This is episode number nineteen in our series for 2020 and today’s date is Friday, June 12. 

First I talk to leading Australian barrister Ian Neil SC on the implications of COVID-19 for the Gig Economy.

And then I’ll be talking to economist Nicholas Gruen on the challenges of making forecasts about health and the economy.

But first, let’s talk to Ian Neil SC.

Listen to the full podcast here:

The economic downturn in the US triggered by the pandemic has been officially declared a recession. The National Bureau of Economic Research made the designation on Tuesday, citing the scale and severity of the current contraction. It said activity and employment hit a “clear” and “well-defined” peak in February, before falling. The ruling puts a formal end to what had been more than a decade of economic expansion – the longest in US history. Meanwhile, US markets continued their rebound, with the Nasdaq hitting a record high close, becoming the first of the major indexes to confirm a new bull market, and the Dow and S&P 500 jumping amid investor expectations that the downturn will be short-lived.

US civil rights groups have received a surge of corporate donations since Minneapolis police killed George Floyd, transforming the fortunes of some of the organisations hit hardest by the Covid-19 crisis. A Financial Times review of statements from US companies found more than $450m in pledges to groups focused on social and racial justice, which typically depend more on individual donations, often from people in disadvantaged communities.

Walmart and its foundation promised to put $100m into a new racial equity centre; Warner Music and Sony Music announced $100m funds with few details attached, and Nike pledged $40m to various organisations. Amazon, Facebook, Google, and Spotify announced donations of $10m or more, with Apple giving undisclosed amounts to groups including the Equal Justice Initiative.

Goldman Sachs, Target, United Health, and Verizon’s foundation each gave $10m. Jacob Harold, executive vice-president of Candid, which studies non-profits and foundations, said it had tracked $232m in donations to racial equity groups since Floyd’s death — almost as much as they receive in a typical year. The influx has come as the Covid-19 pandemic has plunged charities into crisis. After a decade of growth, many have seen donations collapse, their investments shaken and demand for their services soar. Half have less than six months of cash, said Mr. Harold.

The coronavirus crisis will lead the airline industry into record annual losses of $US84 billion as 2020 goes down as the “worst year in the history of aviation”, the sector’s main global body predicted. Airline passenger traffic is expected to rise 55 % in 2021 from its depressed level this year, while still remaining 29% below its 2019 level, the International Air Transport Association (IATA) said in an updated forecast. As an air travel recovery gathers pace in Asia and takes root in Europe and North America, airlines are counting the cost of many weeks of lost business, an increased debt pile, and a diminished outlook for future demand.

That’s why the federal government has poured $800 million into sustaining Qantas through the coronavirus pandemic,  About $490 million was sunk into JobKeeper payments for 25,000 staff members, and $75 million for repatriation flights and one-off return-trips to cities like Johannesburg, Mumbai, and Wuhan. Qantas also collected $128 million to support its domestic services. The federal government is on pace to hand the nation’s largest carrier almost six times the financial assistance its beleaguered rival Virgin Australia received in the same period,

Air New Zealand will be nimbler, fly fewer passengers and routes, and may cut more jobs as it targets a return to “healthy profits” by 2022, its chief executive said as he navigates the airline through the coronavirus crisis. Greg Foran laid out an 800-day plan to customers and staff under which the national flag carrier will look at how to further cut labour costs, including leave without pay, reduced hours, or possibly laying off more people.

Remarkably, the Westpac Consumer Sentiment Index shows consumer confidence is now back around pre-COVID levels, having recovered all of the extreme 20% drop seen when the pandemic exploded in March–April. Confidence has clearly been buoyed by Australia’s continued success in bringing the Coronavirus under control, which has in turn allowed for a further easing in social restrictions over the last month. The Index is now only 2% below the average in the preceding September to February period.

The unprecedented 58% fall in ANZ Job Ads over March and April ended in May, with a 0.5% rise in the monthly average. The week-to-week movements are more promising, with job ads improving steadily during May, from a low point at the beginning of the month. This is consistent with the gradual rollback of COVID-19 restrictions, which has allowed some businesses to reopen, extend trading hours, or increase activity and is seeing a recovery in household spending. A net 600,000 people lost employment in April, and another 600,000 people became underemployed. ANZ expects to see another net employment loss in May, reflecting the weakness in labour demand in the second half of April and early May. But a period of rapid improvement in the labour market is likely from mid-year, as business activity rebounds.

Australian business uncertainty remains high despite a further broad-based improvement in NAB’s monthly business survey as coronavirus restrictions ease. Business confidence recovered to a net balance of -20 points in May from -45 points in April. Business conditions recovered to -24 points from -34 points in April. The employment sub-component of business conditions lagged, with a recovery to -31 points from -34 points.

Forward indicators including capital expenditure, capacity utilisation also remained weak, NAB warned. Despite a broad-based improvement, NAB chief economist Alan Oster said business conditions “remain deeply negative” – at a level last seen coming out of the GFC – with the services sector weakest. Similarly, business confidence “remains weak” with a current reading last seen around the trough in the 1990s recession.

Chinese investment in Australia plunged 58.4% last year to $3.4 billion at the lowest level since 2007, according to a report released amid a broadening diplomatic spat between the nations. The Demystifying Chinese Investment in Australia report by KPMG and The University of Sydney also showed the number of Chinese investment deals dropped 43% to 42, from 74 in 2018. One deal — Mengniu Dairy Co.’s acquisition of Bellamy’s Australia Ltd. for A$1.5 billion, accounted for 43.7% of the year’s total. Even as China remains Australia’s largest trading partner, there are increasing signs of a widening rift between the nations.

Australia announced on Friday it will implement a tougher screening regime on foreign investors seeking to buy sensitive assets, with telecommunications, energy, technology and defense-manufacturing companies to be included in the zero-dollar threshold for screening. Factors contributing to last year’s investment decline include tighter Chinese regulations for overseas deals, state-owned enterprises reducing investments in developed markets in favor of developing nations, and negative perceptions by China toward stricter investment regulations by the Australian government, according to report co-author Doug Ferguson.

China is warning its students to reconsider plans to study in Australia due to an increase in racist attacks as it steps up a campaign to punish Australia economically for supporting an international probe into coronavirus. The travel warning on Tuesday follows last week’s advice for Chinese tourists to stay away from Australia and is a potential blow for the university sector which was already expected to lose $12 billion in revenue from Chinese students this year.

The trade threat against Australia’s third-biggest export income earner comes on top of restrictions on Australian barley and beef since the Morrison government angered Beijing by calling for an international investigation into the global pandemic. The official advice issued by China’s Ministry of Education came as university campuses prepare to reopen in July although students currently in China would not be allowed to travel overseas anyway under existing restrictions. It was not as strongly worded as last week’s warning for tourists to stay away but still directed students to reconsider their plans.

Women are less likely than men to go back to their normal spending patterns as the COVID-19 shutdowns are lifted, according to research that highlights how a broader shift towards more frugal consumer behaviour may slow the country’s economic road to recovery. The findings, from a survey by the Boston Consulting Group and market research firm Dynata, also shows younger women are less likely than younger men to feel financially secure but more likely to believe they have enough savings to get through the downturn.

The survey of 1514 Australians, conducted between May 21 and 26, found only 32% of Millennial women (aged 25 to 36) agreed that their spending habits would return to normal, compared to 39% of Millennial men. In addition, more than a third of Millennial women, or 35%, said they did not feel financially secure, compared to 26% of men in the age group. This more pessimistic view of women around their financial situation was present across every age group surveyed.

The Morrison government has extended the instant asset write-off by another six months to December at an expected cost of $300 million in an effort to prevent a further crash in business investment. Despite COVID-19 related including $100,000 cash grants and a $70 billion JobKeeper program, private business investment slumped 2.9% in the year to March, and forecasts from the Reserve Bank point to a 13% drop by December this year.

The instant asset write-off scheme provides immediate tax deductions for small and medium-sized businesses on certain expenditures allowing such businesses to pay less tax on their profits. This frees up more cash for them now rather than over several years into the future when the tax deductions would have been able to be made. The extension of the business asset write-off will be available to more than 3.5 million businesses employing more than 9.7 million employee

Unions have warned the jobs of more than 2000 postal workers are under threat after Australia Post managers allegedly told workers a restructuring of delivery services could lead to the jobs of one in four posties being cut. Australia Post on Monday left open the prospect of voluntary redundancies but denied the new delivery model, which will see letters delivered every second day, which would result in forced job cuts.

The Communications, Electrical and Plumbing Union will lobby the ALP and Senate crossbenchers to back a disallowance motion overturning a government regulation that permits Australia Post to change the way it delivers postal services. Australia Post managers had briefed workers on a new structure that would see the scrapping of existing arrangements where four traditional postie runs are staffed by four posties. Under the proposed restructure, two of the posties would take two of the runs each and deliver letters and small untracked parcels on alternate days. Responding to the union claims, Australia Post denied postal delivery workers would be forced out of their jobs.

The Australian Associated Press newswire will be sold to a consortium, in a bittersweet deal that will save the 85-year-old news service but mean half the editorial jobs will go. AAP chief executive Bruce Davidson told staff of the sale, first to a consortium led by former News Corp Australia and Foxtel chief executive Peter Tonagh. Mr. Davidson said AAP and the consortium reached commercial terms and would now enter negotiations to complete a sale by the middle of June. AAP is owned by Nine, News Corp, Seven West Media, and Australian Community Media. Nine, owner of The Australian Financial Review, and News Corp are the largest shareholders. Mr. Tonagh said he was looking forward to working with the AAP team to continue its great work and to find new commercial opportunities to ensure its long-term survival.

But the ABC will axe up to 250 jobs after staff were told on Tuesday that the public broadcaster needs to cut $41 million from its annual budget. Staff working in news, analysis and investigations, entertainment, regional and local programs, and production and content technology will be offered the opportunity to apply for a redundancy package The announcement follows a three-year funding freeze on the ABC that began last July and ultimately delivers an $84 million budget cut. Meanwhile, News Corp has also announced that just under 100  jobs will be cut at the newspaper giant’s biggest titles, including The Daily Telegraph, the Herald Sun, and The Australian.

Former Cricket Australia chief executive James Sutherland will spearhead a push to restart live entertainment. The move comes as the T20 World Cup, on which Mr. Sutherland sits as a director, remained in doubt ahead of its scheduled start in Australia from late October, as do the stadium shows and music festivals which normally dominate the summer calendar.

As head of the newly formed Live Entertainment Industry Forum, Sutherland will bring together the country’s biggest sport and entertainment promoters and some serious egos including Melbourne heavyweight Michael Gudinski’s Frontier Touring and Sydney behemoth Michael Chugg’s Chugg Entertainment. It also includes the heads of Live Nation, led locally by CEO Roger Field and chaired by Michael Coppel, and TEG, which is led by Geoff Jones and linked to fellow legendary music promoter Paul Dainty. Major stadiums are also inside the tent including the cricket grounds in Melbourne and Sydney, Marvel Stadium and Melbourne and Olympic Parks, Adelaide Oval, and the Australian Festivals Association, among others. The group has promised to develop the world’s best safety protocols to uniformly apply across major events, stadium shows, and festivals to satisfy the requirement of the public, governments, health officials, and sporting bodies.

The founder and chief executive of online retailer says the initial flood of online purchases of laptops, webcams, office chairs, and bread makers during lockdowns has translated into a big shift into broader categories that have driven a doubling of sales in April and May.

Ruslan Kogan said on Friday the group’s 13 distribution centres around Australia were busier than they had ever been as an additional 126,000 extra customers joined the company in May, propelling active customer numbers to 2,074,000. The company said on Friday gross sales across the April and May period were more than 100% higher than the same time a year ago, and the gross profit was up by 130%. The average run rate of earnings before interest, tax, depreciation, and amortisation in April and May was now $7 million. shares have surged from $4.10 on March 23 to give the company a sharemarket capitalisation of $1.2 billion. This market value is now more than five times that of department store group Myer at $220 million. has also launched a $115 million capital raising, with the funds set to be used on ‘future value accretive opportunities”. The raising will comprise a $100 million fully underwritten placement priced at $11.45 per share, a 7.5% discount to its Tuesday close, and a $15 million share purchase plan.

Sales have soared at Catch Group, Bunnings, Officeworks with people working from home and Wesfarmers’ online operations but the conglomerate has warned that higher COVID-19 related costs will take the edge off profit growth this year. In a trading update on Tuesday, Wesfarmers said Bunnings’ sales had risen 19.2% in the June-half to date, after 5.8% growth in the December-half, lifting sales so far this year by 11.3%. Officeworks sales have risen 27.8% in the June-half, following 11.5% growth in the December half, lifting year-to-date sales by 19.3%.

At online retailer Catch Group, which was acquired a year ago. gross transaction values soared 68.7% in the June-half, up from 21.4% growth in the December-half, lifting sales so far this year by 43.7%. Wesfarmers’ total e-commerce sales, across all divisions, rose 89% as consumers ordered online to avoid the shops. However, the strong sales growth will not flow straight through to the bottom line. Wesfarmers chief executive Rob Scott said Bunnings had invested about $20 million in additional cleaning, security, and protective equipment to respond to COVID-19 over the last three months.

And that’s it for this week. And next week, I’ll be talking to Ipsos Australia director David Elliott on the results of its latest ongoing surveys into COVID-19. The survey found that Australians are divided in their opinions about opening businesses due to concerns that it puts too many people at risk of COVID19. And I’ll be talking to IFM Investor’s chief economist Alex Joiner on what’s happening with our recession.

In the meantime, you can find me on Twitter at talkingbizz, on Facebook, and on LinkedIn. And if you want, leave a comment. Wishing you all a safe and healthy week and looking forward to bringing you Talking Business next week.