Terry McCrann: An economy groaning under the strain of lockdowns
Chairman Dan had joined with Premier Gladys to lock the entire country into recession and their two states into serious recession.
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Saturday morning Chairman Dan joined with Premier Gladys to lock the entire country into recession and their two states Victoria and NSW into serious recession through at least Christmas.
Who said state premiers no longer had any power? They have wrenched control of the economy – and that word ‘control’ is exactly appropriate – from Treasurer Josh Frydenberg, whose only job is to write out the virtual reality cheques building into ever bigger billions.
Remember the federal budget? No I barely do and I’m sure you don’t – and very sensibly don’t.
Since Peter Costello stopped being treasurer, federal budgets have become ever escalating exercises in utter fiscal fantasy.
Remember when we fussed over horrendous, never-before seen $50bn deficits? Then along came Frydenberg’s – Covid-delayed – budget last October.
It gave us a $214bn deficit – but, heck, it did promise to get it down to ‘just’ $112bn the next year. Although it also said the national debt was headed for $1 trillion. And counting. Actually, ‘and counting’, for all of future fiscal eternity.
Well, the most recent budget, back in its regular time of May, painted a rosy post-Covid future.
It was titled – yes, they give budgets titles these days – “Securing Australia’s Recovery”. It boldly announced that “Australia’s recovery from Covid-19 is well underway”.
It promised the deficit for the 2020-21 year that was just about to end would actually be down to ‘only’ $161bn.
The economy would go roaring through the new 2021-22 fiscal year. It would surge by 4.5 per cent. The jobless rate would drop to just 5 per cent and keep going down.
As they used to say through the Great Depression of the 1930s, “happy days were just around the corner”.
But that was then, before the Dawn of Delta, the return of Chairman Dan from his brooding convalescence, and Premier Gladys switching to her bizarre combination of hysteria and hands-off hesitation, like she was channelling her inner Anna and her inner Boris at the same-time.
Now we have NSW – just under one-third of the national economy – locked down through at least (if you are a super-optimist) the end of October. Although she keeps talking of “greater freedoms” once NSW hits “6m jabs”.
Now we have Victoria – one quarter of the national economy – locked down for an indefinite period, but when you put the bits and pieces of Premier Dan and his chief health officer Brett Sutton’s minds together, it’s hard to see much more than all-but the most trivial easing this side of a 70 per cent full vaccination rate.
This will be economically savage for the 15m people in those two states – absent those still on full-pay, commendably led from the front by Chairman Dan and Premier Gladys.
It will also be significantly negative for the 11m in the rest of Australia, unless and until Treasurer Frydenberg says: heck, it’s only money and starts splashing it around.
Last year, when he was splashing it around, Victoria’s lockdown still knocked nearly 2 percentage points off national economic growth in the ‘recovering’ September quarter. Growth was 3.5 per cent; it would have been over 5 per cent.
That was when only 25 per cent of the economy was in lockdown, the other 75 per cent was surging back from the national lockdown. It was also when that 75 per cent was getting, and spending, billions of federal money that it no longer really needed.
We now face the prospect of more than half the national economy being in lockdown; and not just through one quarter but most of two quarters. And even that ‘best case’ assumes we do actually move away from lockdowns into 2022 when we are 70 and 80 per cent fully vaccinated.
Hmm. Have a look at what’s happening in the ‘fully’ vaccinated UK. They are recording around 30,000 cases a day and 100 deaths, in the middle of their summer.
That translates to around 4000 cases and around 13 deaths a day in NSW and 3000 cases and 10 deaths a day in Victoria.
Do you sincerely believe that premier Gladys and even more Chairman Dan will let go their iron grips if we saw those sorts of numbers here?
We will find out in two weeks what happened to GDP in the June quarter, before all this exploded. It should be positive although quirky things will have thrown our exports out of kilter.
GDP will go negative in the September quarter, and probably significantly negative like 3 per cent. Remember the national lockdown took GDP down a never-before seen 7 per cent in the June quarter last year.
Unless we get a miracle – the prime minister might believe in them; knowing the politicians we have, I don’t – our state political duo is locking in another negative in the December quarter.
You’d like to think – hope – that would at least set us up for a thumping surge into a vaccinated 2022.
Right now: I’ll get back to you on that.
Originally published as Terry McCrann: An economy groaning under the strain of lockdowns
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