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COVID chaos has shed light on many issues in the Australian childcare sector. Here are 4 of them

<p>Thousands of families are without childcare as <a href="https://www.acecqa.gov.au/resources/national-registers/service-temp-closure-info">hundreds of services</a> have had to close due to a surge in COVID cases, while many more are running at reduced capacity. Many parents dread another <a href="https://theconversation.com/from-covid-control-to-chaos-what-now-for-australia-two-pathways-lie-before-us-174325">chaotic year</a> that may have them jugging <a href="https://thesector.com.au/2022/01/06/executive-functioning-is-much-harder-for-children-from-chaotic-households/">childcare and work</a> at home.</p> <p>The government <a href="https://theconversation.com/the-government-has-again-rescued-the-childcare-sector-from-collapse-but-short-term-fixes-still-leave-it-at-risk-166568">rescued the childcare sector</a> several times over the past two years – making services eligible for a portion of their pre-pandemic payments as families pulled their children out. But these measures were only temporary.</p> <p>The childcare system was already busting at the seams before COVID. I led an <a href="https://uneprofessions.az1.qualtrics.com/jfe/form/SV_38j3CdPsHnM8l81">international survey</a> in 2021, during the pandemic, in which early childhood educators’ gave ideas on how their government could support their work. In Australia, 51 educators participated.</p> <p>Here are four preexisting the issues that have <a href="https://womensagenda.com.au/latest/early-childhood-directors-are-carrying-an-exhausting-load-during-covid-19-even-beyond-major-outbreaks-research/">increased during the pandemic</a>.</p> <h2>1. Staff shortages</h2> <p>Currently, many childcare services are closed and others are operating at reduced capacity because staff are either sick with COVID or close contacts that need to isolate. But staffing problems plagued the sector well before the pandemic, with <a href="https://theconversation.com/early-childhood-educators-are-leaving-in-droves-here-are-3-ways-to-keep-them-and-attract-more-153187">more than a 30% staff turnover</a>.</p> <p>The agency responsible for early childhood education and care, the Australian Children’s Education and Care Quality Authority (ACECQA), released its <a href="https://www.acecqa.gov.au/national-workforce-strategy">National Workforce Strategy</a> in 2021. It revealed 25% of educators have been at their service for less than a year. This high turnover harms relationships with children who need continuity.</p> <p>In a 2021 <a href="https://womensagenda.com.au/latest/73-of-early-educators-plan-to-leave-the-sector-within-three-years/">survey of almost 4,000 Australian educators</a>, 73% said they planned to leave their job within three years. The <a href="https://bigsteps.org.au/wp-content/uploads/2021/08/Exhausted-undervalued-and-leaving.pdf">reasons</a> included low pay, overwork and being undervalued.</p> <p><a href="https://images.theconversation.com/files/440392/original/file-20220112-23-1qok3m4.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/440392/original/file-20220112-23-1qok3m4.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Child pouring out sand." /></a> <span class="caption">73% of early childhood educators plan to leave the profession.</span> <span class="attribution"><a href="https://unsplash.com/photos/z02yFSgVRbA" class="source">Markus Spiske/Unsplash</a></span></p> <p>Women make up <a href="https://www.acecqa.gov.au/national-workforce-strategy">91% the early childhood education and care workforce</a>. Pay is low in traditionally female occupations, and many educators leave simply because they <a href="https://journals.sagepub.com/doi/full/10.1177/0022185618800351">cannot afford to stay</a>.</p> <p>ACECQA has fast tracked <a href="https://www.acecqa.gov.au/qualifications/requirements/children-preschool-age-or-under/recognition-as-an-equivalent-early-childhood-teacher">quick conversions</a> for primary and secondary school teachers into early childhood education, despite large and important differences in teaching philosophies.</p> <p>But there is unlikely to be a stampede to become one of Australia’s <a href="https://au.indeed.com/career-advice/finding-a-job/lowest-paid-jobs-in-australia">13th lowest paid workers</a>, just above a housekeeper. The national average salary for a childcare worker is A$29.63 per hour, but many earn as little as <a href="https://www.payscale.com/research/AU/Job=Childcare_Worker/Hourly_Rate">A$23.50</a>. This is in comparison to an average school teacher who earns <a href="https://www.payscale.com/research/AU/Job=Primary_School_Teacher/Salary">A$33.65</a> per hour.</p> <p>One educator in our study called for</p> <blockquote> <p>recognition of the equal value of early childhood educators with primary school teachers, especially for university-trained teachers, who experience a huge pay gap.</p> </blockquote> <p>Casualisation in the sector is another issue leading to high turnover. As part of government COVID rescue packages, permanent staff could receive JobKeeper payments, but casual staff at childcare services were not eligible. Many <a href="https://thesector.com.au/2021/08/05/hypervigilance-is-wearing-ecec-educators-down-as-the-pandemic-continues/">casual staff left</a> the sector.</p> <p>Government oversight is needed but there is always confusion about which government is responsible. Then there are also differences between community based and private services.</p> <h2>2. Nobody is responsible for the sector</h2> <p>Australia has one of the <a href="https://theconversation.com/quality-childcare-has-become-a-necessity-for-australian-families-and-for-society-its-time-the-government-paid-up-131748">highest levels</a> of privatisation in early childhood education in the world. This makes it harder for governments to control casualisation. However, the government sets the award wages.</p> <p>In a recent speech to the National Press Club, New South Wales Premier, Dominic Perrottet, <a href="https://www.abc.net.au/news/2021-12-08/perrottet-bid-to-take-over-childcare-from-commonwealth/100681344">said</a> he wanted states and territories to be able to take over responsibility for childcare from the federal government. This was part of his plan for “reform for a postpandemic world” which he said should be “state led, not Commonwealth led”.</p> <p>The federal government funds childcare, through subsidies, but providers are largely private and set their own fees. The state and territory governments fund community preschools.</p> <p>The federal government is responsible for the sector’s standards, frameworks and curricula, but the state and territory governments regulate them. This messy web makes it more difficult to reform the sector and manage costs for families.</p> <p>One level of government taking responsibility for childcare and preschool services will go some way to fixing the problems.</p> <p><iframe width="440" height="260" src="https://www.youtube.com/embed/FIef0mCk7Ao?wmode=transparent&amp;start=0" frameborder="0" allowfullscreen=""></iframe> <span class="caption">NSW Premier Dominic Perrottet wants the states to take over responsibility for childcare.</span></p> <h2>3. Too much paperwork</h2> <p>In <a href="https://thesector.com.au/2021/07/26/acecqa-shares-findings-from-national-workforce-strategy-as-recruiting-challenges-persist/">ACECQA’s survey</a>, educators blamed <a href="https://journals.sagepub.com/doi/10.1177/2043610615597154">administrative overload</a> as one of the <a href="https://thesector.com.au/2021/07/26/acecqa-shares-findings-from-national-workforce-strategy-as-recruiting-challenges-persist/">three main reasons</a> they wanted to leave the profession.</p> <p>The increasing paperwork came as governments created <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=&amp;cad=rja&amp;uact=8&amp;ved=2ahUKEwi86rWw4Jv1AhUTS2wGHSpPD7MQFnoECCYQAQ&amp;url=http%3A%2F%2Fwww.aasw.asn.au%2Fdocument%2Fitem%2F936&amp;usg=AOvVaw0tkTyvOjf6LvcG5WzaJeYG">managerial systems</a> disguised as <a href="https://www.tandfonline.com/doi/abs/10.1080/02680939.2017.1352032">quality assurance</a>, to try to regulate the sector.</p> <p>Now, educators must <a href="https://www.tandfonline.com/doi/abs/10.1080/02680939.2014.924561">collect big data</a> every day, including <a href="https://bigsteps.org.au/wp-content/uploads/2021/08/Exhausted-undervalued-and-leaving.pdf">mountains of checklists</a> for regulation and to document children’s learning. This extra workload <a href="https://educationhq.com/news/managerialism-has-taken-over-in-early-childhood-education-109737/">reduces time</a> spent on quality interactions. It also makes <a href="https://thesector.com.au/2021/10/25/bound-for-burnout-early-childhood-educators-are-swimming-against-a-gendered-micromanaged-tide/">educators feel micromanaged</a>, affecting their <a href="https://doi.org/10.1080/1350293X.2020.1836583">identity and confidence</a>.</p> <p>Echoing the <a href="https://www.pc.gov.au/inquiries/completed/childcare/report/childcare-overview.pdf">Productivity Commission’s findings</a> in 2014, educators in our study said governments must “reduce paperwork”, which they described as “ridiculous”, “complex”, “indecipherable”, “frustrating” and “random”. As one educator said: “we need some paperwork, but we also need to be there for the children”.</p> <p>Over 60% felt frustrated three or more times a week. Nearly 40% of educators said the paperwork required for accreditation compliance (assessment and rating) <a href="https://educationhq.com/news/managerialism-has-taken-over-in-early-childhood-education-109737/">decreased the time</a> they spent with children.</p> <h2>4. High burnout, low morale</h2> <p>Despite being an essential worker, <a href="https://womensagenda.com.au/latest/early-childhood-directors-are-carrying-an-exhausting-load-during-covid-19-even-beyond-major-outbreaks-research/">educators are undervalued</a>, struggling for <a href="https://journals.sagepub.com/doi/10.1177/18369391211050165">recognition</a>. Their strengths <a href="https://www.iejee.com/index.php/IEJEE/article/view/1447/532">are not mentioned</a> in <a href="https://www.acecqa.gov.au/sites/default/files/2020-05/belonging_being_and_becoming_the_early_years_learning_framework_for_australia.pdf">curriculum</a> documents.</p> <p>Overwork is the <a href="https://thesector.com.au/2021/07/26/acecqa-shares-findings-from-national-workforce-strategy-as-recruiting-challenges-persist/">second reason</a> educators want to leave. Our study showed that during the accreditation period, when they need to fill out regulation requirement documents, 50% of staff reported working unpaid hours. <a href="https://thesector.com.au/2021/09/14/accreditation-effects-on-early-childhood-educator-morale/">Staff morale</a> also suffers during accreditation.</p> <p><a href="https://images.theconversation.com/files/440556/original/file-20220112-21-1sgijcd.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/440556/original/file-20220112-21-1sgijcd.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="Childcare worker talking to kids." /></a> <span class="caption">Despite doing essential work, childcare workers are burnt out and suffer from low morale.</span> <span class="attribution"><a href="https://www.shutterstock.com/image-photo/preschool-teacher-talking-group-children-sitting-1214667421" class="source">Shutterstock</a></span></p> <p>During the pandemic, educators reported an <a href="https://journals.sagepub.com/doi/full/10.1177/18369391211040940">increased burden</a> with extra time needed for cleaning, health requirements, communicating with parents, rearranging work plans and spaces, caring for staff, and constant <a href="https://thesector.com.au/2021/08/05/hypervigilance-is-wearing-ecec-educators-down-as-the-pandemic-continues/">hypervigilance</a>.</p> <p>One said, “I would prefer to work somewhere for the same or similar wage with less stress and take-home work”.</p> <p>Burnout is the <a href="https://link.springer.com/article/10.1007/s13158-020-00264-6">third reason</a> educators want to leave. “The demand on educators is too high. The pressure is intense”, one told us.</p> <p>The National Workforce Strategy recommends directors give educators links to well-being services and strategies. While this is well-meaning, it is simplistic given the level of crisis.</p> <p>For example, we found 70% of educators felt overtired and 60% felt overwhelmed three or more times in the last week.</p> <p>Recognition of childcare as an <a href="https://journals.sagepub.com/doi/full/10.1177/18369391211040940">essential service</a> – with assured funding provision and a more streamlined level of government regulation – is key to reforming the sector’s status, and educators’ pay.</p> <p>The sector is in crisis, so we need to stop talking about ideas to change it and take action towards <a href="https://thrivebyfive.org.au/">total reform</a>.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/174404/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><span><a href="https://theconversation.com/profiles/marg-rogers-867368">Marg Rogers</a>, Senior Lecturer, Early Childhood Education, <em><a href="https://theconversation.com/institutions/university-of-new-england-919">University of New England</a></em></span></p> <p>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/covid-chaos-has-shed-light-on-many-issues-in-the-australian-childcare-sector-here-are-4-of-them-174404">original article</a>.</p> <p><em>Image: Pixabay</em></p>

Family & Pets

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How the decline in Chinese tourists around the world has hit the luxury sector

<p>Large groups of Chinese visitors have become a pillar of the global tourism industry. Coronavirus has not only put paid to this enormous source of income for major cities and sights around the world, it is having a massive knock-on effect for the luxury goods business.</p> <p>For any tourist, buying souvenirs is a key part of the holiday experience. They might be trinkets such as key rings or fridge magnets, a T-shirt emblazoned with the slogan “I ❤ NY” or a Russian matryoshka doll. But a significant number of Chinese tourists prefer to spend large sums on luxury items, such as designer clothes and accessories, when they travel overseas.</p> <p>Roughly one-third of global spending on luxury goods was credited <a href="https://www.voguebusiness.com/consumers/chinese-consumers-luxury-purchases-growth-bain">to Chinese consumers in 2018</a>. Consultants at Bain predict this <a href="https://jingdaily.com/bain-company-chinese-consumers-will-make-up-half-of-global-luxury-purchases-by-2025/">to rise to 50% by 2025</a>. Before the coronavirus pandemic, nearly all of this £85 billion worth of spending (92%) was done <a href="https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/how%20young%20chinese%20consumers%20are%20reshaping%20global%20luxury/mckinsey-china-luxury-report-2019-how-young-chinese-consumers-are-reshaping-global-luxury.ashx">outside the Chinese mainland</a> .</p> <p>What’s more, most of this overseas shopping is done by women between the ages of 19 and 29, according to a 2018 survey of <a href="http://223.27.21.115/~allegiantmediaco/wp-content/uploads/Documents/CN-Travel-Shopper-White-Paper-Final.pdf">over 750 million Chinese people</a>. From our interviews <a href="https://www.emerald.com/insight/content/doi/10.1108/TR-08-2019-0335/full/html">with many of these women</a>, it seems clear that as the Chinese economy recovers from coronavirus they will return to spending. Where they are able to travel and spend will have a big impact on economic recoveries from the pandemic.</p> <p><strong>The awakened generation</strong></p> <p>In China, demographic cohorts are defined by decades. Rather than millennials or generation Z, in China it is the post-90s generation (those born in the 1990s) that have become the core driver of growth for many industries, including luxury, leisure and travel retail.</p> <p>China’s post-90s generation are the direct beneficiaries of the country’s economic reform that began in the 1980s, which opened up the Chinese market to the rest of the world and spurred enormous economic growth through the 1990s to today. Girls, in particular, benefited from growing up at a time when China was more connected with the rest of the world and experienced significant cultural changes, including a decline in the <a href="https://link.springer.com/article/10.1007/s10834-011-9277-9">historic preference for sons</a>. The one-child policy played a part in this, too.</p> <p>Compared with previous generations, which are more family-centred and self-effacing, post-90s Chinese women are self-confident, independent and well-educated. They are also keen to express themselves through consumerism. This was evident in the conversations we had with high-spending young women. For them, buying luxury goods was a key part of their identity and self-expression. When travelling, it was one of the most important parts of their holiday, if not the actual purpose for their trip.</p> <p>Around the world, people buy and display luxury goods – from fancy cars to expensive watches and handbags – as status symbols. This is especially the case for the post-90s Chinese woman who seeks to distinguish herself from others in various ways. Vivian*, who’s 30, has a master’s degree and works in finance, told us:</p> <p><em>Buying luxury branded products is very personal. It’s my handbag. I do not want to look like everyone else.</em></p> <p>Travelling further afield to Europe is a way to buy luxury goods that distinguish themselves from their peers, as different designs are available to those in China. As well as the premium shopping experience, the people we spoke to repeatedly talked about the importance of having unique items. Ava, a 23-year-old student, said:</p> <p><em>Those special designs somehow are much more beautiful than those basic items that are available everywhere [in China]. They also reflect my lifestyle as a well-travelled person. When I carry it around, people know I am special.</em></p> <p>We also found that for the post-90s Chinese woman who travels abroad, buying designer items in the country where they originated from was seen as part of the authentic experience. As Emma, who is 23 and works in fashion, put it:</p> <p><em>Buying handbags in Paris makes me feel like a French lady. It’s a fun and authentic experience. It is a very different experience to purchasing them in Shenzhen.</em></p> <p><strong>‘Revenge spending’</strong></p> <p>The coronavirus pandemic has not reduced this appetite among China’s wealthy post-90s generation to travel and spend. A survey from <a href="https://blog.globalwebindex.com/chart-of-the-week/coronavirus-reshaping-the-luxury-market/">April this year found</a> that almost 60% of this group who had delayed their purchase plans would return to spending once the outbreak was over in China. And a number of luxury businesses reported a <a href="https://edition.cnn.com/2020/06/11/business/global-luxury-sales-china-coronavirus-intl-hnk/index.html">big rise in spending</a> following the easing of lockdown restrictions in China, including jewellery brand Tiffany and fashion house Burberry.</p> <p>While overseas travel restrictions will significantly reduce the outbound tourist market for the time being, many brands will be hoping for a similar bout of so-called <a href="https://www.cnbc.com/2020/05/13/revenge-spending-by-the-rich-could-drive-luxury-recovery.html">“revenge spending”</a>, as people make up for the time spent cooped up in lockdown.</p> <p>Having been the first to be hit by coronavirus, China is the first major economy to show a recovery. And as the world’s largest (and still growing) source of travellers and luxury shoppers, China will be the engine of the post-pandemic recovery for both these sectors. Both should be aware of what motivates this younger generation to spend in order to tap into it. Growing tension between the west and China, along with struggles to contain the pandemic in the west, may see other Asian countries as the first to benefit from outbound Chinese tourists.</p> <p>*<em>Names have been changed.</em></p> <p><em>Written by Misha Ketchell</em><em>. This article first appeared on <a href="https://theconversation.com/how-the-decline-in-chinese-tourists-around-the-world-has-hit-the-luxury-sector-145267">The Conversation</a>. </em></p>

International Travel

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The coronavirus will hit the tourism and travel sector hard this 2020

<p>The spread of infectious diseases is invariably linked to travel. Today, tourism is a huge global business that accounts for <a href="https://www.wttc.org/-/media/files/reports/economic-impact-research/regions-2019/world2019.pdf">10.4 per cent of global Gross Domestic Product (GDP) and 10 per cent of global employment.</a></p> <p>Nothing seems to slow its growth as year-over-year <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">increases outpace the economy</a>. The United Nations World Tourism Organization is predicting further <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">growth of three per cent to four per cent in international tourist arrivals for 2020</a>, with <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">international departures worldwide particularly strong</a> in the first quarter of this year.</p> <p>But that was before a new coronavirus (formally known as 2019-nCoV) hit China and then very rapidly started spreading to the rest of the world with <a href="https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6">20 countries and counting</a> isolating cases.</p> <p>Officials in China and those in the rest of world have been much quicker to take more drastic action after learning bitter lessons from the SARS outbreak in 2003, which also started in China.</p> <p>The impact on travel to and from China of this new coronavirus, however, has been devastating. Airlines, including <a href="https://www.cbc.ca/news/business/coronavirus-air-travel-1.5444326">Air Canada</a>, <a href="https://www.cnn.com/2020/01/29/business/british-airways-coronavirus/index.html">have cancelled all flights</a> or <a href="https://www.cnn.com/2020/01/29/business/american-airlines-suspends-china-flights-coronavirus/index.html">significantly reduced the number of flights</a> in and out of China. <a href="https://www.bloomberg.com/news/articles/2020-01-30/russia-closing-border-with-china-to-affect-people-not-goods">Russia closed its land border to passenger travel</a> with China and <a href="https://www.vice.com/en_ca/article/n7jebz/hong-kong-is-closing-its-borders-to-keep-coronavirus-out">Hong Kong shut down its borders, cross-border ferries and railways</a>.</p> <p>How does the impact of 2019-nCoV differ from that of SARS, which also affected tourism dramatically?</p> <p><strong>SARS has higher death toll so far</strong></p> <p>The <a href="https://www.who.int/csr/sars/country/en/">World Health Organization</a> confirmed 8,096 cases and 774 deaths in 26 countries as a result of the SARS coronavirus. First detected in late February 2003, it had run its course five months later.</p> <p>The coronavirus first appeared in December 2019 but has already <a href="http://doi.org/10.1056/NEJMoa2001316">surpassed the total number of SARS cases in just two months</a>, albeit with a much lower death rate. Infectious disease experts expect it <a href="https://www.straitstimes.com/asia/east-asia/wuhan-virus-experts-say-outbreak-will-last-months-at-least">to last for several months</a> yet with tens of thousands afflicted before it runs its course.</p> <p>SARS accounted for a <a href="https://data.worldbank.org/indicator/ST.INT.ARVL">drop in international tourist arrivals of almost 9.4 million</a>and a loss of between US$30 billion and $50 billion. But in 2002, China’s role as both a travel destination and a source country was relatively minor, receiving fewer than 38 million tourists and sending about 17 million tourists abroad.</p> <p>Compare that to 2019 when it is estimated China received <a href="https://www.china-mike.com/china-travel-tips/china-tourism-statistics/">142 million inbound tourists and the Chinese made 134 million trips abroad and 5.5 billion trips domestically</a>.</p> <p>The severe travel restrictions imposed by the Chinese government on its citizens and the stern warnings from Foreign Affairs offices, <a href="https://travel.gc.ca/destinations/china">including Canada’s</a>, to avoid all non-essential travel to China and all travel to Hubei province (Wuhan is its capital and largest city) means that the economic impact of this coronvirus will be felt in every corner of the world and almost every sector of the economy.</p> <p>The market response has been swift, with <a href="https://www.cbc.ca/news/business/coronavirus-economic-impact-1.5437393">share prices of major airlines, cruise lines and tourism companies dropping several percentage points</a>.</p> <p>With the World Health Organization declaring the coronavirus <a href="https://www.who.int/">a public health emergency of global concern</a>, Gloria Guevara, president and CEO of the World Travel and Tourism Council (<a href="https://www.wttc.org/search-results/?query=coronavirus">WTTC</a>) fears that this escalation could have a damaging and lasting economic impact on the sector. She’s <a href="http://www.travelweekly.co.uk/articles/356089/wttc-issues-coronavirus-economic-impact-warning">expressed serious concerns</a> that airport closures, flight cancellations and shuttered borders often have a greater economic impact than the outbreak itself.</p> <p><strong>Hundreds of thousands die from seasonal flus</strong></p> <p>These concerns are well justified when one considers that <a href="https://www.cdc.gov/media/releases/2017/p1213-flu-death-estimate.html">between 291,000 and 646,000 people worldwide die from seasonal influenza-related respiratory illnesses each year</a>, which does not lead to any of these warnings or drastic measures.</p> <p>Canada saw <a href="https://www.who.int/csr/sars/country/en/">251 SARS cases and 43 deaths</a>, but it cost the Canadian economy an estimated <a href="https://www.cbc.ca/news/business/coronavirus-economic-impact-1.5437393">$5.25 billion and 28,000 jobs</a>. At the time, China was a Canadian tourism market of less than <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2410000301">100,000 visitors annually; that dropped by 25 per cent due to SARS</a>.</p> <p>Today, China is Canada’s second-largest overseas market, accounting for close to <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2410000301">800,000 arrivals</a>, and its highest spending market with more than<a href="https://www.destinationcanada.com/sites/default/files/archive/869-Market%20Highlights%20-%20China%20-%202019/MarketHighlights-CN_EN%5B1%5D.pdf">$2,800 per trip</a>.</p> <p>Depending on how long the restrictions and warnings are in place, losses could easily double of those in 2003. The pain will be felt in every industry as tourism’s supply chain involves everything from agriculture and fishing to banking and insurance. The hardest hit will be its core industries of accommodation, food and beverage services, recreation and entertainment, transportation and travel services.</p> <p>While Air Canada will <a href="https://www.aircanada.com/ca/en/aco/home/book/travel-news-and-updates/2020/china-travel.html">refund fares for cancelled flights</a> to and from China, other airlines may only <a href="https://www.cnn.com/2020/01/28/business/delta-american-united-coronavirus-wuhan-china/index.html">extend change fee waivers</a> or provide credit towards future flights.</p> <p>But this may not be the case for connecting flights from Beijing or Shanghai, the cities most commonly served by North American airlines.</p> <p>A growing number of hotels are also waiving changes and cancellation fees for bookings in China scheduled for the next few weeks. But many travellers to or passing through China may not be able to recover all their money, even if they bought insurance. That’s because most basic travel insurance plans do not cover <a href="https://www.aarp.org/travel/travel-tips/safety/info-2020/insurance-coronavirus-coverage.html">epidemics as a reason for cancellation</a>.</p> <p><em>Written by Marion Joppe. Republished with permission of <a href="https://theconversation.com/the-coronavirus-will-hit-the-tourism-and-travel-sector-hard-130872">The Conversation.</a> </em></p>

Cruising

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The coronavirus will hit the tourism and travel sector hard

<p>The spread of infectious diseases is invariably linked to travel. Today, tourism is a huge global business that accounts for <a style="font-size: 14px;" href="https://www.wttc.org/-/media/files/reports/economic-impact-research/regions-2019/world2019.pdf">10.4 per cent of global Gross Domestic Product (GDP) and 10 per cent of global employment.</a></p> <p>Nothing seems to slow its growth as year-over-year <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">increases outpace the economy</a>. The United Nations World Tourism Organization is predicting further <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">growth of three per cent to four per cent in international tourist arrivals for 2020</a>, with <a href="https://unwto.org/world-tourism-barometer-n18-january-2020">international departures worldwide particularly strong</a> in the first quarter of this year.</p> <p>But that was before a new coronavirus (formally known as 2019-nCoV) hit China and then very rapidly started spreading to the rest of the world with <a href="https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6">20 countries and counting</a> isolating cases.</p> <p>Officials in China and those in the rest of world have been much quicker to take more drastic action after learning bitter lessons from the SARS outbreak in 2003, which also started in China.</p> <p>The impact on travel to and from China of this new coronavirus, however, has been devastating. Airlines, including <a href="https://www.cbc.ca/news/business/coronavirus-air-travel-1.5444326">Air Canada</a>, <a href="https://www.cnn.com/2020/01/29/business/british-airways-coronavirus/index.html">have cancelled all flights</a> or <a href="https://www.cnn.com/2020/01/29/business/american-airlines-suspends-china-flights-coronavirus/index.html">significantly reduced the number of flights</a> in and out of China. <a href="https://www.bloomberg.com/news/articles/2020-01-30/russia-closing-border-with-china-to-affect-people-not-goods">Russia closed its land border to passenger travel</a> with China and <a href="https://www.vice.com/en_ca/article/n7jebz/hong-kong-is-closing-its-borders-to-keep-coronavirus-out">Hong Kong shut down its borders, cross-border ferries and railways</a>.</p> <p>How does the impact of 2019-nCoV differ from that of SARS, which also affected tourism dramatically?</p> <p><strong>SARS has higher death toll so far</strong></p> <p>The <a href="https://www.who.int/csr/sars/country/en/">World Health Organization</a> confirmed 8,096 cases and 774 deaths in 26 countries as a result of the SARS coronavirus. First detected in late February 2003, it had run its course five months later.</p> <p>The coronavirus first appeared in December 2019 but has already <a href="http://doi.org/10.1056/NEJMoa2001316">surpassed the total number of SARS cases in just two months</a>, albeit with a much lower death rate. Infectious disease experts expect it <a href="https://www.straitstimes.com/asia/east-asia/wuhan-virus-experts-say-outbreak-will-last-months-at-least">to last for several months</a> yet with tens of thousands afflicted before it runs its course.</p> <p>SARS accounted for a <a href="https://data.worldbank.org/indicator/ST.INT.ARVL">drop in international tourist arrivals of almost 9.4 million</a> and a loss of between US$30 billion and $50 billion. But in 2002, China’s role as both a travel destination and a source country was relatively minor, receiving fewer than 38 million tourists and sending about 17 million tourists abroad.</p> <p>Compare that to 2019 when it is estimated China received <a href="https://www.china-mike.com/china-travel-tips/china-tourism-statistics/">142 million inbound tourists and the Chinese made 134 million trips abroad and 5.5 billion trips domestically</a>.</p> <p>The severe travel restrictions imposed by the Chinese government on its citizens and the stern warnings from Foreign Affairs offices, <a href="https://travel.gc.ca/destinations/china">including Canada’s</a>, to avoid all non-essential travel to China and all travel to Hubei province (Wuhan is its capital and largest city) means that the economic impact of this coronvirus will be felt in every corner of the world and almost every sector of the economy.</p> <p>The market response has been swift, with <a href="https://www.cbc.ca/news/business/coronavirus-economic-impact-1.5437393">share prices of major airlines, cruise lines and tourism companies dropping several percentage points</a>.</p> <p>With the World Health Organization declaring the coronavirus <a href="https://www.who.int/">a public health emergency of global concern</a>, Gloria Guevara, president and CEO of the World Travel and Tourism Council (<a href="https://www.wttc.org/search-results/?query=coronavirus">WTTC</a>) fears that this escalation could have a damaging and lasting economic impact on the sector. She’s <a href="http://www.travelweekly.co.uk/articles/356089/wttc-issues-coronavirus-economic-impact-warning">expressed serious concerns</a> that airport closures, flight cancellations and shuttered borders often have a greater economic impact than the outbreak itself.</p> <p><strong>Hundreds of thousands die from seasonal flus</strong></p> <p>These concerns are well justified when one considers that <a href="https://www.cdc.gov/media/releases/2017/p1213-flu-death-estimate.html">between 291,000 and 646,000 people worldwide die from seasonal influenza-related respiratory illnesses each year</a>, which does not lead to any of these warnings or drastic measures.</p> <p>Canada saw <a href="https://www.who.int/csr/sars/country/en/">251 SARS cases and 43 deaths</a>, but it cost the Canadian economy an estimated <a href="https://www.cbc.ca/news/business/coronavirus-economic-impact-1.5437393">$5.25 billion and 28,000 jobs</a>. At the time, China was a Canadian tourism market of less than <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2410000301">100,000 visitors annually; that dropped by 25 per cent due to SARS</a>.</p> <p>Today, China is Canada’s second-largest overseas market, accounting for close to <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2410000301">800,000 arrivals</a>, and its highest spending market with more than<a href="https://www.destinationcanada.com/sites/default/files/archive/869-Market%20Highlights%20-%20China%20-%202019/MarketHighlights-CN_EN%5B1%5D.pdf">$2,800 per trip</a>.</p> <p>Depending on how long the restrictions and warnings are in place, losses could easily double of those in 2003. The pain will be felt in every industry as tourism’s supply chain involves everything from agriculture and fishing to banking and insurance. The hardest hit will be its core industries of accommodation, food and beverage services, recreation and entertainment, transportation and travel services.</p> <p>While Air Canada will <a href="https://www.aircanada.com/ca/en/aco/home/book/travel-news-and-updates/2020/china-travel.html">refund fares for cancelled flights</a> to and from China, other airlines may only <a href="https://www.cnn.com/2020/01/28/business/delta-american-united-coronavirus-wuhan-china/index.html">extend change fee waivers</a> or provide credit towards future flights.</p> <p>But this may not be the case for connecting flights from Beijing or Shanghai, the cities most commonly served by North American airlines.</p> <p>A growing number of hotels are also waiving changes and cancellation fees for bookings in China scheduled for the next few weeks. But many travellers to or passing through China may not be able to recover all their money, even if they bought insurance. That’s because most basic travel insurance plans do not cover <a href="https://www.aarp.org/travel/travel-tips/safety/info-2020/insurance-coronavirus-coverage.html">epidemics as a reason for cancellation</a>.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/130872/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/marion-joppe-952990">Marion Joppe</a>, Professor, Law and Economics of Tourism, <a href="https://theconversation.com/institutions/university-of-guelph-1071">University of Guelph</a></em></p> <p><em>This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/the-coronavirus-will-hit-the-tourism-and-travel-sector-hard-130872">original article</a>.</em></p>

Domestic Travel

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“Retail sector in recession”: Warning issued for Australia’s oldest department stores

<p>Australia’s population is multiplying day by day, and with prices getting higher, Australia’s economy is in its third decade of continuous recession-free growth. But there’s still one industry that’s suffering significantly: The retail sector.</p> <p>Department stores are some of the oldest businesses in Australia, with Myer established in 1900, David Jones in 1838, Target in 1926 and Kmart in 1968. These stores are notably older than retailers such as Uniqlo and other brands that have only recently made their way Down Under.</p> <p>But despite their age and reputation, those stores are dwindling, regardless of whether they’re high-end or budget friendly.</p> <p>Only last week, David Jones announced the value of their business to be $437 million, with the owner admitting the business isn’t as profitable as they originally believed.</p> <p>“The retail sector in Australia is currently in recession,” said a spokesman for Woolworths South Africa, which bought the department store in 2014.</p> <p>The decrease in numbers for David Jones was a warning to rival Myer, who began to sell their stock, causing the company’s share prices to fall, reversing what appeared to be an improvement earlier in the year.</p> <p>So what went wrong? Throughout the country, stores have been selling the same amount of stock they did 10 years ago. Some say it was the introduction of the internet that spelt doom for department stores, as it allowed for customers to do more research on whether or not they were getting the best price.</p> <p>And if you look at businesses who have well-defined offerings, for example JB Hi-Fi for electronics, ALDI for groceries and Bunnings for home items, their sales are increasing by the day.</p> <p>But despite it being difficult to remain relevant, department stores are here to stay.</p> <p>While the growth has stopped, it doesn’t mean big businesses are ready to close shop, unlike Barney’s in the US who declared bankruptcy last week.</p> <p>Each month, department stores are selling $1.5 billion worth of items each month, the problem lies in the fact that our population and our bank balances are increasing each year, so the items sold to each person have become smaller.</p> <p>Myer’s sales from the first half of the financial year are 7 per cent lower than they were in the same period 10 years ago. But regardless, they are still making profit, it’s just 65 per cent lower.</p> <p>But not every department store is expected to hang on. Take Big W for example, who after years of trading, are slowly closing down their stores due to a decrease in sales.</p> <p>30 Big W stores are expected to close over the next three years, with the business assumed to report a loss before interest and tax of $80-$100 million this financial year.</p> <p>But perhaps the most important store of all is Kmart, being the shining light for a long time. As shoppers went Kmart mad due to their bargain items, a craze began as people started Facebook groups revealing their favourite Kmart hacks.</p> <p>But then the growth stopped, as in the most recent trading update, Kmart’s comparable sales fell 0.2 per cent. While Kmart is continuing to open new stores, they aren’t experiencing much growth.</p> <p>If the business begins to follow in the same path as other department stores, that will be a cause for concern, with sales not going up by much, but not going down either.</p>

Money & Banking

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The item set to walk off the shelves during ALDI's biggest sale of the year

<p>Those who shop at ALDI love the annual snow gear Special Buys sale. The event, launched in 2008, is ALDI’s most popular Special Buys event.</p> <p>From jackets, goggles, boots and thermal wear, ALDI’s Special Buys snow sale provides shoppers with everything they need to stay warm in the snow at a low price point.</p> <p>Insiders revealed to <a rel="noopener" href="https://www.news.com.au/travel/travel-ideas/ski/item-aldi-insiders-say-will-walk-off-the-shelves-during-snow-sale/news-story/ec080817b090c4c8042a9f4b57cec4b2" target="_blank">news.com.au</a> what items will be in high demand when the sale launches on Saturday, May 18, which just so happens to be the same day as the federal election.</p> <p>Some of the items that are in high demand include:</p> <p><strong>Adults Merino Thermal Underwear</strong></p> <p>As they’re all under $40 and are also breathable, these are set to be a big seller.</p> <p><strong>Adults and Children’s Ski Jackets and Pants</strong></p> <p>The jackets are waterproof, but each item holds a different rating. The higher the number is, the more waterproof the jackets and pants are.  All items are under $60.</p> <p>The jackets and pants also have DuPont’s Sorona wadding, which is a renewably sourced fibre that keeps the outer garments insulated, moisture resistant and heat retentive no matter the alpine conditions.</p> <p>The jackets also contain a ski lift pass pocket and zips in the pockets for wet conditions.</p> <p><strong>Children’s Thermo Boots</strong></p> <p>The boots contain a polar fleece lining and are all under $20. The boots also contain a three-layered EVA in-sock in aluminium and thinsulate layers, as well as being waterproof to keep feet warm and dry. The boots also look like sneakers, which will be popular with the kids.</p> <p><strong>Adults and Children’s Goggles</strong></p> <p>This is possibly the most crucial item you need whilst hitting the slopes, and it’ll only cost you under $15. The goggles have an adjustable head strap, two different lenses to choose from, as well as offering UV protection. They come in two colours, which are black and grey, and are anti-fog coated so you can still see whilst the weather isn’t the nicest.</p> <p>As the journey of heading to the snow can be an expensive venture for the family, there’s a reason that this sale is so popular amongst Aussies.</p> <p>“A ski holiday isn’t the most affordable vacation option, so we’re proud to do what we can to make this experience more affordable for Australian families,’’ ALDI textiles buying director Renata Hay told <a rel="noopener" href="https://www.theaustralian.com.au/business/aldi-faces-competition-in-ski-gear/news-story/e0a00a48884a43915631bbaa45f87d26" target="_blank"><em>The Weekend Australian</em>.</a></p> <p>“We’ll be shipping more than 10 per cent greater volume of ski products in to our stores this year than last. The demand and ­double-digit growth have continued to surpass population growth and our store growth.”</p> <p>The ski and snow sector is now dominated by ALDI’s annual sale and has created such a cult following that ALDI has now introduced a competition that gives shoppers the chance to win a Perisher weekend package.</p> <p>One of 10 Perisher weekend packages are on offer, which include accommodation, ski lift passes, lessons and ski or snowboard hire. The competition gives shoppers the chance to win more than $30,000 in prizes.</p> <p>As always, items are available Australia-wide until stock sells out.</p>

Travel Tips

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Why Australia’s aged care sector needs more funding

<p><em><strong>Michael Woods is a Professor of Health Economics at the University of Technology Sydney.</strong></em></p> <p>In the 2018-19 budget, federal Treasurer Scott Morrison made big promises for the aged care sector. He said the <span style="text-decoration: underline;"><strong><a href="https://www.budget.gov.au/2018-19/content/speech/download/budget_speech.pdf" target="_blank">government would prioritise</a></strong></span> “caring for older Australians” – a direct take from the <span style="text-decoration: underline;"><strong><a href="http://www.pc.gov.au/inquiries/completed/aged-care/report" target="_blank">Productivity Commission’s</a></strong></span> landmark 2011 report of the same name.</p> <p>The next morning, headlines relayed the treasurer’s message that the government would increase home care packages by 14,000 over four years at a cost of A$1.6 billion. But the <span style="text-decoration: underline;"><strong><a href="https://www.acsa.asn.au/ACSA/media/General/Better%20Practice%20Project/080518_ACSA_Budget_1.pdf" target="_blank">aged-care sector</a></strong></span> quickly <span style="text-decoration: underline;"><strong><a href="https://www.cota.org.au/news-items/media-release-extra-home-care-packages-welcome-aged-care-measures-will-provide-relief-older-australians/" target="_blank">dampened the good news</a></strong></span> by pointing out more than 100,000 people are on the waiting list for a Home Care Package. While the new places were welcome, there was much more to be done to properly care for older Australians.</p> <p>The 14,000 home care places are additional to those built into prior budgets. And there is extra money ($1.6 billion over four years) allocated to fund them in this year’s budget. But it still won’t be enough to meet demand.</p> <p><strong>Aged care funding in brief</strong></p> <p>As the needs of older people increase, they may seek support services from private or not-for-profit providers. The Australian government provides a safety net of subsidies for those unable to fully fund their own care.</p> <p>The three <a href="https://agedcare.health.gov.au/programs">main subsidised programs</a> are:</p> <ul> <li>the <span style="text-decoration: underline;"><strong><a href="https://www.myagedcare.gov.au/help-home/commonwealth-home-support-programme" target="_blank">Commonwealth Home Support Program</a></strong></span>, which provides support services to enable older people to stay at home and be more independent in the community</li> <li><span style="text-decoration: underline;"><strong><a href="https://www.myagedcare.gov.au/help-home/home-care-packages" target="_blank">Home Care Packages</a></strong></span>, which deliver an agreed set of services to meet a specific need, and come in four levels of care, ranging from basic to complex personal and health care (medical care is provided and funded separately)</li> <li>residential care and accommodation, which is available for older people unable to continue living independently.</li> </ul> <p>The level of subsidy varies according to the program and the person’s financial capacity to contribute. The federal government controls the amount of taxpayer money through both policy and the spending it announces in the annual budgets (if the parliament agrees).</p> <p>These subsidies are provided through an <span style="text-decoration: underline;"><strong><a href="https://agedcare.health.gov.au/sites/g/files/net1426/f/documents/08_2016/2016_report_on_the_funding_and_financing_of_the_aged_care_industry_0.pdf" target="_blank">aged care provision ratio</a></strong></span>, which aims to provide 113 subsidised care places for every 1,000 people aged 70 and over. In recognition of Australia’s ageing population and the growing demand for care, the government has been changing this policy so that the ratio will increase to 125 places for every 1,000 by 2021-22.</p> <p>It remains to be seen whether this will be sufficient, or even appropriate. The use of a ratio based on the number of people aged 70 and over is <span style="text-decoration: underline;"><strong><a href="https://www.gen-agedcaredata.gov.au/Topics/Admissions-into-aged-care/Explore-admissions-into-aged-care" target="_blank">becoming less relevant</a></strong></span> as people are <span style="text-decoration: underline;"><strong><a href="https://www.pc.gov.au/inquiries/completed/aged-care/residential-care-dynamics/residential-care-dynamics.pdf" target="_blank">taking up these services</a></strong></span> at later ages. The average age of a person receiving a home care package had increased to 82.5 in 2015-16. And the average age was 84 for those who moved into residential care.</p> <p>Within the overall number of places, the government also sets sub-targets for the numbers of Home Care Packages and residential care places. Most elderly people <span style="text-decoration: underline;"><strong><a href="http://www.naca.asn.au/Age_Well/Blueprint.pdf" target="_blank">want to stay in their own homes</a></strong></span> for as long as possible.</p> <p>So, the government is altering the mix of home care and residential care in the target of 125 places per 1,000 people. By 2021-22, the target for home care packages will increase from 27 to 45 per 1,000, while the residential target is to reduce from 88 to 78 per 1,000 – with an additional two places for restorative care (support to restore a person’s wellness and capacity to live in the community).</p> <p><strong>What about the extra packages in the budget?</strong></p> <p>This year’s budget included an extra 14,000 home care packages. The number of home care packages is growing each year anyway because the number of people aged 70 or over is increasing and the “ratio” policy is giving more emphasis to home care.</p> <p>This is evident in the forward estimates of the 2017-18 budget, which showed subsidised home care packages <span style="text-decoration: underline;"><strong><a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/2017-2018_Health_PBS_sup4/%24File/2017-18_Health_PBS_Complete.pdf" target="_blank">were growing</a></strong></span> to a target of 134,500 by 2020-21.</p> <p>This year’s <span style="text-decoration: underline;"><strong><a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/2018-2019_Health_PBS_sup1/%24File/2018-19_Health_PBS_1.00_Complete.pdf" target="_blank">budget papers</a></strong></span> forecast that by 2020-21, the number of subsidised home care packages will increase from an actual allocation of 87,600 in 2017-18 to 144,500 places. This is an extra 10,000 from the previous year’s forward estimates.</p> <p>By 2021-22 (the four years Morrison referred to) the target is 151,500 – an increase of another 10,000. So there will be an overall increase of around 64,000 packages from the number available last year (87,600), of which 14,000 are additional in this budget.</p> <p>The numbers of residential and restorative care places are also increasing, by 13,550 and 775 respectively. And the budget decision to merge the residential and home care budgets will increase the flexible allocation of funds across the system. Unused residential care funding will be able to fund home care packages.</p> <p>An increase in the proportion of care provided in a person’s home is not only what most people want, but it also helps the budget bottom line. In 2015-16 the <span style="text-decoration: underline;"><strong><a href="https://agedcare.health.gov.au/sites/g/files/net1426/f/documents/08_2017/design_version_2017_acfa_annual_report.pdf" target="_blank">average government subsidy</a></strong></span> for each home care consumer was A$16,760, compared to A$48,403 for those in residential care. Though a comparison with the higher Level 3 and 4 home care packages wipes out most of this difference.</p> <p><strong>So what about the waiting list?</strong></p> <p>The aged care sector has noted the demand for home care is far greater than the 14,000 additional packages. The latest estimate (at December 2017) is that 104,600 older Australians are in the national prioritisation queue, waiting for an approved care package.</p> <p>Of these, 56,700 were not receiving any Home Care Package. A further 47,900 had been assigned a <span style="text-decoration: underline;"><strong><a href="https://www.gen-agedcaredata.gov.au/www_aihwgen/media/Home_care_report/HCP-Data-Report-2017%E2%80%9318-2nd-Qtr.pdf" target="_blank">lower level of care</a></strong></span> through an interim package while waiting for their approved one to come through.</p> <p>As a result of the mismatch of supply and demand, the government’s policy may need to change further. This will depend in large part on the evolving needs and wishes of our elderly citizens. But it will also depend on the affordability of the subsidies for taxpayers and getting the right balance with those older Australians who can draw on their own income and wealth to meet some or all of the costs of these services.</p> <p>Funding pressures, of course, are not the only concerns that need to be addressed. Another is the growing demand for aged care workers and for that workforce to be properly trained. And quality issues are also continuing to make headlines.</p> <p>Aged care reform is progressing, but the agenda remains unfinished.</p> <p>Do you agree with this?</p> <p><em>Written by Michael Woods. Republished with permission of <a href="http://www.theconversation.com" target="_blank"><strong><span style="text-decoration: underline;">The Conversation</span></strong></a>.</em><img width="1" height="1" src="https://counter.theconversation.com/content/96403/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation"/></p>

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Why it can be dangerous to invest by sectors

<p><em><strong>Kent Kwan is co-founder of AtlasTrend. With 15 years of professional experience in investing and international financial markets, Kent has successfully managed more than $1 billion in funds invested in international-listed shares.</strong></em></p> <p>It is a long held tradition in the investment markets that shares and managed funds are separated into industry categories e.g. resources, healthcare. Many people will base their investment decisions on the perceived growth or defensive characteristics of these industries.</p> <p>For example, financial planners might advise those in retirement to invest in lower risk and lower growth industries such as utilities whereas for younger clients they may advise investments in higher growth industries and companies.</p> <p>This used to make sense in the 20<sup>th</sup> century but I fear it is now an outdated way for approaching investing. In fact, it might even be downright dangerous from a risk perspective to filter investments based solely on notional industry classifications.</p> <p>Why is this the case?</p> <p>It is all because in the 21<sup>st</sup> century the rapid pace of technological development and innovation has already started to turn many traditional industries and companies upside down.</p> <p><strong>Technology &amp; innovation will disrupt all traditional industries</strong></p> <p>It is a big statement but I can’t think of one major industry globally which will not be significantly disrupted in some way by technology or innovation in the next 5 to 15 years. In many cases, these innovations have impact across multiple sectors. Let’s take the following two examples of industries which are traditionally seen as very defensive with little risk to their future earnings profile.</p> <p><strong>Utilities industry</strong></p> <p>The utilities (power generation) industry has long been recognised as one of the most defensive industry available for investment. The theory being centralised generation of electricity will always be required and large power stations will for the foreseeable future have no competition. </p> <p>However, there is now ongoing rapid improvement in solar energy and battery storage technology. This improvement is happening so fast that the world is probably less than a decade away from solar energy generation on your rooftop being able to provide all your home energy needs at below the cost of what a traditional utility can supply electricity.</p> <p>When this occurs, you can imagine what will happen to the profit and loss of traditional utility companies. There is a real possibility that some utility companies become obsolete. What is now regarded as the most defensive of sectors for investing may well become the riskiest of sectors. </p> <p><strong>Healthcare industry</strong></p> <p>The use of technology such as big data analysis (the use of computing power to analyse huge amounts of data to find useful trends) is already having great impact across the healthcare industry. For example, it can significantly shorten new drug research time, diagnose diseases, personalise medical treatments and provide much earlier indications of health issues.</p> <p>For healthcare companies to prosper, it will no longer just be about people becoming sick and providing medical care. It will instead be driven by which company can best utilise innovation and technology to prevent people becoming ill in the first place and using appropriate data analytics to provide the best course of medical treatment. As a result, what was an industry with relatively defensive investment characteristics is rapidly morphing into an industry with very different and divergent traits.</p> <p><strong>What does it mean for your investing strategy?</strong></p> <p>You should reconsider filtering investments based on traditional notions of sectors or perceived growth / defensive characteristics.</p> <p>The better risk adjusted way to invest is to focus on what long term themes or trends are driving significant global change or global innovation. Then invest in the specific companies that benefit from these trends and avoid those that will be disrupted by that same trend.</p> <p>Let’s take online shopping as an example of a long term innovation trend.</p> <p>Statistics globally show the trend towards online shopping is growing rapidly though still in its infancy. For example, only 7.5% of all retail goods and services sold in the US are sold online. There is near certainty this trend towards online shopping will continue to grow rapidly over the next 10 years.</p> <p>The winners and losers from this trend are quite varied across many industries.</p> <p><strong>Winners:</strong> Online retailers should be the obvious winners but it is likely the ones who are first movers and have scale that will be the true winners. Traditional retailers who can leverage their existing customer bases to the online world will also benefit. Since every product sold also has to be stored first, packaged and then delivered, freight companies and large scale logistics warehouse developers are also set for a great decade. Looking slightly further into the future, companies that are able to develop online shopping autonomous delivery technology (self-driving cars or even drones) may create a completely new industry.</p> <p><strong>Losers:</strong> Traditional retailers who are not engaged with their customers online will no doubt suffer immensely. Real estate companies that own mid-tier shopping malls together with car park companies near these malls will find growth quite difficult to come by. Food and beverage outlets that depend on shopping mall foot traffic may also find their businesses in decline.</p> <p>Going forward, successful investing will need an understanding of the global trends that impact multiple industries and companies. If you are an investor at heart, this should be great news because it will broaden your horizon to brand new investment opportunities you may have never considered before. At the very least, it should help you avoid some potentially costly investments in certain sectors that are set to be disrupted.</p> <p>Are you comfortable with your investments? What do you make of this advice?</p> <p>Let us know in the comments below.</p> <p><em>To learn more about a selection of top thriving global investing themes, sign up for a free <a href="https://www.atlastrend.com/register/?group=oversixty" target="_blank"><strong><span style="text-decoration: underline;">AtlasTrend</span></strong></a> trial today.</em></p> <p><em>Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.</em></p> <p><strong>Related links:</strong></p> <p><a href="http://www.oversixty.co.nz/finance/money-banking/2016/08/10-more-items-you-must-never-buy-at-the-supermarket/"><strong><span style="text-decoration: underline;"><em>10 more items you must never buy at the supermarket</em></span></strong></a></p> <p><span style="text-decoration: underline;"><a href="/finance/money-banking/2016/07/understanding-the-huge-power-of-big-data/"><em><strong>Understanding the huge power of big data</strong></em></a></span></p> <p><a href="/news/news/2016/07/20-simple-ways-to-save-when-grocery-shopping/"><span style="text-decoration: underline;"><em><strong>20 simple ways to save when grocery shopping</strong></em></span></a></p>

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