State of Play: Just When We Thought We Were Out of the Woods

Good afternoon and welcome to our State of Play. A lot happening at the moment, COVID spiking in Victoria and borders being closed and it may be a setback for the economy. However, there was some good news this week, Deloitte’s brought out a report. So their chief economist, Chris Richardson, said things were looking quite positive and they were far more confident than they were a few months ago. So they’re predicting that our economy will only contract 3% in 2020 and it will go on to grow further from there.

Now, of course, what we have to work out though and what we have to keep in mind is that this didn’t include… and they’ve factored in some sort of government stimulus beyond September, October. So we’re going to kind of fall off a bit of a cliff then when all the stimulus packages and the life support comes off. And what they’ve said is, assuming that the government does something and doesn’t just let us all fall, and secondly, that… So they’ve called it a “job tweaker”. And the other thing they talked about was that we don’t have a huge second wave that sends us into a lockdown or anything again.

There will be some sort of knock on effect from Victoria, because apparently the Victorian economy accounts for 25% of our GDP. So a quarter of our GDP is threatened because they’re having an economic reaction, further lockdown, being isolated from the rest of Australia with borders closed and that sort of thing. So they’re going to have a slower recovery which will affect our overall recovery.

But, the positives in the report were that we’re doing better than other countries and we should come out of this. On the positive note, the recession may have got the worst that it’s going to get in these two quarters and we may even get better in the second half of 2020. So they’ve said the reason that we’ve come through so well is because of JobKeeper and JobSeeker and a range of policies that buffered us and that they effected them as a government really quickly. So they were in a good position, we were lucky that our government wasn’t carrying too much government debt, as well as, they had some money in reserves. They were getting our federal budget back aligned. So we were able to act quickly and swiftly.

And instead of bats in roofs and covered outdoor learning annexes in school, like they did with the government stimulus back in 2009 when the GFC hit, here they just made it broad based helicopter money, literally like dumping money out of the sky, and got it into people’s hands quickly. There was no real lag effect and we didn’t go down for the count and take a while to come back. Obviously we’re not out of the woods yet, but what they did say is the fact that we got the virus quickly under control, we flattened the curve relatively quickly, we had quarantines. There’s a few outbreaks here and there, but the fact that we dealt with it quite quickly meant that our costs, our emergency costs, didn’t escalate. Other countries that had hundreds of thousands of cases and hospitals overflowing, there’s a big economic cost to that. So we saved a lot of money there and hopefully, touch wood, we won’t have to expand that later in a second wave.

And we’ve had very, very low rates and globally rates have fallen. So this means that even though the government has incurred big debt to keep us all propped up, the repayments on that debt are quite low. So yes, debt is up, but the drop in rates means that it’s more affordable and it’s not so dramatic. It’s not going to be a big gouge for us.

The downside risks, putting it in perspective, that upside, is that it all of this ends in September and October. But Scott Morrison has said, they’re going to do something. It’ll just be far more focused. And that’s what Chris Richardson at Deloitte said will be a good thing. So there will be a big risk. There’s considerable downside, if they just do nothing and say, “Oh, well, we gave you six months breathing space. You’re all on your own now.” Because what’s going to happen come September early October is that JobKeeper ends, JobSeeker ends, the pause in repayments on half a million mortgages runs out, so they’re going to expect banks are going to want repayments to happen. Although banks have said, they’re going to work with customers as well, and they may kick the can down the road a bit there.

Rental evictions are lifted and that mandatory code for commercial leases ends. Government loan guarantees for small businesses are pulled back. The ban on insolvencies, so liquidations, winding up of companies and bankruptcies, there was a six month ban, that’s lifted. Clock runs out on extra wages and subsidies for apprentices and a whole lot more stuff ends. They just did that on an emergency basis across the board when COVID hit. And now they’re going to pare it back and have more directed responses. But they will need more spending. So things like the home builder packages and the government roads, infrastructure building, pumping money into the economy is going to help certain sectors like they have with real estate and construction and that sort of thing.

They will have to make it more directed, otherwise we’re keeping businesses that should really be closed down. They’re not adding any value, they’re inefficient. They were probably losing money anyway, before COVID and keeping people employed in those businesses on artificial stimulation or life support, isn’t serving anyone. So there’s going to be casualties of war and they just have to let those go through to the keeper, Deloitte says. And they should, instead of having a blanket, across the board payment for everyone on JobKeeper or JobSeeker, they’ll have to pare that back, less dollars per person, but more strategically directed where it’s needed, like for example, in international travel or industries that depend on borders being open. So phasing out the support slowly, rather than just cutting it off and saying you’re on your own.

The other thing that Deloitte said, is that Victoria’s a quarter of the Australian economy. So if it doesn’t start up, if it doesn’t fire because it goes back into lockdown, there’s wide ranging consequences of that. But given that their economy is still open and hopefully this is as bad as it gets, little hotspots here and there, and we deal with them and we stomp them out and Victoria is able to operate as the rest of Australia is out of lockdown, then we’re probably past the worst of a recession.

So we’ll know more when the budget comes out. It was meant to happen in May, the federal budget, and they look at the next four years, that will now happen in October. So in May they just said, “How can we predict anything in the eye of the storm? Hopefully things will have stabilized.” So they deferred their federal budget until October where they can see the damage.

And there’s predicted a contraction of 3% of the economy in 2020, which isn’t that much in the scheme of things. Some economies are double digit percentage contractions. And they’ve said 4.7% growth next year and 4.4% growth the year after. So that’s big growth predicted in Australia.

On a quarterly basis, they’ve said our GDP, our gross domestic product, is going to shrink again for the June quarter. So we only shrunk a little bit, under a percentage point, for the March quarter. But obviously the storm only hit us end of March. So they’re predicting a loss and Josh Frydenberg, the treasurer, said at middle of the month said, “Yeah, we’re already going to have a loss, come end of June.” And what they’ve said now, looking at the numbers, they’ve said, it’s contracted 6.4% for the June quarter. But they’ve said it’ll grow by 2.4% in the September quarter. So the quarter we’re in now, we’re predicted to grow. So they’ve come out of lockdown and it’s all upside from here, providing no second wave, Victoria gets on top of things and things go back to normal and 0.7% in the final quarter of 2020.

And the reason that it’s not as high as this current quarter is because all the stimulus package is in. So they’ve factored that into it. The wages outlook, what we earn as individuals in the private sector, that’s not so good. It’ll grow by 2.6% in 2020, but then next year it’s going to fall by 0.8% and 0.4% the year after that. These are, how long is a piece of string. This is their crystal ball doing the best they can in all the economic modeling.

They’ve said, the unemployment rate is going to jump from 7.1% this year to 7.9% next year. And it won’t really stabilize until 2024 when it’ll be 5.2%. That’s not back to pre COVID level. So we’re looking at 2024 till we get some sort of normalcy back where we were before. And the other thing that they’ve said we need to be aware of is that our population is going to shrink.

So we’re very dependent. We’re a very small population in a really large country and we’re doing so well. For a small economy, Australia is hitting it out of the park. To be a player on the world stage with only 25 million people, capital cities have that many people in other countries, so to really have an impact like we do and be a top performing economic country, we do well anyway, but we depend on the birth rate. So we depend on population growth and we tried to have a baby bonus. We tried to get more people being born here. We’ve got just too good a lifestyle and a shrinking, aging population, which is not good economically. And we depend heavily on foreigners coming, on our immigration policy. And high net worth individuals coming to Australia and skilled migrants are a big factor that drive our economy, because they come here with money. They’re professionals. They work. They earn money. They pay taxes. They buy properties. So we have to factor in that we’re going to have 250,000 fewer people living permanently in this country. So that’s going to have a knock-on effect and shrink everything.

Melbourne is going to feel an impact. We’ve already seen it. So remember, last week we were saying, well, property prices are holding pretty stable in the scheme of things, given that we’ve got high unemployment, a lot of uncertainty and people are scared. But what it has meant is that fewer people are selling and a lot of people are wanting to buy. So demand still exceeds supply. But what we have seen is property prices fall more steeply in Melbourne than anywhere else. So you can see there on the table, the dark red, they’re down 2.3% for the quarter in Melbourne, 1.1% for the month. And the green are cities where property prices have gone up. Even in Sydney, the market has only fallen less than half, 0.8% of what it’s fallen in Melbourne.

So some worrying signs there. Melbourne often leads the charge when it comes to price variations or property markets turning. So we can see up there, the light blue line is Melbourne and the dark blue line is Sydney. So they have had higher highs in the past and lower lows, like 2010, 2012. And currently right now in 2020, their market has fallen further, faster. And similarly their dwelling prices have risen and fallen more steeply in the top quartile of the market. So the top 25% in terms of price range of properties have felt it more keenly.

There are more investors in Victoria than most other States except for New South Wales. So New South Wales has 40% of its market of buyers are investors. 32 1/2% in Victoria. Investors are not as invested as other like owner occupiers. If I live in a place and my kids go to school and I’m kind of settled and it falls in value, so be it. I still live there. I wasn’t planning to sell for the next 10 years anyway, I can ride it out. But investors are more volatile. If it falls, it means they’re losing money. There’s an opportunity cost. Should they be investing that money somewhere else where they can get a better yield? Investors seem to be a bit more fickle. So a market is more volatile when there’s more investors there. Although we haven’t seen it in Sydney and in the New South Wales market, more so in Victoria.

And the other thing that’s happened is Victoria, in terms of its loss of payroll, so people earning less, shift workers earning less, people losing their jobs there. They’ve felt it more keenly than any other state. So they’re down 7.6% in a month, in terms of money that people have at their disposal to go out and spend. So it’s had a contracting effect on their economy and therefore on their housing market. So more so than in Sydney.

So what we can see here is by industry, that is the industries that are affected and what’s happened with their employment and their earnings, their payroll, the amount of money burning a hole in their pocket. And we are seeing Victoria is the dark line and the national average is the lighter line. So they’ve felt it more in hospitality, food, beverage, travel, across the board. They’ve suffered in every industry and that’s playing out in their property market and their property prices now.

Also, Victoria was the go-to place for immigration. I had a business in Singapore and servicing Southeast Asia in terms of high net worth individuals wanting to come to Australia. They thought Melbourne was Australia. That’s all they heard of. Melbourne was the place to go. They also thought Melbourne because of university’s, education, that Melbourne was just the “it” place and the go-to place for foreign investment as well as migration and foreign students, followed closely by Sydney. But they depended a lot on foreign migration for their economy and for their property market. And you can see after Sydney, Melbourne people hadn’t really heard that much of… They heard of the Gold Coast and they’d heard of Brisbane because it was sunny. They heard of Perth because it’s in their time zone. And other than that, there wasn’t much interest in other capital cities.

We had our CFO share with us. We have daily huddles with our team just to get on top of things and keep communication lines open. And our CFO, Priyan, shared with us the other day, just some insights from his connections and communities. And the reality is that the business world is suffering. And that’s kind of like the Canary in the coal mine. So we can’t exhale yet, because even though Australia is okay, we’ve got to pare back and look at ourselves as part of a global network. We still depend on foreign trade. There’s no sense in us doing really well, producing all this stuff that we can’t export, because no one will buy it because everyone else has gone to hell in a hand basket. So we need our trading partners to do well also.

So it’s like when they say the US or China sneezes, Australia gets a cold. We all have to come through this together because the global economy is so interconnected. And what our CFO shared with us was Victoria’s Secret, international brand, is on the verge of bankruptcy. They’ve closed 250 stores globally. Zara, massive clothing label, has closed 1200 stores. La Chapelle has withdrawn 4,300 odd stores. Chanel has discontinued production. Hermes has discontinued. So the big, high end brands and fashion houses. Patek Phillipe, the watch and jewelry company, have discontinued production. Rolex has stopped producing. People are just cutting back. People are building war chests. So it’s that global recession mindset where discretionary, luxury spending is the first thing to go. So the luxury industry has ceased production.

Nike has a total of 23 US billion dollars preparing for the second stage of layoffs. So they’re really hunkering down and building that war chest. Tourism and travel industries, well we already know that, forget about them. The founder of Airbnb said 12 years of effort in building has been destroyed in six weeks. And Starbucks announced that it’s permanently closing 400 stores. So there’s a lot of pain out there. And if your company’s still there, if you still got a job or you still got a business that’s trading, be grateful for that and focus on that and building that.

Where in the business world, they say, the powers that be close to the coal phase say that we’re facing an out of control pandemic. So we’ve already seen it spiking in other countries like the US and they haven’t got the vaccine or the cure yet. So it’s too early to exhale, but it’s very, very important to watch this space to be informed and to know what’s happening and know it’s a bit like bushfires. when the wind changes direction, until that fire is gone or under control, it can always flare up again. And we’ve got to stay on high alert. As the prime minister said, we just can’t get complacent yet. So the second half of 2020 is going to be a challenge for economies globally and for big businesses, and smaller businesses that depend on the big businesses. So it’s going to have a domino effect. So we’ve got to get very nimble, be able to pivot and to focus on what matters right now.

The one thing you can control is yourself. Within you, you can control what you focus on, what you strive for and what your outcomes are. Got a lot of feedback last week from the quote that I shared. I actually got that from, if you’ve read Brene Brown and a couple of her books, but one of them Rising Strong. She talks about that famous Teddy Roosevelt quote, for those of you who missed it, he talks about daring greatly. So in times when you’re most downtrodden and you’re in the most pain and you’ve hit rock bottom, that’s where you’ve got to stand up. So he said, “It’s not the critic who counts, not the man who points out how the strong man stumbles or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust, sweat, and blood, who strives valiantly, who at best knows in the end the triumph of high achievement and who at the worst, if he fails, at least fails while daring greatly.”

In other words, economies will rise and fall. It’s a roller coaster ride. You can either go with the tide, like a cork on the ocean, you can Bob up and go down. Most people do that. Most people do what everyone else does. And you perfectly, can hold your head high and it’s perfectly excusable to say, “Well, I tried and I failed.” Because history will look back. And if you say, “Oh, I had a business in COVID-19 in hospitality.” Everyone will go, “Oh yeah, I get it. Fair enough.” You’ve got every excuse now to justify failure. But at the end of the day, where does that get you? At the end of the day, no one’s really judging you. What you’ve got to do and picture it. Brene Brown talks about being face down in the arena. Gladiator is one of my favorite movies. So face down, she wanted to put that in her writings, under a microscope. When you’re down and you’ve hit rock bottom and everything goes into slow motion, getting up again and continuing to fight on, knowing that nothing is certain ever.

Even when we think we understand reality, we can never ever predict the future. The stoics say, stuff happens, stuff is going to happen. It’s always outside of your control. What you can control is how you respond, how you view it, how you perceive it. Often we look at something and say, “Oh, that’s the worst thing that could have happened at the time.” And it’s only with the power of hindsight that we look back and go, “Oh, that was the greatest thing.”

There’s a story I’ve read in a book. I’ve shared it with you before the book the Survivors Club. So it talks about one off incidents, but it was a lady who had a child later in life, IVF. And she was going to a mother’s group and they were doing knitting for the school fete. And she was walking up the driveway to this house in the dark. And she tripped over, got up, dusts herself off, went inside and suddenly she’s sitting down and having a cup of tea. And they said, “What’s on your front?” And there was blood everywhere. She’d fallen on a knitting needle, had gone right through a heart. And it was just miraculous that she didn’t die.

And you think that would be the worst thing that could happen to you. But what had happened was that when they opened her up to do emergency surgery, they found that she had a tumor and she would have been dead within a few months anyway. So that horrible incident actually ultimately saved her life. And yes, she had to go through years and years of struggle. But ultimately what seems like the worst thing that could hit us out of the blue, freak incident like COVID, that we weren’t expecting, that we couldn’t in a million years have predicted can actually be a defining moment face down in the arena, that’s a watershed moment that changes everything.

So Rising Strong, when we rise up and dare greatly, it’s about these moments that define us. And there’s a propensity often to gloss over them. And when I was reading Brene Brown’s book, Rising Strong, she talks about how we gold plate grit. And I realized I do that. I say, “Oh, things were bad. They were good. Then they were bad and there was a GFC, but then I got good again. And it’s a happily ever after.” And it seems like we can talk about the bad stuff when we’ve come out the side and it’s okay to look back on it and reflect, but we kind of know there’s a happy ending. What about when you’re there? When you’re in the arena and when things are bad at that time. Why don’t we share that sort of failure?

I think that it’s something that people should embrace because other readings I’ve done on failure, Ashley Good, she has written and there’s Ted talks on all of these sorts of things. I found when I was going through a hard time, reading other people’s research and findings and realizing actually that’s very normal. Everyone fails. Everyone stuffs up. Everyone makes mistakes. We may not all have it at the same time, but we all go through bad times. And what Ashley Good’s research found was that when audiences and people were asked, “Hey, if you hear the word failure, what do you think?” And they were negative connotations. “Oh, failure, that’s bad, that’s fear, that sadness, making a fool of myself, stuffing up, feeling desperate, feeling lost, ashamed, panic, heartbroken.” But when asked about stories of failure… the word failure, invokes negative connotations. Stories of people’s failures actually invokes the exact opposite.

So when audiences we’re shown people in the eye of the storm, failing, in the act of failing, face down in the arena with the dirt and the blood and the sweat, what happened then was the response was they were brave. They were helping. They were generous. They were courageous. They were knowledgeable. So we tend to want to trivialize the bad stuff with hindsight and say, “That stuff was okay. You passed through the storm, hold your head up, you’ll get through it.” And then you’re happy again. And we should actually celebrate and share the failures, not because they’re human, but because they’re real and everybody suffers them. So Brene Brown calls it badassery. Feeling the fear, feeling upset, but taking it on anyway.

Ray Dalio, if you’ve ever read his work, Principles, biggest hedge fund manager in the world, he talks about it as radical transparency. Tell it like it is and be real about it and admit to the failures and admit to the heartbreak and the vulnerability, which makes us real.

And if you’ve read Jim Collins, any of his business books, Good to Great, he talks about, in a recent talk during COVID, he talked about brutal honesty, just being real about it, calling it for what it is. And he talks about people, one guy, seven years in a prisoner of war camp. And he said, the worst people who gave up the soonest and died were the optimists because they were saying, “I’ll be out by Christmas. I’ll be out by Christmas. Come on, stay positive.” And they weren’t being real about it. And they ended up dying of a broken heart. So he said, “It was bad. And I acknowledged it was bad every day. And I was just grateful that I was alive. And I lived in the present for the moment and just took it step by step, breathe in, breathe out, but be real about it.” And ultimately, he said, “I’m going to come through this. I will share this with others. It may be five years, it may be 10 years, it may be 20 years. I won’t even think about that. I’ll just decide what I do now and what I do next.”

So ask yourself this, this is a defining moment. It will be hard. It may get better. By September and the last quarter of this year, it may be just a forgotten thing of the past. Or we may have to work through a few more years, especially because global impacts are going to rebound on Australia. But you have a choice now. Do you want to be in the arena? Will you seek courage to define yourself or comfort, which is go with the masses? And yet, if we fall, there’ll be JobKeeper. They’ll do JobSeeker. The government will give us something. It’ll all just play out. Or will you take control?

So vulnerability isn’t about winning or losing. It’s having the courage to show up and be seen when you don’t know the outcome, when you’re still failing and you don’t know the happily ever after, and you don’t have necessarily any control on the outcome, except what you think, what you do, what you believe and your perception of the situation. You get to choose that. A lot of cheap seats in the arena are filled with people who never venture out into the ring. And that’s where the glory is. And that’s where the winning will take place.

When I read my recent readings about failure, it made me reflect, because of course we’re all scared of the unknown. We don’t know what lies ahead. I’m furiously reading newspapers, looking at figures. What did Deloitte say? What’s going to happen if employment goes up, goes down? At the end of the day, we have no control over the future. We never ever have. We never do. COVID or no COVID, we still don’t know if we’re going to get up tomorrow. So we should be grateful for every second. And we should do the best we can every single day with every moment that we have.

And ultimately, at the end of the day, when I looked at the failure of my past and the current uncertainty, and I looked around for comfort, that’s when I realized I’ve come further than I thought back in 2009. We often worry about the next month, the next two years. We never worry about the next 10 years. But future pacing it, something has to change. And in my time of uncertainty, back in 2009 in the GFC, I just read and read and read anything that could give me comfort.

So you remember a big hit back then, if you’re talking bestseller books and movies, was the Secret, and that was about the power of positive thinking and the knock-on effect and the law of attraction and all of that sort of stuff. So I got into thinking positively and a lot of motivational speakers and anything I could get my hands on YouTube or in reading materials. And I’m fortunate enough now to be in a position to reach out to those people who influenced me before, when we all need guidance and influence now and positive energy, whether it be facts and figures and data and numbers that can give us a sense of certainty, or whether it can be empowering as to the way we think, the way we perceive, the way we frame up the world.

I’m bringing them all to you in a series of live streams, our Ignite live stream series that we’ve been carrying on the past few Saturdays. We’ve had Robert Kiyosaki. We’ve had Gary V. And this Saturday, the 11th of July, we’ve got a great lineup for you. I’ve got, first of all, Dr. John Demartini. I’ve also got Brian Tracy. And so they’re international talents. And they were people that were of great comfort to me, 10 odd years ago when I went through my crisis and who I wanted their insights and their stoic philosophies and their mindset and their strategies, because they’ve been through so much lifetime of hardships. They’ve seen it all before. They’ve helped thousands of other people have the right attitude and the formula for success.

I’ve also, when it comes to local data and information, to give us some sort of sense of up and down and rhyme and reason in an uncertain time, I’ve got CoreLogic coming along. Eliza Owen, some of you may have been reading some of her reports and her writing. She looks at the market and exactly what’s happening now. So data on that and trends up to the minute in terms of the property market and the economy, so the cold, hard facts and figures there. As well as Bernard Salt. We wanted some local insight and Australia’s top demographer and futurist. So he’s going to tell us what he sees the future holding. How the world’s changed, because it has changed. We can’t fight change. We have to know how to adapt to change and thrive because of the change.

So it’s a massive heads up. I’ve got a huge lineup for you. It’s the biggest event in terms of talent and people sharing content that we’ve ever hosted. And it’s happening this Saturday from 9:00 AM to 2:00 PM. So take a razor blade to your diary. I’m putting the link to register for that up in the description. We’ll also have it in the comment section. Because it’s one that you won’t want to miss. And I’ve got the top people to give you the information that you need now and the formula so that you can plot your own pathway and navigate through all this, to the success, but enjoy the journey as you go.

So looking forward to that and catching up live with you on Saturday. So go to those links there. And don’t forget to follow us on Facebook to get regular updates and share this with your friends or tag them in the comments section. They’re welcome to come to all our live streams. That’s what we’re looking for, to influence and empower as many people as we can together. If you’re watching this on YouTube right now, don’t forget to like, subscribe, hit the bell, if you want to be notified every time we release new content.

And in the meantime, stay safe, take care. We will talk on Thursday on Ask Dom, as well as our State of Play. And I’m looking forward to catching up with you live and bringing you all the talent and all the great insights and mindset that you need on Saturday, on our live stream. So I’ll see you then.

Dominique Grubi…:Good afternoon and welcome to our State of Play. A lot happening at the moment, COVID spiking in Victoria and borders being closed and it may be a setback for the economy. However, there was some good news this week, Deloitte’s brought out a report. So their chief economist, Chris Richardson, said things were looking quite positive and they were far more confident than they were a few months ago. So they’re predicting that our economy will only contract 3% in 2020 and it will go on to grow further from there.

Now, of course, what we have to work out though and what we have to keep in mind is that this didn’t include… and they’ve factored in some sort of government stimulus beyond September, October. So we’re going to kind of fall off a bit of a cliff then when all the stimulus packages and the life support comes off. And what they’ve said is, assuming that the government does something and doesn’t just let us all fall, and secondly, that… So they’ve called it a “job tweaker”. And the other thing they talked about was that we don’t have a huge second wave that sends us into a lockdown or anything again.

There will be some sort of knock on effect from Victoria, because apparently the Victorian economy accounts for 25% of our GDP. So a quarter of our GDP is threatened because they’re having an economic reaction, further lockdown, being isolated from the rest of Australia with borders closed and that sort of thing. So they’re going to have a slower recovery which will affect our overall recovery.

But, the positives in the report were that we’re doing better than other countries and we should come out of this. On the positive note, the recession may have got the worst that it’s going to get in these two quarters and we may even get better in the second half of 2020. So they’ve said the reason that we’ve come through so well is because of JobKeeper and JobSeeker and a range of policies that buffered us and that they effected them as a government really quickly. So they were in a good position, we were lucky that our government wasn’t carrying too much government debt, as well as, they had some money in reserves. They were getting our federal budget back aligned. So we were able to act quickly and swiftly.

And instead of bats in roofs and covered outdoor learning annexes in school, like they did with the government stimulus back in 2009 when the GFC hit, here they just made it broad based helicopter money, literally like dumping money out of the sky, and got it into people’s hands quickly. There was no real lag effect and we didn’t go down for the count and take a while to come back. Obviously we’re not out of the woods yet, but what they did say is the fact that we got the virus quickly under control, we flattened the curve relatively quickly, we had quarantines. There’s a few outbreaks here and there, but the fact that we dealt with it quite quickly meant that our costs, our emergency costs, didn’t escalate. Other countries that had hundreds of thousands of cases and hospitals overflowing, there’s a big economic cost to that. So we saved a lot of money there and hopefully, touch wood, we won’t have to expand that later in a second wave.

And we’ve had very, very low rates and globally rates have fallen. So this means that even though the government has incurred big debt to keep us all propped up, the repayments on that debt are quite low. So yes, debt is up, but the drop in rates means that it’s more affordable and it’s not so dramatic. It’s not going to be a big gouge for us.

The downside risks, putting it in perspective, that upside, is that it all of this ends in September and October. But Scott Morrison has said, they’re going to do something. It’ll just be far more focused. And that’s what Chris Richardson at Deloitte said will be a good thing. So there will be a big risk. There’s considerable downside, if they just do nothing and say, “Oh, well, we gave you six months breathing space. You’re all on your own now.” Because what’s going to happen come September early October is that JobKeeper ends, JobSeeker ends, the pause in repayments on half a million mortgages runs out, so they’re going to expect banks are going to want repayments to happen. Although banks have said, they’re going to work with customers as well, and they may kick the can down the road a bit there.

Rental evictions are lifted and that mandatory code for commercial leases ends. Government loan guarantees for small businesses are pulled back. The ban on insolvencies, so liquidations, winding up of companies and bankruptcies, there was a six month ban, that’s lifted. Clock runs out on extra wages and subsidies for apprentices and a whole lot more stuff ends. They just did that on an emergency basis across the board when COVID hit. And now they’re going to pare it back and have more directed responses. But they will need more spending. So things like the home builder packages and the government roads, infrastructure building, pumping money into the economy is going to help certain sectors like they have with real estate and construction and that sort of thing.

They will have to make it more directed, otherwise we’re keeping businesses that should really be closed down. They’re not adding any value, they’re inefficient. They were probably losing money anyway, before COVID and keeping people employed in those businesses on artificial stimulation or life support, isn’t serving anyone. So there’s going to be casualties of war and they just have to let those go through to the keeper, Deloitte says. And they should, instead of having a blanket, across the board payment for everyone on JobKeeper or JobSeeker, they’ll have to pare that back, less dollars per person, but more strategically directed where it’s needed, like for example, in international travel or industries that depend on borders being open. So phasing out the support slowly, rather than just cutting it off and saying you’re on your own.

The other thing that Deloitte said, is that Victoria’s a quarter of the Australian economy. So if it doesn’t start up, if it doesn’t fire because it goes back into lockdown, there’s wide ranging consequences of that. But given that their economy is still open and hopefully this is as bad as it gets, little hotspots here and there, and we deal with them and we stomp them out and Victoria is able to operate as the rest of Australia is out of lockdown, then we’re probably past the worst of a recession.

So we’ll know more when the budget comes out. It was meant to happen in May, the federal budget, and they look at the next four years, that will now happen in October. So in May they just said, “How can we predict anything in the eye of the storm? Hopefully things will have stabilized.” So they deferred their federal budget until October where they can see the damage.

And there’s predicted a contraction of 3% of the economy in 2020, which isn’t that much in the scheme of things. Some economies are double digit percentage contractions. And they’ve said 4.7% growth next year and 4.4% growth the year after. So that’s big growth predicted in Australia.

On a quarterly basis, they’ve said our GDP, our gross domestic product, is going to shrink again for the June quarter. So we only shrunk a little bit, under a percentage point, for the March quarter. But obviously the storm only hit us end of March. So they’re predicting a loss and Josh Frydenberg, the treasurer, said at middle of the month said, “Yeah, we’re already going to have a loss, come end of June.” And what they’ve said now, looking at the numbers, they’ve said, it’s contracted 6.4% for the June quarter. But they’ve said it’ll grow by 2.4% in the September quarter. So the quarter we’re in now, we’re predicted to grow. So they’ve come out of lockdown and it’s all upside from here, providing no second wave, Victoria gets on top of things and things go back to normal and 0.7% in the final quarter of 2020.

And the reason that it’s not as high as this current quarter is because all the stimulus package is in. So they’ve factored that into it. The wages outlook, what we earn as individuals in the private sector, that’s not so good. It’ll grow by 2.6% in 2020, but then next year it’s going to fall by 0.8% and 0.4% the year after that. These are, how long is a piece of string. This is their crystal ball doing the best they can in all the economic modeling.

They’ve said, the unemployment rate is going to jump from 7.1% this year to 7.9% next year. And it won’t really stabilize until 2024 when it’ll be 5.2%. That’s not back to pre COVID level. So we’re looking at 2024 till we get some sort of normalcy back where we were before. And the other thing that they’ve said we need to be aware of is that our population is going to shrink.

So we’re very dependent. We’re a very small population in a really large country and we’re doing so well. For a small economy, Australia is hitting it out of the park. To be a player on the world stage with only 25 million people, capital cities have that many people in other countries, so to really have an impact like we do and be a top performing economic country, we do well anyway, but we depend on the birth rate. So we depend on population growth and we tried to have a baby bonus. We tried to get more people being born here. We’ve got just too good a lifestyle and a shrinking, aging population, which is not good economically. And we depend heavily on foreigners coming, on our immigration policy. And high net worth individuals coming to Australia and skilled migrants are a big factor that drive our economy, because they come here with money. They’re professionals. They work. They earn money. They pay taxes. They buy properties. So we have to factor in that we’re going to have 250,000 fewer people living permanently in this country. So that’s going to have a knock-on effect and shrink everything.

Melbourne is going to feel an impact. We’ve already seen it. So remember, last week we were saying, well, property prices are holding pretty stable in the scheme of things, given that we’ve got high unemployment, a lot of uncertainty and people are scared. But what it has meant is that fewer people are selling and a lot of people are wanting to buy. So demand still exceeds supply. But what we have seen is property prices fall more steeply in Melbourne than anywhere else. So you can see there on the table, the dark red, they’re down 2.3% for the quarter in Melbourne, 1.1% for the month. And the green are cities where property prices have gone up. Even in Sydney, the market has only fallen less than half, 0.8% of what it’s fallen in Melbourne.

So some worrying signs there. Melbourne often leads the charge when it comes to price variations or property markets turning. So we can see up there, the light blue line is Melbourne and the dark blue line is Sydney. So they have had higher highs in the past and lower lows, like 2010, 2012. And currently right now in 2020, their market has fallen further, faster. And similarly their dwelling prices have risen and fallen more steeply in the top quartile of the market. So the top 25% in terms of price range of properties have felt it more keenly.

There are more investors in Victoria than most other States except for New South Wales. So New South Wales has 40% of its market of buyers are investors. 32 1/2% in Victoria. Investors are not as invested as other like owner occupiers. If I live in a place and my kids go to school and I’m kind of settled and it falls in value, so be it. I still live there. I wasn’t planning to sell for the next 10 years anyway, I can ride it out. But investors are more volatile. If it falls, it means they’re losing money. There’s an opportunity cost. Should they be investing that money somewhere else where they can get a better yield? Investors seem to be a bit more fickle. So a market is more volatile when there’s more investors there. Although we haven’t seen it in Sydney and in the New South Wales market, more so in Victoria.

And the other thing that’s happened is Victoria, in terms of its loss of payroll, so people earning less, shift workers earning less, people losing their jobs there. They’ve felt it more keenly than any other state. So they’re down 7.6% in a month, in terms of money that people have at their disposal to go out and spend. So it’s had a contracting effect on their economy and therefore on their housing market. So more so than in Sydney.

So what we can see here is by industry, that is the industries that are affected and what’s happened with their employment and their earnings, their payroll, the amount of money burning a hole in their pocket. And we are seeing Victoria is the dark line and the national average is the lighter line. So they’ve felt it more in hospitality, food, beverage, travel, across the board. They’ve suffered in every industry and that’s playing out in their property market and their property prices now.

Also, Victoria was the go-to place for immigration. I had a business in Singapore and servicing Southeast Asia in terms of high net worth individuals wanting to come to Australia. They thought Melbourne was Australia. That’s all they heard of. Melbourne was the place to go. They also thought Melbourne because of university’s, education, that Melbourne was just the “it” place and the go-to place for foreign investment as well as migration and foreign students, followed closely by Sydney. But they depended a lot on foreign migration for their economy and for their property market. And you can see after Sydney, Melbourne people hadn’t really heard that much of… They heard of the Gold Coast and they’d heard of Brisbane because it was sunny. They heard of Perth because it’s in their time zone. And other than that, there wasn’t much interest in other capital cities.

We had our CFO share with us. We have daily huddles with our team just to get on top of things and keep communication lines open. And our CFO, Priyan, shared with us the other day, just some insights from his connections and communities. And the reality is that the business world is suffering. And that’s kind of like the Canary in the coal mine. So we can’t exhale yet, because even though Australia is okay, we’ve got to pare back and look at ourselves as part of a global network. We still depend on foreign trade. There’s no sense in us doing really well, producing all this stuff that we can’t export, because no one will buy it because everyone else has gone to hell in a hand basket. So we need our trading partners to do well also.

So it’s like when they say the US or China sneezes, Australia gets a cold. We all have to come through this together because the global economy is so interconnected. And what our CFO shared with us was Victoria’s Secret, international brand, is on the verge of bankruptcy. They’ve closed 250 stores globally. Zara, massive clothing label, has closed 1200 stores. La Chapelle has withdrawn 4,300 odd stores. Chanel has discontinued production. Hermes has discontinued. So the big, high end brands and fashion houses. Patek Phillipe, the watch and jewelry company, have discontinued production. Rolex has stopped producing. People are just cutting back. People are building war chests. So it’s that global recession mindset where discretionary, luxury spending is the first thing to go. So the luxury industry has ceased production.

Nike has a total of 23 US billion dollars preparing for the second stage of layoffs. So they’re really hunkering down and building that war chest. Tourism and travel industries, well we already know that, forget about them. The founder of Airbnb said 12 years of effort in building has been destroyed in six weeks. And Starbucks announced that it’s permanently closing 400 stores. So there’s a lot of pain out there. And if your company’s still there, if you still got a job or you still got a business that’s trading, be grateful for that and focus on that and building that.

Where in the business world, they say, the powers that be close to the coal phase say that we’re facing an out of control pandemic. So we’ve already seen it spiking in other countries like the US and they haven’t got the vaccine or the cure yet. So it’s too early to exhale, but it’s very, very important to watch this space to be informed and to know what’s happening and know it’s a bit like bushfires. when the wind changes direction, until that fire is gone or under control, it can always flare up again. And we’ve got to stay on high alert. As the prime minister said, we just can’t get complacent yet. So the second half of 2020 is going to be a challenge for economies globally and for big businesses, and smaller businesses that depend on the big businesses. So it’s going to have a domino effect. So we’ve got to get very nimble, be able to pivot and to focus on what matters right now.

The one thing you can control is yourself. Within you, you can control what you focus on, what you strive for and what your outcomes are. Got a lot of feedback last week from the quote that I shared. I actually got that from, if you’ve read Brene Brown and a couple of her books, but one of them Rising Strong. She talks about that famous Teddy Roosevelt quote, for those of you who missed it, he talks about daring greatly. So in times when you’re most downtrodden and you’re in the most pain and you’ve hit rock bottom, that’s where you’ve got to stand up. So he said, “It’s not the critic who counts, not the man who points out how the strong man stumbles or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust, sweat, and blood, who strives valiantly, who at best knows in the end the triumph of high achievement and who at the worst, if he fails, at least fails while daring greatly.”

In other words, economies will rise and fall. It’s a roller coaster ride. You can either go with the tide, like a cork on the ocean, you can Bob up and go down. Most people do that. Most people do what everyone else does. And you perfectly, can hold your head high and it’s perfectly excusable to say, “Well, I tried and I failed.” Because history will look back. And if you say, “Oh, I had a business in COVID-19 in hospitality.” Everyone will go, “Oh yeah, I get it. Fair enough.” You’ve got every excuse now to justify failure. But at the end of the day, where does that get you? At the end of the day, no one’s really judging you. What you’ve got to do and picture it. Brene Brown talks about being face down in the arena. Gladiator is one of my favorite movies. So face down, she wanted to put that in her writings, under a microscope. When you’re down and you’ve hit rock bottom and everything goes into slow motion, getting up again and continuing to fight on, knowing that nothing is certain ever.

Even when we think we understand reality, we can never ever predict the future. The stoics say, stuff happens, stuff is going to happen. It’s always outside of your control. What you can control is how you respond, how you view it, how you perceive it. Often we look at something and say, “Oh, that’s the worst thing that could have happened at the time.” And it’s only with the power of hindsight that we look back and go, “Oh, that was the greatest thing.”

There’s a story I’ve read in a book. I’ve shared it with you before the book the Survivors Club. So it talks about one off incidents, but it was a lady who had a child later in life, IVF. And she was going to a mother’s group and they were doing knitting for the school fete. And she was walking up the driveway to this house in the dark. And she tripped over, got up, dusts herself off, went inside and suddenly she’s sitting down and having a cup of tea. And they said, “What’s on your front?” And there was blood everywhere. She’d fallen on a knitting needle, had gone right through a heart. And it was just miraculous that she didn’t die.

And you think that would be the worst thing that could happen to you. But what had happened was that when they opened her up to do emergency surgery, they found that she had a tumor and she would have been dead within a few months anyway. So that horrible incident actually ultimately saved her life. And yes, she had to go through years and years of struggle. But ultimately what seems like the worst thing that could hit us out of the blue, freak incident like COVID, that we weren’t expecting, that we couldn’t in a million years have predicted can actually be a defining moment face down in the arena, that’s a watershed moment that changes everything.

So Rising Strong, when we rise up and dare greatly, it’s about these moments that define us. And there’s a propensity often to gloss over them. And when I was reading Brene Brown’s book, Rising Strong, she talks about how we gold plate grit. And I realized I do that. I say, “Oh, things were bad. They were good. Then they were bad and there was a GFC, but then I got good again. And it’s a happily ever after.” And it seems like we can talk about the bad stuff when we’ve come out the side and it’s okay to look back on it and reflect, but we kind of know there’s a happy ending. What about when you’re there? When you’re in the arena and when things are bad at that time. Why don’t we share that sort of failure?

I think that it’s something that people should embrace because other readings I’ve done on failure, Ashley Good, she has written and there’s Ted talks on all of these sorts of things. I found when I was going through a hard time, reading other people’s research and findings and realizing actually that’s very normal. Everyone fails. Everyone stuffs up. Everyone makes mistakes. We may not all have it at the same time, but we all go through bad times. And what Ashley Good’s research found was that when audiences and people were asked, “Hey, if you hear the word failure, what do you think?” And they were negative connotations. “Oh, failure, that’s bad, that’s fear, that sadness, making a fool of myself, stuffing up, feeling desperate, feeling lost, ashamed, panic, heartbroken.” But when asked about stories of failure… the word failure, invokes negative connotations. Stories of people’s failures actually invokes the exact opposite.

So when audiences we’re shown people in the eye of the storm, failing, in the act of failing, face down in the arena with the dirt and the blood and the sweat, what happened then was the response was they were brave. They were helping. They were generous. They were courageous. They were knowledgeable. So we tend to want to trivialize the bad stuff with hindsight and say, “That stuff was okay. You passed through the storm, hold your head up, you’ll get through it.” And then you’re happy again. And we should actually celebrate and share the failures, not because they’re human, but because they’re real and everybody suffers them. So Brene Brown calls it badassery. Feeling the fear, feeling upset, but taking it on anyway.

Ray Dalio, if you’ve ever read his work, Principles, biggest hedge fund manager in the world, he talks about it as radical transparency. Tell it like it is and be real about it and admit to the failures and admit to the heartbreak and the vulnerability, which makes us real.

And if you’ve read Jim Collins, any of his business books, Good to Great, he talks about, in a recent talk during COVID, he talked about brutal honesty, just being real about it, calling it for what it is. And he talks about people, one guy, seven years in a prisoner of war camp. And he said, the worst people who gave up the soonest and died were the optimists because they were saying, “I’ll be out by Christmas. I’ll be out by Christmas. Come on, stay positive.” And they weren’t being real about it. And they ended up dying of a broken heart. So he said, “It was bad. And I acknowledged it was bad every day. And I was just grateful that I was alive. And I lived in the present for the moment and just took it step by step, breathe in, breathe out, but be real about it.” And ultimately, he said, “I’m going to come through this. I will share this with others. It may be five years, it may be 10 years, it may be 20 years. I won’t even think about that. I’ll just decide what I do now and what I do next.”

So ask yourself this, this is a defining moment. It will be hard. It may get better. By September and the last quarter of this year, it may be just a forgotten thing of the past. Or we may have to work through a few more years, especially because global impacts are going to rebound on Australia. But you have a choice now. Do you want to be in the arena? Will you seek courage to define yourself or comfort, which is go with the masses? And yet, if we fall, there’ll be JobKeeper. They’ll do JobSeeker. The government will give us something. It’ll all just play out. Or will you take control?

So vulnerability isn’t about winning or losing. It’s having the courage to show up and be seen when you don’t know the outcome, when you’re still failing and you don’t know the happily ever after, and you don’t have necessarily any control on the outcome, except what you think, what you do, what you believe and your perception of the situation. You get to choose that. A lot of cheap seats in the arena are filled with people who never venture out into the ring. And that’s where the glory is. And that’s where the winning will take place.

When I read my recent readings about failure, it made me reflect, because of course we’re all scared of the unknown. We don’t know what lies ahead. I’m furiously reading newspapers, looking at figures. What did Deloitte say? What’s going to happen if employment goes up, goes down? At the end of the day, we have no control over the future. We never ever have. We never do. COVID or no COVID, we still don’t know if we’re going to get up tomorrow. So we should be grateful for every second. And we should do the best we can every single day with every moment that we have.

And ultimately, at the end of the day, when I looked at the failure of my past and the current uncertainty, and I looked around for comfort, that’s when I realized I’ve come further than I thought back in 2009. We often worry about the next month, the next two years. We never worry about the next 10 years. But future pacing it, something has to change. And in my time of uncertainty, back in 2009 in the GFC, I just read and read and read anything that could give me comfort.

So you remember a big hit back then, if you’re talking bestseller books and movies, was the Secret, and that was about the power of positive thinking and the knock-on effect and the law of attraction and all of that sort of stuff. So I got into thinking positively and a lot of motivational speakers and anything I could get my hands on YouTube or in reading materials. And I’m fortunate enough now to be in a position to reach out to those people who influenced me before, when we all need guidance and influence now and positive energy, whether it be facts and figures and data and numbers that can give us a sense of certainty, or whether it can be empowering as to the way we think, the way we perceive, the way we frame up the world.

I’m bringing them all to you in a series of live streams, our Ignite live stream series that we’ve been carrying on the past few Saturdays. We’ve had Robert Kiyosaki. We’ve had Gary V. And this Saturday, the 11th of July, we’ve got a great lineup for you. I’ve got, first of all, Dr. John Demartini. I’ve also got Brian Tracy. And so they’re international talents. And they were people that were of great comfort to me, 10 odd years ago when I went through my crisis and who I wanted their insights and their stoic philosophies and their mindset and their strategies, because they’ve been through so much lifetime of hardships. They’ve seen it all before. They’ve helped thousands of other people have the right attitude and the formula for success.

I’ve also, when it comes to local data and information, to give us some sort of sense of up and down and rhyme and reason in an uncertain time, I’ve got CoreLogic coming along. Eliza Owen, some of you may have been reading some of her reports and her writing. She looks at the market and exactly what’s happening now. So data on that and trends up to the minute in terms of the property market and the economy, so the cold, hard facts and figures there. As well as Bernard Salt. We wanted some local insight and Australia’s top demographer and futurist. So he’s going to tell us what he sees the future holding. How the world’s changed, because it has changed. We can’t fight change. We have to know how to adapt to change and thrive because of the change.

So it’s a massive heads up. I’ve got a huge lineup for you. It’s the biggest event in terms of talent and people sharing content that we’ve ever hosted. And it’s happening this Saturday from 9:00 AM to 2:00 PM. So take a razor blade to your diary. I’m putting the link to register for that up in the description. We’ll also have it in the comment section. Because it’s one that you won’t want to miss. And I’ve got the top people to give you the information that you need now and the formula so that you can plot your own pathway and navigate through all this, to the success, but enjoy the journey as you go.

So looking forward to that and catching up live with you on Saturday. So go to those links there. And don’t forget to follow us on Facebook to get regular updates and share this with your friends or tag them in the comments section. They’re welcome to come to all our live streams. That’s what we’re looking for, to influence and empower as many people as we can together. If you’re watching this on YouTube right now, don’t forget to like, subscribe, hit the bell, if you want to be notified every time we release new content.

And in the meantime, stay safe, take care. We will talk on Thursday on Ask Dom, as well as our State of Play. And I’m looking forward to catching up with you live and bringing you all the talent and all the great insights and mindset that you need on Saturday, on our live stream. So I’ll see you then.

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