The nation again pivots on Victoria

Whether they appreciate it or not, 19 million Australians are teetering on the edge, not just Victorians.

Mike Lavery gets his COVID-19 vaccination at the the vaccination centre in Melbourne Showgrounds, Flemington. Picture: NCA NewsWire / David Crosling

It’s not just Victorians teetering on the edge today and over the next few days; whether they appreciate it or not, the other 19m Australians are as well.

Right now the appropriate stance is to be alert but not yet alarmed. Looked at narrowly, the Victorian government’s response has been targeted, measured and appropriate.

But the inescapable fact is that the situation – and more particularly, where it could be taken - can’t just be looked at narrowly.

It cannot but be and indeed has to be looked at through the prism of the criminal negligence and plain bumbling incompetence of 2020 in Victoria.

It’s impossible to be definitive about the virus eruption itself, but there is more cause for optimism that the opposite.

Over the last few months we’ve seen outbreaks across all four of the other mainland states, and they’ve all been resolved quickly and with minimal economic or business disruption.

Hopefully, this will be the case also with Victoria; but then, ominously, this time it is Victoria not NSW.

We can only hope that Victorians wake up one morning, having gone back to an early-to-mid May future, where the only thing they had to worry about was the state budget.

This would also mean, that the rest of Australia could also breathe easier.

The counter outcome is inconceivable; we simply cannot afford Victoria going rogue again.

Victoria’s all-on-its own lockdown last year was devastating for Victorians; it was also seriously damaging for the rest of the country.

Mike Lavery gets his COVID-19 vaccination at the the vaccination centre in Melbourne Showgrounds, Flemington. Picture: NCA NewsWire / David Crosling

It’s not just that Victoria is one-quarter of the national economy, so that it directly lopped national economic growth significantly in the September recovery quarter.

Lack of spending out of Victoria also acted as a drag on the growth – on jobs, on activity – right across the rest of Australia as well.

After the totally unprecedented 7 per cent plunge in GDP in the June quarter when the entire country was locked down, GDP sprang back 3.3 per cent in the September quarter.

In my judgment the growth figure would have been closer to 5 per cent but for Victoria’s self-imposed solitary lockdown.

Yes, there was a bizarre ‘benefit’; when Victoria came out of lockdown into the December quarter, it acted like a surcharger across the national economy.

This meant that by the end of 2020, the national economy had made up almost all the ground lost in the June quarter.

It’s since made it all up, and then some, through the March quarter. We’ll get the actual official ABS numbers next week.

What made a huge difference was the full JobKeeper through September’s ‘open up’ quarter; and then its extension in reduced form over the six months to March.

That, those near-zero interest rates – in particular those 2 per cent home loan rates - and Victoria (belatedly) all worked to boost the economy,

JobKeeper has now of course terminated, making what now happens in Victoria so absolutely pivotal for the national economy.

We do not want to see a replay of that September quarter, with one-quarter of the national economy closed again.

This time we wouldn’t have JobKeeper; we also wouldn’t have the other three-quarters of the national economy rocketing along out of their lockdowns.

We really, really, want to wake up, say, next Monday and see it all as a fading bad dream.

Like last year, though, and bizarrely, Victoria’s failure probably does have an upside. It might well spur a quicker take-up of vaccination.

That’s the key not simply to avoiding future lockdowns and state border closures - that are far more disruptive than they might seem on the surface – but also opening the international border.

Subject of course to the federal election getting done; an event – and Scomo-positive outcome – that might be spurred by Victoria.

Originally published as The nation again pivots on Victoria