Economic recovery

Advocacy priorities:

As the economy begins to recover from the impacts of COVID-19, there are optimistic signs of a return to a strong, growing economy. However, there are some areas requiring attention to ensure an optimal platform for growth. The return of the visitor economy’s contribution to economic growth remains muted as levels of interstate and international visitation remain soft. This is a common concern of M9 councils, and encouragement of this sector is needed.

While the progressive easing of restrictions in late 2021 and early 2022 has facilitated some recovery, local economies have not yet returned to pre-pandemic levels of activity.

City of Melbourne data shows, for example, that while pedestrian activity in the key retail district of the Bourke Street Mall had increased by 11 per cent between March and April 2022, this was still 56 per cent lower than the pre-COVID benchmark.

One consistent issue amongst the M9 is the slow rate of return of visitors, to pre-pandemic levels of activity. For example, the City of Melbourne has seen improvements in both hotel occupancy (up to 55% in March 2022) and international passenger arrivals at Melbourne Airport (up 18% in March 2022), however both are considerably lower than before the pandemic (cf. 88% for hotel occupancy in March 2019; and a 76% decrease in international arrivals over the same time-frame). Domestic arrivals are at about two-thirds of pre-pandemic levels.

Given that there are no longer restrictions on either domestic or international arrivals, the relatively low number of visitors presents an opportunity to drive growth and recovery further by promoting the opportunity for visitation, and addressing the shortfall.

In March 2022, the Victorian Government released its Visitor Economy Masterplan Directions Paper (‘the Masterplan’ – attached), a consultation document that aims towards “ … long-term growth of the sector”(p. 4). Of the paper’s seven strategic directions, the first is ‘Melbourne’, which incorporates

“… opportunities to leverage Melbourne’s role as a gateway to improve visitor dispersal from the CBD to less-recognised metropolitan neighbourhoods and Victoria’s regions.” (p. 17)

In addition to broader visitor economy and tourism impacts, COVID-19 has left an indelible mark on major shopping strips through some of the highest levels of retail vacancies ever recorded and a dramatically reduced pedestrian numbers in inner city areas.

The dramatic effect that the pandemic has had on the M9 Councils and their unique precincts requires further tailored assistance to rediscover and enhance the bespoke offerings that each local area contains and is most well known for. The positioning and enhancement, and in some cases regeneration, of these precincts is crucial to attracting visitation and spend back into local economies.

Across the M9 Councils, the increased stressors that the pandemic has imposed on precincts and high streets is evident through key indicators like vacancy rates, spend data and pedestrian traffic numbers. In some instances, vacancy rates have increased to over 20% compared to pre pandemic vacancy rates of 4-5%. Pedestrian traffic has dropped significantly especially in the Melbourne CBD and the surrounding municipalities. Spend in localities like Hobson’s Bay between 2019-21 has decreased by $43 million in output for the accommodation and food services sector, and by $25 million in the output of the local retail industry.

As most visitors can now travel to the greater Melbourne metropolitan area unencumbered by restrictions, engagement with and advocacy to the state government in relation to opportunities to leverage Melbourne’s role as a gateway to improve visitor dispersal from the CBD to less- recognised metropolitan neighbourhoods and Victoria’s regions – would create clear economic benefit for the M9 group.

Given the importance of ensuring that economic recovery is sustainable and continues to provide a strong foundation for our commercial precincts and high streets, an imperative is for the M9 to advocate for a package of support that will enable localised and municipality specific solutions.

By funding Precinct support programs, local governments have the ability to support localised job creation and retention through enabling start-ups, entrepreneurs and micro businesses to establish and expand in precinct areas. Councils being able to incentivise businesses and /or consumers through, for example, public realm enhancements or local area marketing campaigns can promote and sustain business activity and job creation.

Resourcing of M9 Councils to deliver individual solutions to support small businesses and precinct enhancement agendas is crucial to ensure these specific issues can be addressed. This will assist in growing sustainable investment and visitation to high streets and commercial precincts.