The social and economic impacts of drought, fires and now COVID-19 will have profound impacts in parts of regional, rural and remote (RRR) Australia. The economic shock of natural disasters or events like the unprecedented COVID-19 health crisis create impacts that are immediate — and that is to be expected. What is often not expected or well understood is the effect of ‘lag time’ aftershocks in our regions following economic crisis. Lag time is an attribute of some RRR communities and is most often seen in economically path dependent and single industry communities, many of which of course, comprise RRR Australia.
When a crisis hits in these communities, there is often a period where workers have received payouts and redundancies, or other special forms of support. The effects of those payouts and redundancies can act almost as a stimulus in local economies because the workforce is quite concentrated in a single geographical location. A good example is the Upper Spencer Gulf, in South Australia which felt the impact a few years ago of the ‘perfect storm’ of mining downturn, the misfortunes of (then) OneSteel and the closure of the Playford and Northern power stations. Anecdotally, car dealers in one local community said they experienced their best six months ever, immediately following the closures as payouts and redundancies were spent locally.
Research undertaken by the Australian Alliance for Social Enterprise indicates that this ‘bubble effect’ of local spend can be quite significant. The research showed that for every dollar invested in local services another 2.3 more dollars are generated. While this effect was observed in a small study and the single context of social services, one could imagine that the same effect could be expected in other domains, and anecdotal evidence would at least suggest this.
In part, it creates a time-limited buffer that that can mitigate immediate negative impacts and that is positive. However, this lag time can create false hopes and expectations for the future. Indeed, even in this current crisis, we are seeing the effect to some extent. The immediate cash injection of stimulus funds into our communities is welcomed and making a difference. There are reports nationally that the increase in the sale of freezers has been huge during COVID-19 as people sought to stockpile otherwise perishable foods. And panic buying, with all its inherent problems of leaving the most vulnerable more vulnerable, has had some effect on the local