Terry McCrann: Victoria’s catastrophe is the nation’s disaster
Daniel Andrews’ handling of the coronavirus pandemic is not just a literally existential problem for 6.5 million Victorians — it is a very serious problem for the entire nation, writes Terry McCrann.
Terry McCrann
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The catastrophe of Daniel Andrews is not just a literally existential problem for 6.5 million Victorians. It is a very serious problem for the entire nation.
After the June quarter’s plunge over the cliff – thank goodness for the ‘good’ news from treasurer Josh Frydenberg that everyone else, ‘led’ by the UK, had plunged even further – the outcome for the economy for the September quarter was and is now pretty much locked in.
In the June quarter Australia’s GDP shrank by 7 per cent. Before the catastrophe of Premier Andrews, the national economy was headed for something like a 4-5 per cent spring back in the September quarter.
No, that would not have meant we would have been out of recession. We would still have had real unemployment well into double digits right across Australia – even before accounting the two million-plus that would have been hanging on to their jobs thanks to JobKeeper.
Victoria would have shared in that bounce back. As it is 25 per cent of the national economy, a better performing Victoria would also have helped boost the other 75 per cent.
But, then add – or subtract – the ‘Andrews factor’. Victoria spent the entire September quarter in Lockdowns Version 2.0 (Stage 3) and Version 3.0 (Stage 4) crushing – and I mean, crushing – the state’s economy.
Frydenberg told us that (federal) treasury had estimated the cost at round $12bn. With national GDP running at around $500bn a quarter, that alone was going to lop at least 2.5 percentage points off the September quarter number.
Importantly, depressingly, that estimate was made on the assumption that Lockdown Version 3.0 would end halfway through September and Victoria would then revert somewhere towards economic (and indeed health and wellbeing) sanity.
The treasury estimate did not anticipate the continued further crushing of the Victorian economy through the last two weeks of September and then on to much if not all of the December quarter.
This in itself will be sufficient to round off Victoria’s ‘contribution’ to slicing at least 3 percentage points off the September quarter GDP and the national recovery.
That suggests the September quarter (national) GDP growth will be in the 1-2 per cent range.
I can tell you that what used to be known as the ‘official family’ – (federal) Treasury and the Reserve Bank – are essentially forecasting a flat outcome for the September quarter; give or take the odd decimal point either side of zero.
I believe they are being a tad too pessimistic; that we will get a positive September quarter GDP growth number in the 1-2 per cent range. No thanks (or, entirely, thanks) to Victoria.
We will of course only, belatedly, find out early in December when the official September quarter GDP numbers are released, two-thirds of the way through the next quarter.
So, 7 per cent down in the June quarter; at best 2 per cent up in the September quarter – and that would leave the economy heading into the December quarter operating at around 94-95 per cent of where it had been in the March quarter, before all this happened.
So, from the rest of the nation: thank you Premier Catastrophe; thank you sycophant cabinet members; thank you spineless backbenchers.
And a very special thank you to the three crossbenchers in the Victorian Upper House who gave the premier his, literally, dictatorial powers for another six months before seeing what he would do with them on the following Sunday.
As I said, what is a contributing disaster for the national economy is an unqualified disaster for the (Victorian) state economy.
For if a $12bn (now, post-Sunday, actually $12bn-plus) hit to the national economy has lopped nearly 3 per cent off national GDP; it will have lopped around 10 per cent off the Victorian state economy.
Just let that sink in: Australians generally and Victorians specifically.
The 7 per cent drop in the economy (both national and Victorian state) was the biggest ever recorded fall in GDP, and certainly in the 75 years since the end of World War II.
Yet Victoria will have followed that 7 per cent with an even more devastating 10 per cent further fall; and followed it all on its own among the eight states and territories.
The Victorian economy over the September quarter will be something like 84-85 per cent of the size it was in the March quarter.
And then the 6.5 million citizens still face the prospect of very little relief through the December quarter yet to come.
And what of the New Year – not just for the state but the damage it will do the entire nation?
WILL THE RECESSION VANISH?
If the September quarter GDP number does turn out to show positive growth, I would just love – and I mean love – it if the March quarter’s 0.3 per cent fall ended up, some time in the future, being ‘adjusted’ into the positive.
Why? Because the idiots – and there are an impressive lot of them, including among so-called ‘economists’ – who ‘think’ recessions are defined as “two successive quarters of negative growth”, would suddenly lose their recession.
March quarter: positive; June quarter: negative; September quarter: positive. It wouldn’t matter what the December quarter was – there’d be no successive negatives.
We had and still have and will have – at least through the December quarter – the worst real recession in nearly 100 years. But to idiots it wouldn’t exist.
Originally published as Terry McCrann: Victoria’s catastrophe is the nation’s disaster