Terry McCrann: Dan the villain is now nation’s hero

Victoria is now supercharging growth for the whole country as the state has emerged progressively from “Chairman Dan’s” near total lockdown.

The good news is that Australia recorded its strongest economic growth in nearly half a century over the September three months with one quarter of the entire national economy – Victoria of course – still dragging it down.

The even better news is Victoria is now supercharging growth for the whole country as the state has emerged progressively from “Chairman Dan’s” near total lockdown from around mid September.

This will work perfectly – even as if it’s been deliberately devised – to offset the slowing of much of the growth in the rest of the country, after the initial exuberance bouncing off the devastating June quarter national lockdown bottom.

Indeed, even better, the Victorian “supercharger” will knit perfectly with the opening up of the state borders and especially Queensland’s and the seasonal Christmas spending binge.

In short, Victoria’s Premier will have transformed himself from the nation’s “Lockdown Villain” to its “Recovery Hero” – true, carrying with him (and 6.5 million Victorians) into a never-ending future that mouth-watering $153bn state debt and the almost certain loss of the triple-A credit rating.

Victorian Premier Daniel Andrews. Picture: NCA NewsWire / David Geraghty

As I’ve been telling you since early September, the nation had been headed for a 4-5 per cent growth bounce in the September quarter after the crushing 7 per cent June quarter plunge. But then along came Victoria.

It was so significantly negative that it was going to cut the national growth back – in my assessment – to just 1-2 per cent.

At the time, both Treasury and the Reserve Bank of Australia believed it would cut national growth all the way back to zero.

At the end of October I told you things were looking better and national growth for the September quarter would be 2-3 per cent. It’s come in at 3.3 per cent.

At the time, the RBA was still too pessimistic. It still is.

Yes, RBA governor Philip Lowe admitted the RBA had been too pessimistic and he was upbeat talking to the pollies Wednesday.

He said the economic news had been “better than we were expecting” and “recovery is under way”.

But he also said activity in the economy wouldn’t get back to where it had been pre-virus – at the end of 2019 – until the end of 2021.

I estimate it will get there much sooner. The growth in the September quarter got the (national) economy back to 95 per cent of where it was a year ago.

Thanks to the Victorian “supercharger”, which in my estimate will boost growth to around 4 per cent in the current December quarter, we should be back to around 99 per cent by Christmas.

Then positive growth in the March quarter should take us above where we were in late 2019.

However, at that point JobKeeper – which has been the single biggest driver right through 2020 – ends, and the economy and every one of our 13 million jobs will be on their own, having to pay their way in the real world.

That means the rest of 2021 could actually be a sideways year – subject of course to “events”.

And the biggest “event” is, first, the virus; then the “Godot” vaccine and what especially state but also the national governments do.

Both the RBA’s “pessimistic optimism” and my more positive outlook rests on the fundamental assumption that we do not get a replay of 2020 – a virus explosion and a return to lockdowns. If that happened all bets would be off.

The “good news” in the RBA’s relative pessimism is that it won’t be in any hurry to cut back on its stimulus and indeed remains almost trigger-happy prepared to do more.

All this said, even when we get back to where we broadly were, there will still remain a lot of individual trauma.

Originally published as Terry McCrann: Dan the villain is now nation’s hero