Australia is now back into the same debate as it had in April, only with the two sides carrying slightly different standards. Back then, it was full lockdown versus a graduated response. Now it’s elimination versus suppression.
There are extremists on both sides — some business figures who just want to let the virus rip and let the corpses pile up so they can get back to making money; some progressives who accuse anyone who tries to take economic factors into account of putting money before lives.
But the different terms obscure that it’s the same debate between the same camps as earlier in the year: those who regard the economic impacts of lockdown as less important than dealing with COVID-19, versus those who, either because they have a more nuanced understanding of the health impacts of lockdown, or can’t afford to focus only on one issue to the exclusion of others, aren’t prepared to countenance the kind of economic shutdown necessitated by elimination.
In the former camp are a growing number of public health advocates and commentators; in the latter camp are public health experts like Peter Collignon, and the federal government, the NSW government and their health advisers. All are plucking aspects of the successful New Zealand and unsuccessful Victorian responses to back their case.
Neither side, however, has an answer for a more fundamental question that both approaches inevitably lead to — at what point, and how, will Australia reopen its borders?
The elimination strategy requires closed borders until a vaccine is found, but suppression also relies on keeping foreign arrivals to an absolute minimum — particularly after the Victorian failure, and particularly given other states have said they can’t handle the quarantine requirements from even the return of expatriate Australians at the moment.
Over a million people work in the higher education and tourism sectors, both of which rely heavily on foreign students and tourists, who provide $60 billion worth of exports each year (not to mention an abundance of easily-exploited labor for avaricious industries like retail, hospitality and horticulture).
The massive construction sector relies heavily on a high volume of temporary and permanent migration to drive continuing residential construction and the endless appetite of state governments and metropolitan local councils for infrastructure.
While the government appears to regard the higher education sector as an enemy and refuses to provide any assistance, it has lavished support on tourism and related industries and provided some limited assistance for residential construction, in addition to the JobKeeper program that the latter two sectors have access to. But for how long can those sectors be propped up by taxpayers?
Do we wait for a vaccine, which is years away, if it ever arrives at all, to reopen our borders? That will cripple two major sectors and undermine a third, cost hundreds of thousands more jobs than those already being lost, and condemn Australia to, at best, a significantly deeper stagnation than that of 2019 and, at worst, an extended recession — with all the health problems that we know will flow from that.
If not, how do we handle the quarantine load of reopening our borders, especially when we can’t even handle the number of expatriate Australians who want to come home now? Foreign students and temporary workers can be quarantined on arrival, given the length of their stay. But quarantining foreign tourists, who make up a quarter of all tourism spending, is unlikely to work, and will add substantially to the cost of visiting Australia.
Pointing out the lack of answers to these questions isn’t a criticism. It’s just one of a number of immensely difficult policy challenges that state and federal policymakers have to grapple with — and which next week’s economic statement must squarely address.
Before the pandemic — even before the bushfires over summer — there was a real question of where growth was going to come from in Australia in coming years, given declining residential construction, a dearth of business investment, a contractionary fiscal policy and a slump in productivity.
That same question now screams out for attention given border closures mean we’re going to see contractions in two major industries and sustained pressure on a third, with second-round effects of those impacts in turn hurting the rest of the economy.
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Whatever we do in regard to this infection, we are in a process of reducing the material wealth of ordinary people.
We are, of necessity, going to have to accept that we cannot live at the levels of consumption and waste to which the corporate and commercial worlds have accustomed us.
You mention a disruption of the tourist industries: Do tell – where is the ‘productivity’ in people simply travellng about at whim? Yet that monetary movement is included in the Gross Domestic Product figures as if it produces material benefit.
“Economics was invented to make Astrology seem respectable.” is about as accurate a statement as is imaginable.
Politics has never been ‘respectable’ for all the “Honourable” prefixes to the participants’ names: It is the dirtiest of occupations, second only to Diplomatic services and their attendant espionage and ‘security’ divisions.
I’m old, and tired of such naïvity and assumption by political journalists that they have some kind of magic mirror which enables them to see into the dark and occult corners of the world of power, wealth and privilege.
Well spoken, Rolly. I think you just stabbed the beast that was, is not, but will be. Not BK, the other beast.
“Do tell – where is the ‘productivity’ in people simply travellng about at whim”?
People enjoy it. Surely there’s utility in that? Or must all productivity be about absolute needs only? While I agree that consumerism has run rampant, and tourism probably is a bit overdone, I don’t agree with outlawing fun.
Geez rolly you sound about as cranky as me
Forget international tourism, I can’t see how we’ll even reopen domestic tourism when the tiniest hint of a new virus case causes state premiers to slam shut their borders. Why would you buy an interstate flight when you could be banned from entry at a moment’s notice?
Yes we are living in an Oz of competing re-election strategies.
This is certainly a very vexing situation. I don’t think anyone really has the answer but it does appear from recent studies that the decline in economic growth and the increase in unemployment is happening in every country regardless of the strategy adopted to deal with Covid-19. The only difference is that in the ‘let it rip’ countries the death rate is dramatically higher.
Just out of interest, which countries have a “let it rip” position? Not requiring masks, social distancing etc? Or are you talking about lockdown v not lockdown?
Well we certainly DON’T want to return to population growth as the only driver of economic activity, so perhaps these are the wrong questions to be asking?
A better one might be
“what key areas for government investment might replace population growth as an economic driver”?
Then the answer – massive investment in renewables and an appropriate grid, habitat and species rescue, public housing, education and care services, public transport- becomes pretty damn obvious!
Consider the viability of “growth”; if it’s not gonna end in disaster we can ONLY have economic growth on a basis of COMMON WEALTH
Absolutely. We also need to measure economic activity better, including non-market work, depletion of environmental and other resources etc.
Agree totally Linda. The immigration economy was a false economy in the first place. This pandemic has shown how destroying our major manufacturing sectors and governments hell bent on buying overseas items, like trains, has killed our economy and greatly weakened our ability for a quick turnaround when things improve.
I believe we should not be allowing immigration like we had until this pandemic is well over and a major focus in re-establishing our manufacturing sectors to ensure we have a sound future.
But with Trade Agreements still in the conservative mind, I doubt there will be any real change. Just big announcements that result in disappointment for the masses.
The borders are open, just not for invisible exports (or “spreaders” as they’re known).
A cherished belief is that we can reboot Australia as a manufacturing nation. This is a lovely thing to believe, but it’s best not to enquire too deeply into what might need to revert for that to happen.
My mythology says that Australians wanted to buy the coolest stuff as cheaply as possible. This meant that the stuff would have to be manufactured by people paid much lower rates of pay, leave, leave loading, long service leave and super. Everyone knew we were exporting jobs in order to buy cheaply; it wasn’t a government or deep state thing.
So. Can we bring manufacturing back and retain current pay rates and entitlements?
Why don’t we try instead of continuing the death spiral.
Even the PRC is allocating low-end manufacturing to Vietnam, Thailand, Cambodia and Indonesia, in about that order, because its own domestic costs have increased.
A decade ago a reasonable meal in air-conditioned restaurant cost 5(Y) or RMB. A decade hence the same meal would be close to 18(Y); certainly 15(Y)+
Thailand is becoming a motorcycling manufacturing world leader. All the big players have factories there. It’s the same for cars I think, but I am only sure about motorcycles.
I think what peeved many off was when some major fashion houses went overseas, we didn’t see a proportional price drop in garment prices. This combined with a consolidation of the retail environment, left us no option but to pay top Aussie prices for imported products.
Another example: a trip to Vietnam, local dressmakers were making wedding dresses for around $300 under order from Australia. Aussie retailers were on selling them for around $3,000. Jewelry a similar story Aussie consumers have been ripped off for many years
This is not only the small retailer’s fault, shopping centre landlords, shire, and utility rates, and mass media must also share some of the blame.
I hope that we will return to some notion that things have value and are less disposable. And that they are worthy of repair rather than automatic replacement.
And maybe this means they shouldn’t break so readily.
In line with Linda Connolly’s comment, a major problem is having “growth” as the economic fundamental. And in how “growth” and economic activity and “productivity” are measured. But these ideas are too far-out for “rational” discussion.