Phillip Au doesn’t have to walk far from his office in Sydney’s central business district to see the lingering impact of COVID-19 lockdowns, border closures and uncertainty.
“On the weekend, Chinatown is just like a ghost town, you can count the number of people walking in the street,” the business and migration consultant said last month, even before the emergence of the Omicron variant.
Up the road, Song Hotel general manager Jon Ackary echoes the sentiment.
“There’s very few people back working in the office, and if they are they’re working Tuesday, Wednesday and Thursday (for example),” he says.
The hit from Sydney’s more than 100-day lockdown was laid bare in Wednesday’s national accounts, with NSW state demand contracting by 6.5 per cent in the three months to the end of September. The blow – plus a smaller contraction in Victoria – resulted in national GDP shrinking 1.9 per cent in the quarter as locked up households in the two most populous states consumed far less.
Still, the economy performed far better than feared, particularly in Victoria, where private business investment expanded at a faster pace than the lockdown-free states of Queensland and Western Australia, despite going back into lockdown on August 6.
Westpac chief economist Bill Evans says an important dynamic was the sharp contraction in household spending but the fastest growth in household disposable income since late 2008 due to government support payments, lifting the household savings ratio to a sizeable 19.8 per cent.
With people in NSW and Victoria already out of lockdowns since October, it points to rosier economic numbers in the fourth quarter and 2022 as consumers run down that savings buffer.
“As long as we do not return to extensive lockdowns, we can expect household spending to drive extraordinary growth over the course of 2022,” Mr Evans says.
For CBDs, however, the future is less clear.
Justin Smirk, a senior economist at Westpac, says there’s little sign of CBD businesses planning to get levels of employment back to pre-COVID levels in the near term. “It's even questionable whether you would get back there. So, definitely, the nature of CBDs is changing,” he says.
Even before the recent lockdown, the Song Hotel’s Mr Ackery said his industry had been struggling since COVID emerged in early 2020, resulting in its staff numbers falling from 75 to 15.
But with bookings bouncing back, he’s now facing a similar issue many businesses are: trouble finding staff.
“The industry essentially shut down in April 2020, and a lot of our workforce left and went overseas. They've found other jobs,” he said.
“Hospitality lost a lot of people and they're not coming back in a hurry.
“Hospitality hours can be unfriendly for some people. Some people like it, but the international students really add some flexibility to our operations.”
Mr Smirk says closing the international borders resulted in a large loss of supply in the labour market, particularly in hospitality and other exposed industries, resulting in “massive labour shortages” despite not all businesses being back at pre-COVID levels of activity.
Amid uncertainty relating to the Omicron variant, the federal government on Monday paused the border reopening, forcing international skilled workers and students, as well as humanitarian, working holiday makers and provisional family visa holders, to wait until at least December 15.
But Mr Smirk says that even when the borders reopen, immigration won’t just roar back and it will take time for the population to grow, resulting in a “transition phase” that could last until the end of next year.
“This mismatch in labour and skills and people looking for new opportunities, businesses deciding to train rather than trying to recruit (and) businesses trying to do more with less people to,” he says.
Back at Mr Au’s business and migration consultancy near Chinatown, he says the inability to welcome students and tourists since COVID has been very difficult and he’s looking forward to the border reopening.
“This country relies heavily on skilled visa (holders)…(plus) students, holiday working visa, from around the world. They will stimulate the economy,” he says.
Almost two years into Australia being mostly closed off to the world and despite the emergence of Omicron, Mr Ackery remains hopeful.
“It'll bounce back," he says.