Terry McCrann: The second wave recession

Will we ever get out of the lockdown economic destruction morass, even when we are “fully” vaccinated?

NSW Premier Gladys Berejiklian at a media briefing on Saturday. Picture: NCA NewsWire / Flavio Brancaleone

Let’s be very clear: we are back in recession.

The question is no longer, simply, whether we can spring out of recession in the December quarter – like most of Australia did in the September quarter last year when, again, most of Australia opened up from that first national lockdown.

Victoria and 6.6m Victorians had to wait until the December quarter, thanks to Chairman Dan’s ‘one-off’ lockdown (on the way to five more, and counting) – which of course Premier Berejiklian is in the process of replicating for NSW and most of its 8.2m citizens right now.

Replicating? Correct that: she all but announced Saturday an intention to top the Chairman’s record. Maybe she was imbued with the Olympic Spirit or something.

Having categorically lost the title of “Gold Standard” for avoiding lockdowns, maybe she’s now set her heart on claiming the Gold Medal for longest lockdown.

Victoria’s lockdown went for 16 gruelling weeks. The NSW one has already gone for nearly seven weeks. Premier Berejiklian said Saturday that September and October were going to be “very difficult months”.

Add those two months and the remaining two weeks of August and NSW is heading for a 17-week lockdown and, almost certainly, “counting”.

Sydney is heading for a 17-week lockdown. (Photo by Saeed Khan/AFP)

Last year, Victoria’s lockdown all on its own lopped nearly 2 percentage points off national economic growth. Victoria is around one-quarter of the national economy; NSW is closer to one-third.

Plus, last year everyone (as in 3.6m people all over Australia) were still getting the generous (especially for part-time workers) JobKeeper, even those in the 75 per cent of opened-up Australia that no longer needed it.

This year you only get JobKeeper Version 2.3 if you are actually in a lockdown state. Yes, that’s better for stopping the rorting, but it does mean billions less “free money” flowing into the economy and being spent.

The bottom line is that while last year the national economy was able to overcome the Victorian lockdown and record positive 3.5 per cent growth (albeit also springing back from the horror June quarter) in 2020s September quarter; this year national GDP will be negative through the September quarter.

The first question now becomes will it be negative again in the December quarter.

How much of that quarter will NSW remain locked down? Indeed, will it be joined by other states, as it is right now by Victoria, locking down 55 per cent of the national economy right now, but hopefully only for another week or two?

It’s bizarre that Chairman Dan’s become the ‘opening up hope’.

Further and more potently, given exactly this NSW lockdown and the political fear and loathing it has cemented deep into politicians across Australia, the question is now much more about next year, 2022.

Will we ever get out of the lockdown economic destruction morass, even when we are “fully” vaccinated?

National cabinet is supposed to have unanimously agreed the “go early, go hard” – they say “suppression”, I say “elimination” – strategy until we are “fully” vaccinated, defined by the two-stage 70/80 per cent vaccination levels.

That is supposed to mean an – again, unanimous – agreement that after that no-one does lockdowns (or closes their state border).

Come on. Believe that, and I’ve got a nice bridge in Sydney to sell you; cheap, and, home delivered naturally, given the lockdowns.

Given the ten times a day daily rhetoric about how horrible and deadly the “game-changing Delta variant” is, is anyone really holding their breath for that promised “Delta Dawn”?

Can you really see that day, when any premier – even now Premier Berejiklian – is going to get up and gaily say we’ve had so many hundred cases and so many deaths, including fully-vaccinated people under 70: but hey, “we are all Swedes now”?

The National Australia Bank’s economic team has already had a jab at saying we are already in recession. They though, were punting on the June quarter GDP coming in – very slightly – negative and then the definite September quarter GDP negative making that “two successive negative quarters”.

As I’ve also always explained that’s a nonsense definition of recession. A recession is when businesses are destroyed and significant numbers of people lose their jobs.

That’s what is happening right now; we are in recession, even if the June quarter GDP number – as I suggest is more likely – does come up positive. We will find out with the official figures at the end of the month.

Whatever, we are going to limp through the rest of the year towards 2022 which was supposed to herald that promised “Delta Dawn”.

The Reserve Bank was predicting robust 4.25 per cent growth through 2022 after almost as strong growth of 4 per cent through 2021.

You’d have to say that 2021 growth forecast has been rendered “no longer operable”, even though it’s barely a week old. But what now of 2022?

Originally published as Terry McCrann: The second wave recession