A year ago, Reserve Bank Governor Philip Lowe was worried about “economic scarring” – the long-term damage COVID-19 might do to the Australian economy. These scars, he explained, showed up in various ways: from young people not getting onto the jobs ladder – or slipping off it – to lost training opportunities and “lower levels of investment in physical capital and research”.
Twelve months on, the RBA is reporting that Australia’s economic scarring is less than it would have been, thanks to success in containing the virus and a massive injection of public funds into the economy.
“Without decisive policy interventions, the pandemic would have sharply reduced household and business incomes, caused greater labour market disruption and prolonged economic scarring through business and personal bankruptcies and higher long-term unemployment,” RBA economists write in the RBA’s June 2021 Bulletin.
We’ve done so well that the Australian Bureau of Statistics reports in recent research, “Australia’s economy experienced a faster recovery than most OECD countries, with levels of activity now exceeding those prior to the pandemic”.
But the problem is the problem you always have with data; the big numbers hide the minutiae – the myriad personal tragedies and the individual scars.
The economy has bounced back strongly but not evenly.
Businesses involved in e-commerce and consumer spending and home improvements are going gangbusters. Those in hospitality, tourism and international education – all big parts of Queensland’s economy – have struggled.
And so too all those small businesses classed as non-essential – such as beauty parlours and gyms – and forced to shut down whenever the authorities decide it’s time for a lockdown.
What the data does reveal is that small businesses are recovering more slowly than big companies.
The latest figures show that companies with between 20 and 200 employees have increased their payroll numbers by 6 per cent since the start of the pandemic in March last year.
Companies with more than 200 employees report a 3.4 per cent increase but for businesses with fewer than 20 workers, the growth figure is just 1.7 per cent.
There’s no accurate measure, as least not that I’ve found, of how sole traders, freelancers and contractors have managed.
And if measuring the real economic impact at such a granular level is hard, measuring the impact on the mental health of business operators trying to stay afloat is just about impossible.
But governments know it’s an issue and have been putting money into mental health programs specifically designed for small business owners.
The Australian Small Business and Family Enterprise Ombudsman launched the “NewAccess for Small Business Owners” program in March this year.
Developed by Beyond Blue, with $4.8 million of government funding, and delivered by mental health provider Richmond Fellowship Queensland, it is “designed to help small business owners who are feeling overwhelmed about everyday life issues, which may be caused by business challenges, staffing, relationships, health or loneliness”.
The Ombudsman said the program, “offers free one-on-one telehealth sessions with specially trained mental health coaches providing evidence-based advice on strategies for managing stress.”
It has delivered more than 1,100 sessions in the past four months. Details on the scheme can be found here: https://www.beyondblue.org.au/get-support/newaccess/newaccess-for-small-business-owners
The Federal Government also set aside what it called “an initial” $74 million in this year’s Budget, delivered in May, to “support the mental health and wellbeing of all Australians”.
This included $10 million “to create a dedicated coronavirus wellbeing support line, delivered by Beyond Blue, to help people experiencing concern due to a coronavirus diagnosis, or experiencing stress or anxiety due to employment changes, business closure, financial difficulties, family pressures or other challenges”.
The Queensland Government didn’t specifically target the mental health of small business operators in its 2021-22 budget delivered in June but it does offer a range of advice here:
Elsewhere, the Australian Psychological Society also has information on coping with stress during the pandemic. https://www.psychology.org.au/for-the-public/Psychology-topics/COVID-19-Australians
For its part, accounting body CPA Australia was so concerned about the challenges its members faced dealing with stressed clients, it launched a psychological and suicide intervention first aid course in March.
The CPA didn’t have official usage figures available but says the program was downloaded 80 times in the first four hours after it was launched.
Australia may well have survived the first 18 months of the COVID-19 era with less-than-expected economic scarring thanks to buckets of public money and stringent public health measures.
But the reality, and cost, of the mental scarring could well take years to become apparent. The longer these abnormal times continue the larger the likely damage.
In the meantime, governments are doing the only thing they know how to do; throw money at the problem – a problem that they themselves helped create, by forcing small business to shut down in the first place.
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