A tale of two cities

When the coronavirus cases started to rise in Australia, the Federal, State/Territory Government initiated various restrictions. The Federal Government ordered to close pubs, clubs, gyms, cinemas and places of worship, while restaurants and cafes were restricted to takeaway orders.

On March 27, gatherings were limited to just two people, and most employers instructed their staff to work from home. Many small businesses had to lay off their staff. Australian borders were also closed for all visitors and non-immigrants from the rest of the world.

The restrictions put in place to halt the spread of the coronavirus pandemic have a severe adverse impact on the economy. Businesses are shutting their operations, and it is projected that as many as 1.7 million people will lose their jobs over the coming months.

The ongoing turmoil is likely to last for up to one year before everyday life could return to normal. The Australian Prime Minister has already advised that the restrictions could be in place for up to six months.

The socio-economic impacts of the coronavirus pandemic are spatially differentiated in Australia’s largest city Sydney. The socio-economic division of Sydney has been characterised by the ‘Latte Line’, that extends from Northwest to Southeast.

The line separates well-off North and East from less well-off Greater Western Sydney. The most disadvantaged socio-economic groups show a robust geographical concentration in the Sydney Western suburbs.

There exists a significant transport, employment, educational, health and cultural divide between the well-heeled areas above the Latte Line and predominantly disadvantaged areas below it. Areas above the line are very well served by public transport, jobs, educational and health infrastructure, cultural facilities and an even better tree canopy cover and climate.

Areas below the line, on the other hand, experience severe job deficit, have car reliant transportation system with long commutes, poor quality educational institutions, poor health, lower life expectancy and higher mortality.

The disadvantaged areas below the line are highly culturally diverse with a much larger proportion of non-Australian born and non-English speaking migrant backgrounds.

The socio-economic impacts of COVID-19 will be more adverse in lower socio-economic below the Latte Line.

Job Losses

Restrictions of everyday activities due to COVID-19 pandemic are predicted to cause widespread job losses. Some sectors of the economy will be hit harder than others. It is estimated the most impacted sectors are hospitality with 689,800, real estate with 130,000, sports and physical recreation with 114,000, hotel and other accommodation with 97,800 jobs.

Western Sydney has a high dependency on jobs in these sectors. About 70% to 80% of people in Western Sydney are involved in non-professional and non-managerial jobs (figure 1) that are the most affected by the COVID-19 crisis. While JobKeeper allowance will maintain some of these jobs, others are predicted to be lost permanently.

It is estimated that the coronavirus disaster will surge Australia’s unemployment rate from 5.1% to closer to 15%. Even with the JobKeeper allowance, national unemployment is forecasted to be rise to 9%. Western Sydney has long been measured as a region of ‘job deficit’ as there are fewer jobs than the number of employees’ resident live.

The current 5% to 11% unemployment rate in Western Sydney (figure 1) is projected to increase way above the national average.

Figure 1: Job status in various Local Government Areas (LGAs) of Sydney. Source: Australian Bureau of Statistics 2016 Census data.

Mortgage default

In Australia, 3.4 million owner-occupied properties are mortgaged to the banks, and about 32% of those were already struggling. An unexpected loss of incomes puts them at further risk of mortgage default. Australians have been warned that more than 1.5 million Australians face further mortgage stress soon and may end up defaulting on their home loans.

The figure of tenancy owned with a mortgage in Western Sydney is around 30% to 52% that is much higher than other parts of Sydney (figure 2). Consequently, mortgage stress is considerably higher in Western Sydney.

Figure 2: Tenure owned with a mortgage in various LGAs of Sydney. Source: Australian Bureau of Statistics 2016 Census data.

Work and study from home

As public gatherings were restricted to just two people, workplaces began instructing staff to work from home and universities switched to online classes. Computer and internet use are much lower in Western Sydney areas.

Also, the internet is not accessible from 10 to 20% of Western Sydney dwellings (figure 3). Western Sydney residents have a lower level of ICT skills that enable working from home.

Also, Western Sydney residents work much more in sectors in which the nature of work does not lend itself to telecommuting. Telecommuting is more applied in managerial and professional jobs. A substantial number of western residents are thus struggling to work and study from home.

Figure 3: Internet access from home in various LGAs of Sydney. Source: Australian Bureau of Statistics 2016 Census data.

Family anxiety

Young people are predominately employed in the most affected sectors and are finding themselves incapable of paying their rents and bills. Thus, there will be no way to seek the assistance of the family. Experts claim that ‘more of Australia’s adult kids are being forced to move back in with their parents in the wake of the COVID-19 pandemic’.

An economist argues that,

“If young people renting lose their jobs or have their hours cut and they’re looking to save costs, they might move home – if they can. “

A Survey shows that young people are already increasingly living at home, with their parents for an extended period. In addition, it is claimed that young people are in the risk of dropping out of their studies,

“At the moment, we’ll have a lot of young people who are studying, who will not receive any assistance, who are out of work and might have to consider dropping out of their studies.”

Western Sydney has a higher number of unemployed young adults who are stroking extra pressure in the family. Besides, Western Sydney has higher rates of domestic violence which are estimated to increase during the coronavirus lockdown.

Supporting extending families overseas

The low-income non-English speaking migrant communities are concentrated mainly in the Western Sydney areas. Many of them routinely financially support their extended families overseas. With the widespread job losses in Western Sydney, they are unable to do so. This is a significant source of distress for them.

On the flipside not having extended families in Australia means that the non-English speaking migrant communities cannot receive support from them in these times of distress.

An affected individual claims,

“We work here, but we do have our family back in ………, and this is what worries me the most — if I’m going to be available to keep helping them.”

Unexpected housing development

Western Sydney has been suffering from the dumping of most new residential development in recent years that has been without provision of transport infrastructure or jobs. Affluent areas of Sydney above the Latte Line have been very successful in resisting provision of more dwelling in their amidst by very effective (NIMBY) community action.

COVID-19 has been used as a ground to the fast-tracking planning system and development approvals for further residential development in particular in Western Sydney. Once again, additional dwellings will be dumped in the Western Sydney areas where there is a lack of jobs and urban amenities.

The tale of two cities continues in the wake of COVID-19. The pandemic is making the Western Sydney condition even worse.

This article was written by Khandakar Farid Uddin and Dr Awais Piracha, an Associate Professor in the School of Social Science at Western Sydney University.