The State’s initial recovery from the impact of COVID-19 has exceeded expectations, largely due to the NSW Government’s success in keeping the economy open by containing the virus. The economy is on track to recover to pre-COVID levels six months sooner than expected and economic growth is forecast to improve to 2¾ per cent by 2023-24. The unemployment rate reached 7.2 per cent in July 2020 but has now fallen back towards pre-pandemic levels to be 6.0 per cent in January. These are early signs economic recovery is underway, but the outlook remains uncertain.
This Half-Yearly Review continues the NSW Government's economic strategy, set out in the 2020-21 Budget, to recover from
the devastating effects of COVID-19 — focusing on job creation while laying the foundations for an even stronger economy in the long term.
The NSW Government’s approach, including world-leading testing and contact tracing, a sensible approach to restrictions and targeted stimulus support measures, has enabled the State to avoid the health and economic catastrophe experienced in many countries across the world.
- The size of the NSW economy is now expected to be broadly unchanged in 2020-21. The economy is forecast to grow by 2¾ per cent in 2021-22.
- Successful management of the virus has allowed the easing of containment measures more quickly than expected at the time of the 2020-21 Budget. Consequently, local economic activity has rebounded by a solid 6.8 per cent in the September quarter.
- The labour market too has fared much better than previously predicted — with a 6.0 per cent unemployment rate at Jan 2021 and reducing by the end of the forecast horizon to 5.0 per cent by June 2024.
While the outlook has improved, ongoing risks remain, with the potential to materially impact the economic and fiscal outlook of the State, including:
- new strains of the virus and unforeseen challenges affecting vaccine rollouts;
- a number of Commonwealth stimulus measures, put in place at the height of the pandemic, are scheduled to be wound back; and
- escalation of global trade tensions.
At the same time, more favourable outcomes are also a real possibility, including the potential for a faster recovery in household spending driven by accumulated savings and the continued recovery of consumer confidence.
NSW Health is working closely with the Australian Government to plan and implement a safe and effective COVID-19 vaccination program in NSW, underpinned by a strong public health system. Initially, vaccines will be distributed primarily through State-run vaccination clinics, with later stages of the program also being delivered through primary care settings such as GPs and pharmacies.
On Monday 22 February, the rollout of the Pfizer vaccine began, with frontline workers amongst the first to receive the vaccine. The rollout for the general population is due to commence in mid-2021. In NSW, the first people to receive a COVID-19 vaccine will include:
- healthcare workers working in locations with a higher risk of exposure to, and transmission of COVID-19, such as emergency departments, COVID-19 testing clinics, and COVID-19 wards;
- staff working in designated quarantine facilities; and
- residents and staff of residential aged and disability care facilities.
Through January 2021, NSW has recovered over 80 per cent (220,183) of aggregate jobs lost during the peak of the pandemic — and there are distinct differences in the job market.
- More women have entered the labour force, which allows more diversity of thinking and skills in workplaces.
- More older workers have been encouraged to remain in the workforce, with some choosing to delay retirement in favour of financial stability.
- There has also has been a shift to a greater part-time share of employment, as employers and employees transition into recovery, adjusting and adapting to a post-pandemic environment.
The NSW Government is continuing to deliver its record stimulus spending to support economic recovery and job creation, and boost confidence in the short term. Meanwhile, reform initiatives are laying the foundations for an even stronger economy in the long term.
- More than 90,000 grants have been paid to small businesses affected by COVID-19.
- Over 10,000 businesses have been supported through the Business Connect program.
- A $1,500 digital voucher scheme (totalling up to $472 million) to support small businesses with the cost of government fees and charges will roll out in April 2021.
- Stage one of the $500 million Dine & Discover program is already supporting local businesses in The Rocks, Broken Hill, Northern Beaches, Sydney CBD and Bega Valley, with the State-wide rollout commencing in March 2021.
Since November 2020, CBD revitalisation initiatives have worked to enliven Sydney, including more than 90 activations and events as part of a $20 million partnership with City of Sydney, as well as other grant programs.
The NSW Government has announced a package of measures for small businesses in the Northern Beaches affected by the COVID-19 lockdown. The package includes:
- $5,000 Hardship Grants available to small businesses that experienced at least a 50 per cent decline in turnover;
- $3,000 Hardship Grants available to small businesses that experienced at least a 30 per cent decline in turnover; and
- improved access to existing small business support, including mental health support, mediation services and the Business Connect program.
The pandemic has demonstrated the NSW Government’s ability to cut red tape and streamline processes to serve its people, businesses and communities, and reform initiatives have been accelerated to lay the foundations for an even stronger economy in the long term. These include:
- simplifying the planning system, through the NSW Planning Reform Action Plan, to reduce assessment times for proposals and improve customer experience;
- allowing supermarkets and pharmacies to open around the clock, licensed venues to sell takeaway and home delivery alcohol, increased flexibility for the operation of home businesses during the pandemic and trialling streamlined approval for outdoor dining;
- flexibility for digital solutions during the pandemic where paper based compliance was previously required, such as paperless prescriptions and electronic meeting, voting and execution of documents;
- reducing red tape involved with occupational licensees moving to new job opportunities interstate;
- fostering longer-term labour force efficiency and flexibility by establishing a Trades Skills Pathways Centre to introduce new pathways into trades, particularly for mature workers and women; and
- establishing the NSW Planning Concierge to help potential investors in the State to navigate the planning system, and overcome barriers and complexities without compromising sound planning decisions.
To enable more people in NSW to purchase their own home, with more freedom to choose the right home for every stage of life, the NSW Government is considering a once-in-a-generation change to the State’s property tax system. The proposal would offer property buyers the choice between paying stamp duty up front, or a much smaller annual property tax instead. Potential benefits include:
- savings: giving property buyers the option of reducing their up-front costs by eliminating stamp duty, reducing the time to save a deposit and delivering household savings of over $20,000 in the first four years (for the median Sydney sales price of $846,000).
- greater mobility: affording people the freedom to buy in locations which suit their jobs and lifestyle.
Since the public consultation started on 17 November 2020, more than 16,500 people have engaged through the Have Your Say website about this reform.
Great global cities are 24-hour cities. The NSW Government’s 24-Hour Economy Strategy aims to lift Sydney's global profile as a vibrant, safe, accessible city that's a great place to live, work and play — day and night. With a 24-hour Economy Commissioner to coordinate its implementation, the Strategy will drive employment opportunities and bring visitors and locals the best of Sydney.