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Melbourne Outlook Takes $110bn Dive

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Land tax waivers for vacant properties, tax breaks for carpark owners and a freeze on rates tops the list of strategies to stop a $110 billion drop in economic output for Melbourne.

The inner city economy will be the hardest hit according to the report funded by the City of Melbourne and Victorian government.

The worst case scenario modelling by PricewaterhouseCoopers shows the possible impact that Covid-19 could make in the next five years.

The data reveals that the City of Melbourne economy will contract by up to $23.5 billion—or 22 per cent—in 2020 compared to pre-Covid forecasts and there would be up to 79,000 fewer jobs annually.

The city's economy was booming before Covid-19, reaching a record $104 billion last year, which accounts for 24 per cent of Victoria’s gross state product.

Related: Melbourne Market Freeze Slugs State Revenue

Melbourne industry breakdown

SectorJob Losses (difference between 2019-2020)Drop in Output (difference between 2019-2020)
Accomodation and food services22,900$1.990bn
Education and training6,800$1.517bn
Financial and insurance services8,000$3.915bn
Arts and recreation services5,300$756m
Professional, scientific and technical services7,400$2.955bn
Retail trade2,300$254m

^Source: Economic impacts of Covid on the City of Melbourne

Both state and local governments have announced stimulus packages, recovery plans and tax breaks to create jobs, support businesses and avoid the worst case scenario.

Following increased scrutiny over lockdowns announced earlier in the week, premier Daniel Andrews revealed regional areas could reopen sooner due to low transmission numbers while defending the curfew and 5km rule.

This week the state government also announced there will be a $6 million waiver on taxes for properties left vacant in 2020 as well as $933 million worth of planning permits approved.

Carpark owners will save $30 million by deferring any outstanding balances until next year and gaining a 25 per cent waver of this year's congestion levy.

The City of Melbourne also made a freeze in rate increases worth $50 million to the council.

Lord mayor Sally Capp said the country can't afford to lose Melbourne’s world-class food, café and retail culture as well as their economic contributions.

“Melbourne was the economic powerhouse of Australia,” Capp said.

“The scale of the economic shock being felt across the central city is unprecedented.

“We are working closely with the state and federal governments to secure further support for businesses and investment for the city’s reactivation when it is safe to do so.”

The modelling accounts for the stage 4 restrictions and assumes a slow economic recovery with prolonged public health measures in place in 2021.

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Article originally posted at: https://theurbandeveloper.com/articles/melbourne-loses-110bn-in-worst-case-scenario