How fully vaccinated policy will impact Australia’s economic comeback

As “Freedom Day” draws closer, there are concerning signs that one factor that could drag down the Aussie recovery.

When the Morrison Government effectively put the nation’s economy into hibernation in the early months of the Covid-19 pandemic last year, it committed more than $500 billion in support to ensure it was still intact when it was finally reawakened.

Despite the expectation at the time that lockdowns and restrictions could last for up to six months, Australia emerged from its hibernation much sooner than anticipated. Through the success of the Covid zero strategy, Australia became the envy of the world.

As our TV screens filled with images of the strife the pandemic was causing in all four corners of the globe, Australia collectively patted itself on the back, as we marvelled at our relative success and the normality of life in our little corner of the world.

Through a combination of the success of the Covid zero strategy and hundreds of billions of dollars of stimulus, by the time the economy was switched back on it was already on the road to one of the strongest recoveries in the world.

This time, as NSW, Victoria and the ACT plan their respective reopenings from lockdown once more, the road to recovery is likely to be quite different to how it was last year.

What’s different this time?

When Australia reopened after the initial lockdowns last year, there were still hundreds of billions of dollars in stimulus from the Government and superannuation withdrawals to come.

Government support for businesses in 2020 and early 2021.

While some businesses in affected regions and industries did require ongoing assistance, tens of billions of dollars in support measures ended up flowing to households and businesses that didn’t need it.

This in turn helped the recovery of the economy, as the gargantuan pile of taxpayer-funded riches was spent on things like home renovations, cars and retail spending.

However this time around, support from the Federal Government to lockdown-affected areas is significantly less than what it was previously.

More than that, once the lockdowns end, so will the Covid Disaster Payment, along with the other support measures that are only available while the crisis is ongoing.

While other government support measures to kickstart the economy may arise in the coming months, as it stands when contrasted with last year’s binge of government support, emerging from lockdown in 2021 looks a whole lot like cold turkey.

How vaccine numbers will affect the economy

Under the reopening plans put forward by the NSW government, when Sydney reopens the 30 per cent of the population who is not yet fully vaccinated will continue to only have access to what NSW Health define as “critical retail”.

Despite the excitement surrounding what elements of the media have dubbed “Freedom Day”, the reality might be more challenging for restaurants and pubs, as they attempt to make a living with 30 per cent fewer potential customers than pre-lockdown.

While this number will to continue to decrease with each passing day as more people are fully vaccinated, at some point more or less all those who want to be vaccinated will have been vaccinated.

According the Melbourne Institute, 16.7 per cent of Australians are hesitant to get the vaccine, with 9.4 per cent unwilling to get the Covid-19 jab.

The proportion of the population that is vaccine hesitant varies quite widely from 14.4 per cent in Victoria to 22.1 per cent in Western Australia.

Vaccine hesitancy is still significantly higher than it needs to be for the economy to thrive again.

Despite speculation from NSW Deputy Premier John Barilaro that at 80 per cent fully vaccinated things may return to something resembling normality, so far the Berejiklian government is yet to confirm when those who are not fully vaccinated will be able to return to the pubs, restaurants and non-critical retailers.

Reopening in 2021 vs 2020 …

When Australia reopened last year after the success of the states’ zero Covid strategies, things generally slowly returned to something approaching normality for most businesses and households not impacted by the closure of international borders and ongoing restrictions.

The fact that Australia was practically Covid-free gave the vast majority of people the confidence to go out back into the world, for even the vulnerable to have lunch down the pub with the girls or to go on a weekend trip with the grandkids.

This time is set to be quite different.

In an interview on Monday, NSW Premier Gladys Berejiklian warned that Covid-19 cases will “go through the roof” once the state opens up next month.

This may be of little concern to many who would have spent the best part of four months in lockdown. But for those concerned about breakthrough Covid infections and potentially passing the virus on to vulnerable loved ones, the possibility it could impact movement and spending is quite real.

Between this factor and the 14 per cent of Victorians and New South Welshman who remain hesitant to be vaccinated, 2021’s reopening is looking far more challenging for businesses.

The more people who are vaccinated, the better the economy will recover as states emerge from lockdowns. Picture: NCA NewsWire/Dan Peled

‘New normal’ will still be challenging

While there is likely to be all manner of controversy and potentially an extensive blame game over the impact of the not fully vaccinated accessing NSW and Victorian businesses, the cold hard numbers of up to 30 per cent fewer customers may present a difficult environment for many businesses to operate in.

With support from the Federal Government set to be switched off once Sydney, Melbourne and Canberra reopens, there just isn’t the same amount of wiggle room that ensured that so many businesses made it through 2020.

Perhaps the majority of Aussies who are fully vaccinated will be sufficiently chomping at the bit for a parma and a night out to support struggling businesses through this difficult time, or perhaps there won’t be.

Ultimately, things are very different than they were in 2020 and this time may present significant challenges for business owners as they attempt to come to grips with this “new normal”.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator