The new normal

This was published 8 months ago

The new normal

This is sponsored content for MLC

Perhaps not since Neil Armstrong and Edwin “Buzz” Aldrin stepped onto the powdery surface of the moon in July 1969 has a single, apolitical event captured the attention of politicos, princes and paupers from Wuhan to Washington, and Berlin to Bangkok. The COVID-19 pandemic is undoubtedly a major moment in history. But one way in which it differs from the lunar landing, VE Day and the Vietnam War, for example, is that historians will struggle to allocate a date to its conclusion. Instead, its aftermath will likely be a long road of tentative, inching steps forward. If the crisis has shown us who we are, how we approach the complexities of the weeks, months and years ahead will illuminate the lessons it has taught us.

The current uncertain times can bring families closer together, encouraging a stronger bond for the future.

The current uncertain times can bring families closer together, encouraging a stronger bond for the future.Credit: Supplied.

“Throughout history, we’ve seen strange things happen,” says Paul Clitheroe, money expert and chairman of the Australian Government Financial Literacy Board. “The GFC [global financial crisis] was a surprise, but we’ve been talking about the threat of pandemic for forever and a day.

“We have to plan for events such as this. I always say – and this is particularly relevant to the over-40s – that first you want to have a clear picture of what your annual lifestyle spending costs are likely to be when you retire, and then try to put aside two years’ worth of money in a safe, cash-type investment. If your first number is, say, $60,000, aim to put aside $120,000.”

As The Guardian reported last month, coronavirus has dealt a searing hand to those retirees and near-retirees who haven’t yet managed to acquire such financial resilience. This is the demographic that has been hardest hit by plummeting share dividends (which have fallen to the tune of 30 to 40 per cent, Clitheroe says), while tumbling rents on any residential or commercial properties they hold have further twisted the knife.


Triage is a three-step process, Clitheroe says: “One: go back to your financial plan – how are you going to live and where is the money coming from? Do you qualify for a part-pension? Two: cut spending wherever you can. Batten down the hatches. Three: remember that recovery will come. It always does.” By the end of May, he says, markets were at an 11-week high.

For those lucky enough to still be generating an income, now is the time to maintain their super contributions, if possible, Clitheroe says. “In hard times, we toughen up. Let’s save money where we can, top up our super and pay off more of the mortgage.”

We’d do well, also, to remember an adage about eggs in baskets. “Diversify,” he says. “Don’t punt on any one asset class, be it cash, property or shares. There will be other crises. Make yourself less vulnerable to shock.”

Tim Steele, group executive, retirement and investment solutions at MLC, says anyone in doubt about their options should seek good financial advice. “Well-advised people won’t have crystallised their losses at the bottom of the market by accessing early release of their super – unless it’s absolutely essential – or rebalancing their portfolios in favour of defensive assets [such as cash and bonds that are less susceptible to market movement], which will have caused them to miss out on the upswing,” Steele says. “Those of us who experienced the GFC know that things will get better from a financial point of view as long as the economy recovers.”

Julia Gentil, a 50-year-old design director for a luxury rug house in Melbourne, agrees. “The GFC was definitely a slap across the face for me,” she says. “I learned the importance of having a safety net and income protection, and ever since I’ve been pretty conservative financially.” For the past two months, Gentil has been working slightly reduced hours, and, for the time being, isn’t buying anything she doesn’t need. One big-ticket purchase has been a new sofa for the Hughesdale cottage she moved into in January with her 18-year-old son, and Schnitzel, the family shih tzu.

For Gentil, lockdown – and its forced recalibration of work-life balance – has been an overwhelmingly positive experience. “All we have to do is stay home and follow the rules: it’s easy,” she says. “And honestly, reduced options are actually a relief. I’ve let go of all my ‘have-tos’ and given myself permission to do stuff when I feel like it. I’ve read books, gone for walks, started knitting again. And I love not having to wait six weeks to catch up with a friend on the phone.”

Around the world, working from home (WFH) has been the undreamed-of success story of COVID-19, with economists hailing it as the biggest workforce change since World War II. Recently, Twitter CEO Jack Dorsey informed his employees that they can carry on working from home “forever”, if they so desire, while New Zealand Prime Minister Jacinda Ardern suggested that, in a bid to boost local tourism, bosses might open up a dialogue with their employees around a four-day working week. “There’s just so much we’ve learnt about ... [the flexibility] of people working from home, the productivity that can be driven out of that,” she said in a Facebook Live video.

The consequences of a widely adopted WFH strategy would be far-reaching, says Simon Kuestenmacher, co-founder and director of research at The Demographics Group. “We have had an incredible 30 to 40 per cent of the Australian workforce working from home,” he says.

“If it continues, it’s great news for corporations wanting to save money on expensive real estate, but also it will mean that the place of work of a household’s principal income earner can cease to be at the centre of the housing decision process. Remote working opens up the possibility of moving to a satellite town. The places that will benefit the most are those regional centres that are connected, by a fast commute, to our capital cities.”

Two-thirds of Australia’s population inhabits five cities. Given that it has long been a goal of government to redistribute population growth away from the capitals into the regions, could this be the moment?

“In the wake of the crisis, the government will be keen to create jobs at scale,” Kuestenmacher says. “And the best way to do this is to embark on an infrastructure program designed to strengthen our regional centres. A cornerstone of such a program would be building their connections to our capital cities.”

Such nation-building would also strengthen regional manufacturing hubs, boosting our self-reliance. (During lockdown, Australians registered their collective shock at having only one face-mask manufacturer: Med-Con, in Shepparton, Victoria.)

Kuestenmacher expects such large-scale development to be overwhelmingly paid for by millennial earners, a cohort that has an appetite for renewable energy. The advent of the green hydrogen economy will be one of the most important innovations, but it will require land, which will further encourage regional migration.

The government has, Kuestenmacher says, an opportunity to build on the goodwill it garnered during its successful containment of the virus, including instituting JobSeeker and JobKeeper payments. That opportunity lies in embracing green energy. “I’m not necessarily optimistic that this will happen,” he says, laughing, “but it would be one way to ensure re-election for the next decade.”

Design director Julia Gentil
has thrived in lockdown and
hopes the “new normal” will
improve everyone’s lives.

Design director Julia Gentil has thrived in lockdown and hopes the “new normal” will improve everyone’s lives.Credit: Supplied.

For Gentil and other nature lovers, an unexpected delight of lockdown has been the positive environmental news that birds can once again be heard singing in Wuhan, more black bears have been spotted roaming freely in Yosemite National Park, and inhabitants of the northern Indian state of Punjab are able to contemplate the majesty of the Himalayan mountain range for the first time in three decades. “I want us to hang on to all of this,” she says with feeling.

What of international travel? As soon as it becomes safe for Australians to fly internationally, the experts agree, they’ll feel no qualms about doing so. Says Clitheroe: “One of the wonderful things about humans is our capacity to forget and feel optimistic again. Aussies are the world’s biggest travellers per head of population ... It might take a couple of years, but I reckon we’ll be travelling as much as ever.”

Queensland is likely to become the most popular destination for domestic travellers, once it reopens its borders. For now, though, one of the most enduring legacies of the great pause IS our new-found appreciation of our most obvious – and perhaps least visible – asset: our home life and the people and animals with which we share it.

Gentil says: “We spend our weekends driving our kids to soccer, netball or rugby instead of just sitting down at home, enjoying each other and doing something creative. Do we really need to work five or six days a week? What about three or four?

“I really hope that we don’t waste this crisis. People everywhere are talking about a return to normal, but I don’t think normal was actually that great. I want to see a new normal, one that works for all of us.”

MLC helps people create a better financial future. Our wealth management expertise means we understand how to help you meet your needs today, set your goals for the future and support you along the way. Our approach is holistic – we’ll give you a better insight into your financial opportunities, and access a broader range of services. We’re here to help. Download our free retirement guide to understand what today’s world means for your finances. Find out more.

Most Viewed in Business