Coronavirus: What’s a billion or 10 when life’s at stake?

Swedes enjoy the sunny weather in Tantolunden park in Stockholm in May. Picture: AFP

The government is incurring much fiscal pain to save lives from the coronavirus, a lot more than it usually does, at least.

The budget update on Thursday revealed a historic $280bn hole in public finances over this and last financial year, a harbinger of chronic budget weakness for years to come.

Let’s assume the government’s actions have saved between 5000 and 10,000 lives, which seems feasible given what’s roughly happened so far in Sweden, Florida and Texas, where shutdowns have been less comprehensive than in Australia.

That, very crudely, equates to a budget cost of between $30m and $60m for each life saved, even if we just look at the cost over two years.

That’s just the rough cost from the federal government’s – that is, taxpayers’ – perspective, though. GDP, a measure of national income, is forecast to decline by almost 4 per cent this year, which is about $60bn in lost income.

The personal and enduring social costs of much higher unemployment, which is, officially, meant to peak above 9 per cent this year, aren’t included in GDP.

The point is not particular estimates — the economy would still have deteriorated to some extent, given the synchronised slump across the world — but the fact that costs incurred are massive.

In 2014, federal government documents suggested the government should value a normal life at about $5m.

In the past, especially after World War II, the economy grew out of budget debts and deficits, underpinned by rapid population growth.

That won’t be so easy this time.

The government has forecast population growth rate will crash from 1.5 per cent a few years ago to 0.6 per cent this financial year – the lowest annual rate of growth since 1916.

If there’s a silver lining, the impossibility of delivering a politically sacred budget surplus should free the Coalition to pursue tax and other reforms that “cost” money in the short term but deliver stronger economic growth in the long term. Who cares if the deficit is $50bn or $60bn?