Coronavirus lockdowns costing Australian economy millions

Australia is leading the world when it comes to our fight against the deadly pandemic – but does the extreme cost outweigh the benefits?

Australia’s COVID-19 success is the envy of the world, with just 909 deaths more than 12 months after the deadly pandemic first reached our shores.

That feat has been breathlessly praised by the international media, with the Washington Post reporting in November that we had “almost eliminated the coronavirus by putting faith in science” and The New York Times celebrating the fact our “short, sharp responses have repeatedly subdued the virus and allowed a return to near normalcy”.

It is undeniably a cause for celebration given how seriously the pandemic has devastated other nations, with the death toll in the US alone rapidly approaching 465,000.

But with the vaccine rollout yet to begin, and estimates it will take until late 2021 to vaccinate the entire population, more and more questions are being asked about the cost of our national response – and whether it has been worth the significant pain.

RELATED: How jab can raise your chance of infection

Melbourne was a ghost town during stage 4 restrictions. Picture: Jason Edwards

HOW WE DID IT

Australia’s coronavirus success has been attributed to a range of factors, including the call to shut down our border in the very early days of the pandemic, well ahead of many other nations.

Our contact tracing system and response to outbreaks was also beefed up quickly, and the states and territories also locked down their own borders and at times restricted the movements of residents.

It also helped that the population was, for the most part, willing to follow public health advice and follow the rules without major backlash, and that we had leaders who universally took the threat seriously from the get-go.

BORDER WARS

However, state border shutdowns quickly became one of the most controversial aspects of our national pandemic response.

Last July, Treasurer Josh Frydenberg warned Victoria’s second, six-week coronavirus lockdown would cost the national economy $1 billion a week, while in June internal modelling by the Chamber of Commerce and Industry Queensland found the state’s border closure cost local tourism operators $17 million per day.

Queensland’s decision to ban Sydney residents last July also sparked the so-called “border wars” between state Premiers Gladys Berejiklian and Annastacia Palaszczuk, with the pair regularly trading digs during daily press conferences.

And Perth’s recent five-day lockdown – which was announced after just one case was recorded – also sparked fury and claims of an “over-reaction”, with WA now reportedly considering reducing the strict requirement of other states to reach 28 days with no community transmission before reopening its border to visitors.

RELATED: Scott Morrison’s warning before vaccine rollout

NSW Premier Gladys Berejiklian and Queensland’s Annastacia Palaszczuk repeatedly clashed over border closures.

‘MAKING A HUGE MISTAKE’

So, was it all worth it?

According to UNSW Economics Professor Gigi Foster, it is difficult to estimate the full cost of Australia’s COVID-19 response due to the different types of costs associated with it, the long period over which they will be paid, and the fact we can only make educated guesses as to what would have happened under an alternative strategy.

But she said lockdowns likely caused more harm than good.

“What I can say is that under any reasonable assumptions, the costs of our lockdown response are far greater than its benefits in a COVID world,” she said.

“This was clear early on and is why I have been saying for almost a year now that we are making a huge mistake when we implement lockdowns in response to COVID.

“That was not a popular message for most of last year, but the longer the madness goes on, the more people seem to be opening to the possibility that we should change course.”

Ms Foster also called on the Government to devise a better approach moving forward.

“The more people wake up, the more likely that the politicians will start to realise that it is in their interests to develop a new political message that allows them to stop the lockdown approach and instead focus on a sensible response to COVID, which would include targeted protection of vulnerable groups, a heavy emphasis on prevention and prophylaxis, border openings, and messages that counter rather than fan fear,” she said.

Prof Foster shared her views on how this could be achieved in Victoria specifically during the state parliament’s Public Accounts and Estimates Committee back in August 2020, telling the inquiry that lockdowns and social-distancing measures came with serious downsides, including “unemployment, business collapse, education neglect, health neglect and loneliness.”

She said at the time she had “come to the conclusion that the costs of wholesale lockdowns are far greater than the benefits.”

Prof Foster said the world had been “swept up in hysteria” but that there was “little difference in COVID death rates between countries that imposed harsh lockdowns and countries that did not”, and that governments instead should have “controlled fear, directed resources and attention towards protecting the most vulnerable, set policy based on the knowledge of a range of experts rather than only health scientists and evaluated the likely impact of their policy choices on total human welfare”.

‘EXTREMELY HIGH COST’

Economist Martin Lally, who has recently conducted a cost-benefit analysis of Australia’s lockdown policy, estimated the nation’s GDP loss due to the lockdowns was around $160 billion.

He estimated that Australia’s COVID-19 death rate under a less strict “mitigation” strategy would have been between 211 and 699 per one million people, or between 5000 and 18,000 individuals, compared to the 35 per million achieved via the lockdown strategy.

However, he found that Australia likely fared better than many other nations given our natural advantages of being an isolated island with a low population density.

Dr Lally told news.com.au that standard methodology among health economists which examined how many lives were saved compared to their life expectancy pre-pandemic coupled with the quality of life in their remaining years posed a big question about whether the huge sacrifice from the wider population was worth it.

“My estimate is that Australia would have incurred far more deaths under mitigation rather than lockdown, but the question is whether the additional lives saved were worth the extremely high cost that was paid,” he said, noting that the majority of the lives saved would have been older Australians or those with pre-existing medical conditions.

RELATED: Australia’s ‘NASA-like’ COVID-19 vaccine plan

Lockdowns have cost the economy billions. Picture: NCA NewsWire/Andrew Henshaw

Given that those people estimated to have been saved by the lockdown measures only lived another five extra years on average – years that were not likely to have been healthy ones – Dr Lally questioned whether the cost outweighed the benefits.

“Was it worth it? My analysis suggests the costs were far too high and out of proportion with standard practice as to how much governments are willing to pay to extend people’s lives,” he said.

“By pursuing the lockdown strategy the government has certainly been successful in the sense of suppressing new outbreaks, which therefore saved up to 17,000 lives, but the cost has been enormous.”

He said moving forward, if a future outbreak was to occur and contact tracing and testing and quarantining of infected individuals was not enough to achieve suppression cases, it would be worthwhile to lockdown towns and small cities, while locking down our largest cities such as Sydney and Melbourne would be “on the cusp” and locking down those states or the whole country would be “far too expensive”.