The introduction of lockdowns and border closures over the threat from the highly infectious UK strain of COVID-19 has triggered another wave of doomsday economic forecasts from industry groups.
Advocacy group Committee for Brisbane this week warned that the cost of an extended lockdown in the city could cost “billions”, although its fears were allayed after the Queensland state government announced on Monday it would ease restrictions.
Tourism operators told The Australian that border closures between Western Australia and other states had smashed confidence. They said national tourism revenue for the holiday period had dropped “at least $3 billion” compared with a year ago, with regions such as far north Queensland losing “$8 million a day”.
The new round of dire warnings echoes pleas from business groups and even Treasurer Josh Frydenberg in August to end Victoria’s second lockdown to stem the economic fallout.
Back then Prime Minister Scott Morrison used figures from Treasury to estimate that the Victorian lockdown would cost “between $10 and $12 billion”, a figure picked up by the Australian Industry Group as evidence for the need to end the lockdown.
But how much do lockdowns and border closures actually cost?
Economists say working out the true financial cost of shutdowns is much harder than it sounds.
Not only is it difficult to separate the cost of a lockdown versus the cost of the virus (people might stay away from shops even when there are no restrictions), there’s also the question of whether to include economic stimulus packages like JobKeeper and JobSeeker as a cost or a benefit to the economy.
On the one hand, they end up costing the government billions. On the other hand, they unlock a stream of income for Australians, many of whom have spent up big during the pandemic.
“You can basically create any number you like,” economist and Crikey contributor Jason Murphy said. “It’s a highly elastic thing.”
Then there’s the accidental positive outcomes of a lockdown, such as lower flu deaths, which might translate into financial benefits on the health system. And stimulus spending on infrastructure projects such as social housing, like in Victoria, means more jobs and the positive economic effects that flow from giving people homes to live in.
In Victoria there was also the ratings downgrade that will affect how much it costs the government to fund its post-lockdown economic stimulus.
In the case of a short lockdown like Brisbane’s, people may simply defer spending until after restrictions ease.
Ultimately, it’s not as easy as saying keeping people at home will devastate the economy. And as economist Saul Eslake says, a temporary shutdown is always going to cost less than letting the virus ravage the community.
“It’s pretty clear from evidence from other countries that there isn’t any simple trade-off between locking down and not,” he said.
“If you don’t get the virus under control, then the economy will suffer.”
rather than focusing on cost of lockdowns and border closures – there should also be the benefits side of the ledger addressed .
From a population viewpoint I would say benefits far outweigh the cost .
Look at UK, Europe – when compared to Australia, China etc. – there is cost/benefit human ledger
How about a (proportional) cost comparison between Oz and the UK/US – contrasting the two approaches :- our lockdowns : to their economy first/”herd-immunity through survival of the fittest root”, the one Scotty FM and his mob were all for; bearing in mind social costs (deaths, extended incapacity and infirmities; the loss of workers, including doctors and health carers for a coming generation or so)?
I’d pay more attention to the opinions of the likes of Eslake, way before those of the likes of the Margie Osmonds and Schwabs of this world. Try counting your money when you’re dead – or when one of your family’s just been taken.
Economics is such a dismal non-science. The sooner they are consigned to the funny pages and astrology charts the better off we will be.
In WA border closures provide cover for overcrowded ED’s and daily ambulance ramping – thank god we don’t have a crisis to deal with!
Correct, there is no factual measurement. Also it is not universal. So a bit of opinion. On the Sunshine Coast there are lots of no Vacancies, Full caravan parks, crowds at shopping centers, all too close to each other, and bloody traffic. When the virus first hit it was heaven, empty streets and highways but certainly back to peak period now.
Many businesses were precarious before but now the ubiquitous coffee shops have popped up everywhere. As the year moves on expect closures just like all the previous years.
Better or worse – couldn’t tell you – just the same but different (variants have changed). However one issue I have noticed is that there is a lot more local tourism with people not travelling overseas let alone the foreign tourists not arriving.
Perhaps an accurate analysis of this phenomena would be of interest to those so quick to have an opinion..
Temporary lockdowns can give confidence that there is an effort to contain the virus. There is always the fear in NSW that it is lurking around and in efforts to be careful self imposed restrictions are placed. There is also a large amount of dollars being spent within the country with tourism more locally than spending millions of dollars in overseas travel. Medical facilities are not being overrun with Covid patients and this also is cost and health saving. The alternative to what we have in Australia with our lockdowns that are appropriate to the outbreak and the closure of borders is far preferable to what we see ravaging economies and human lives elsewhere in Europe, the UK and USA