• Unprecedented government spending at federal and state levels – stimulus packages, healthcare responses, welfare support.
• Australia’s net debt is expected to surge to more than AU$500 billion¹.
• Australian banks are offering relief packages for those impacted by the coronavirus outbreak, such as deferring principal and interest repayments for business loans² as well as deferring mortgage repayments³.
• On the corporate side, stock markets are falling and US corporate bonds have been downgraded⁴.

During the Global Financial Crisis (GFC), governments around the world bailed out banks that were on the brink of collapse. To ensure this would not happen again, enhanced capital requirements were enacted in the form of the Basel III accords.

In the aftermath of the coronavirus crisis, governments will again look to distance themselves from being relied on for bail outs and stimulus packages, and shift the burden of responsibility onto businesses. This could lead to similar regulatory mechanisms applied across industries with all companies of a certain size needing to hold and retain a level of regulatory capital, and perhaps also a proven ability to operate virtually.

In contrast to the GFC and scandals in Australia that lead to the Royal Commission, banks may be viewed as the rescuers from the coronavirus crisis, supplementing the interventions made by governments.

Given debt levels, as well as the pressures put on Centrelink services, a long-term view of value will be applied across government initiatives. This will drive a focus on digitisation of services/assets and data-driven decision-making to ensure better outcomes. Exploration into lean and digital operating models across government departments along with digital service delivery are two likely sources of improvement.

Opportunities for contestability and commissioning/asset recycling will be possible where this aligns with community expectations.

Compared to other nations, Australia was relatively shielded from the heaviest impacts from the GFC.

With significant stimulus packages announced by the Australian government, could an era of austerity be looming once we overcome this crisis? Or will record low interest rates and long-term horizons prevail?

These themes were selected by comparing emerging trends before and during the COVID-19 pandemic. Within each theme, we engaged KPMG professionals to develop hypotheses on what a post-COVID-19 world might look like.