Reviewing a Recession - A Calendar of Events

By Kim Radok, August 2020 Updated: 31 January 2022

The focus of this feature is to document a living recession from the perspective of a professional risk manager and front-line operator’s perspective. This review is designed to help identify the nature and progress of the events of the recession.

Due to so much conflicting information at the moment, I have presented my version as simply as possible.


Although the recession has been building with us for some time, it is very likely to start being a reality this year, even if it is not declared. The various authorities and those with vested interests have initiated unprecedent support and strategies to keep the recession and its effects at bay.

Unfortunately, real time factors such as closed businesses, massive local and global debt, the ongoing presence of COVID and its variances, plus supply chain issues and lack of employees, compounded by inflation, will see the true effects of recession come to light

Maintaining a positive attitude, embellished with self-confidence are key components for future success. Therefore, the majority of indicators and reasons confirm it is now a strategically opportune time to act positively to protect your finances and reputations. Meanwhile, keep looking for those positive opportunities, (which always occur during a recession) and have been articulated in our reviews over the last two years.

Background to Recessions

Recessions and business downturns occur regularly as a normal component of all business cycles. In a downturn or recession, there are many casualties from all areas of our lives; business, consumer and social. Downturns and recessions are not simply about losses however. They also offer possibilities to make money by seizing the opportunities that always arise during these events.

History shows us, on average, downturns and recessions occur every 10 years. The previous recession (or “downturn”) prior to the GFC (Global Financial Crises) was the exception at 14 years.

In 2018, ten years since the start of the GFC, I thought it timely to prepare a feature on the characteristics of a recession. You can find THE ANATOMY OF A RECESSION at

The reasons to focus on a recession at that time were detailed in the feature. However, I feel it appropriate to discuss the three most important at this time. These are, that many business managers, or owners:

  1. today have no experience, or true concept of the ramifications associated to a substantial business downturn or a recession;
  2. (ii) are unable to identify and review the lead-up to a pending recession as an opportunity to mitigate the negative effects; and
  3. (iii) need encouragement to be positive and benefit from the overlooked opportunities which always occur during a recession.

Waiting for the declaration of a recession is often too late to take effective action. The earlier you start to work on your affairs, the better. If you take the right action early, not only may you survive, you could actually make more money than normal even during this, often debilitating, period.


Introduction from September 2021 to December 2021

Another three more months have passed since our last Australian recession update and with no end-in-sight for a return to better times despite - the optimistic view of people with vested interests.

There are many negative factors associated with this pandemic, including the increasing numbers of people unsure how to proceed with confidence. In addition, Australia is now a divided nation, which does not bode well for our future.

It would be wise to start making decisions based on your particular circumstances and take proactive action to look after your own finances and wellbeing. As many positive-minded people continue to show, you can succeed even in these chaotic times - with sensible strategies.

The Downside of the September to December period for Australian Businesses

The following matters have already been discussed in our previous reports and so are only briefly reiterated below.

  1. It is still evident that many businesses have failed to change their operational practices and philosophies to adapting to the current business environment.
  2. Management of too many large businesses continue with their past strategies which have failed to achieve the best outcomes for their businesses.
  3. Despite our international borders slowly re-opening, essential workers and Australian citizens are more demoralised with no firm indication on when they can return home
  4. Various state governments continue to demonstrate their inability to act rationally and as a result many domestic tourists are still simply not prepared to travel interstate.
  5. The RBA still advises that it is unlikely interest rates will increase any time soon, even as inflation continues to increase. As a result, business costs increase and the poor are left financially behind again.
  6. Supply chain problems remain and short staffing in many industries remains a huge problem.
  7. Although a number of businesses are thriving, or, “holding-their-own,” as is the case in all recessions, very few will survive entirely unscathed.

Worse still was the sudden emergence of Omicron. The full effects of this variance remains unknown.

Meanwhile, as their leniency on paying tax has now largely come to an end, the ATO is calling on all businesses to get their overdue tax liabilities in to order.

Businesses Globally

Little has changed from our previous reports; other than the following matters.

Supply chain issues remain; in addition to shortage of containers, workers and truck drivers. These factors are likely to persist for at least another two-to-three years - as advised by industry experts.

As a consequence, increased costs and inflation are evident in most countries; and are flowing through to all businesses and consumers.

In addition, finding enough workers in all industries, plus the increased costs of ESG (Ethical Sustainability and Governance) requirements, (yet more regulations to further strangle business) are impacting on many businesses negatively.

Government and Other Support (or lack of) in Australia

The following issues also have been discussed previously, and warrant repeating.

  1. Direct government support is decreasing.
  2. Continued calls for the majority of infrastructure spending focused on the capital cities is incongruous, as fewer people are visiting the major cities, (not withstanding, the Christmas and New Year events).
  3. As regional populations grow, increased spending to support these regions is being advocated by respected economic and regional development professionals. To date, government response has been limited.
  4. The effects of the latest Victorian Sate budget and the passing of new legislation, continues to impact negatively. The exodus from Melbourne and Victoria is growing, and is expected to further increase as the other states open up.

Lack of Urgency

Due to previous Government assistance, the interfering actions of the RBA, politicians and their bureaucrats, the full negative effects of the recession have largely remained hidden. How long this remains undisclosed, is among the more pertinent questions awaiting us.

In addition, it’s also apparent there’s little urgency from business people on protecting their personal and business reputations.

Changes in the Major Cities

The following issues have been discussed previously in our reports.

  1. People in charge of Australia’s major cities and their corporate allies continue to advocate a return to city offices, even with the latest COVID variance, Omicron, ranging.
  2. Foot traffic is still nowhere near what it was, on a regular basis, pre Covid, (except for the Christmas and New Year crowds).
  3. Meanwhile, counsellors and businesspeople in other major cities around the world are looking at various progressive and interesting ways to reinvigorate their cities. A number of these initiatives appear to be slowly producing results.
  4. A further hindrance in the rebuild of Melbourne is the Victorian government’s approach and strategies, which are penalising small businesses. As a result, it appears many of the smaller businesses will close and move out of Melbourne and Victoria altogether.

Pent Up Demand Recovery

There are many negative and potential unknowns ahead in 2022, which may affect the ‘Pent Up Demand Spending Theory’, which include the following:

The records actually show there was increased spending for Christmas and the New Year celebrations. However, whether this extra spending will continue unabated in to 2022 is still unknown.

There are many negative and potential unknowns ahead in 2022, which may affect the pent-up demand spending theory include the following.

  1. The loss of income and/or reduced cash flow from a large number of the Australians unable to work, or on reduced hours, despite the number of Australians reportedly finding jobs.
  2. As building costs accelerate, more-and-more builders have, or, are likely to become insolvent. Increased costs will also absorb profits, or buildings will remain uncompleted, whilst other projects may become unviable before their scheduled commencement date.
  3. The supply chain problems indicate there will be reduced amounts of products available over the next few years.
  4. Large losses of money to scammers, fraudsters, and poor investment decisions continue unabated.
  5. Housing values are starting to decline; due to increased bank lending requirements and increased numbers of houses for sale.
  6. The RBA continues to advise that low interest rates will remain. With inflation on the rise, many more people on reduced incomes will be paying more for the basics-of-life, - just to survive. (Inflation is an additional cost/tax in itself.)
  7. To date, business insolvencies have been minimised by government support and the leniency of the ATO. It is anticipated that this situation is likely to change, for the worse, in 2022.

As has proven the case since the pandemic broke, these issues suggest the only real sources of funds for many people are their life savings, or forced into borrowing against their homes, or irresponsible consumer borrowing.

People are learning to not spend frivolously in order to keep what savings they have until they believe the worst is over.

Destruction of Trust

The destruction of trust continues with politicians, their bureaucrats, health experts, and even the police.

The actions of these authorities, have created a divided nation of communities, workplaces and families. Regaining public trust for these groups will be a major, and ongoing problem.

Other Factors

The two worst factors affecting all businesses throughout Australia, are the costs associated with finding and employing people in regional areas, plus the previously mentioned costs added by authorities and social expectations.

The lack of qualified people, or those willing to work and/or move to regional areas is still consistent across all states and regions. The problem appears that even when people do move to regional areas, they are often not available to work in the local economy. Rather, many may still be working remotely for their original employers.

Even when workers are enticed to regional areas, they inevitably demand more than the average income, plus additional benefits. These associated costs, along with government’s over-regulation, are financially prohibitive for many small businesses. As a result, they are simply unable to survive and close down. Travel through many parts of regional Australia reveals these issues as accurate.

Increased costs are being heaped-on the surviving businesses, which adds further hardship to their viability. This is a major issue which is going to affect the viability of the country well in to the future.

The Positive Aspects noted from September to December

The same positives which were evident in previous months have continued in this quarter.

A number of governments have continued to offer limited strategies to keep some businesses from closing down and to support the occupation of new employees.

Many charities, organisations and individual people continue helping those less fortunate. The enthusiasm and courage of these parties to persist under the current circumstances is to be admired - and gives us all positive models to follow.

Inspiring stories of businesses and individuals continue in all sections of the community. There is no doubt, even in a recession, a number of innovative businesses can survive.

Even with the lockdowns and state closures, the increase in visitor numbers to regional areas of each state, when allowed, continues to support local regional businesses. The emphasis on supporting Australian businesses continues, even if their domestic prices are higher than those of corporate or international competitors.

As more people leave the big cities, migrating to regional areas, the demand for more services and infrastructure is becoming more visible.

In Summary

A small number of positive aspects in the last three months continue to show there is still scope to innovate and reconstruct businesses for survival – and even growth. An increase in consumer spending in a number of areas, such as restaurants and manufacturing industries, suggests spending may improve after lifting the lockdowns, as long as there are no further lockdowns or restrictions.

It is also evident that customers are supporting local businesses and even paying a premium for local goods and services. Regional manufacture and manufacturing in Australia as a whole seems to be on the rise.

Regretfully, we also continue to see the worst of human behaviours including politicians, bureaucrats, the RBA and others with power. As a result, it is not surprising to see they are increasingly losing the goodwill and respect of the general public.

As this loss of respect escalates, much of the general public continue to lose their faith and despair will increase for their future welfare. As a consequence, increasingly a number of people have been driven to acts of desperation, understandable although not condoned, which further complicates chances of recovery.

There are also too many business people who are not taking ANY positive steps to restore, or confirm, their payment and financial reputations. As a result, we expect to see when they do face insolvency, there will be an increasing amount of debt left behind for their creditors to write off or to be reclaimed via Insolvency Administrators preferential payment actions.

When complying the imposed costs on businesses, the long-term outlook for employing people and/or awarding pay rises, does not look good. For instance, fast-food and other restaurants are now already “employing” self-service devices, forcing customers to order their food – just as self-service checkouts in grocery stores have become more visible in recent times.

In light of the above factors, many people continue to see little evidence that 2022 will be any better than the last two years. This negativity remains despite the positive noises from people with vested interests, who claim everything should be back in reasonable order shortly. The reality is for many, there is unlikely to be any real positive changes for many people in the immediate future.

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