVID-19, short of a near-term vaccine or miracle cure, the road to recovery is going to be long, slow and painful.
And, as with the pandemic itself, the risk of a catastrophic second wave of business failures and job losses remains all too real if policy missteps are made.
What you need to know about coronavirus:
Concerns that the JobKeeper scheme is not working as intended