End of Covid-zero marks a turning point for recovery

The June quarter national accounts showing gross domestic product growth of 0.7 per cent is welcome news but must not be a distraction from the task of getting businesses back to work and citizens free from lockdowns. Release of the better-than-expected economic data on Wednesday coincided with overdue acknowledgment by the Andrews government in Victoria that it would not be possible to return to zero Covid-19 cases in that state. “We will not see these case numbers go down, they are going to go up. The question is how many and how fast,” Premier Daniel Andrews said.

The concession ends a phony war between the leaders of the two most populous states over what is the best pandemic response. Victoria’s decision to drop an elimination strategy in favour of suppression has long-term ramifications for how the nation will manage the pandemic and emerge from it to reintegrate with the rest of the world. But it signals an extension of harsh restrictions in the second most populous state until at least late September, when single-dose vaccination rates are expected to rise to 70 per cent. Mr Andrews has foreshadowed that any easings at that time will be modest.

With an elimination strategy now surrendered in Victoria there can be greater co-operation on agreeing to a plan to rejoin the rest of the world and open up the country to live with Covid-19. NSW Premier Gladys Berejiklian says her state is preparing to lead the way in allowing Australians to travel freely through Sydney airport once double-vaccination rates reach 80 per cent. The more positive message from NSW follows calls by business leaders for national unity on reopening state and international borders and getting businesses back to work.

In an open letter, the leaders of many of the nation’s biggest companies asked governments to work together to chart a course out of current lockdowns. “We need to give people something to hope for, something to look forward to, something to plan around, and to be confident about their futures,” they said. Protecting the economic gains made in the bounce back from the extended lockdowns last year is a priority. Economic growth in June was better than expected and means the national economy has avoided a double-dip recession.

Josh Frydenberg said the better-than-expected figures confirmed the government’s economic response to the pandemic. The federal Treasurer said we were in a position to bounce back strongly as an economy and a country when lockdowns came to an end. The national account figures do not change the fact that the economy has some very difficult days ahead. But Mr Frydenberg said they “underline the fact the economy remains resilient, the fundamentals remain sound”. The national economy is 1.6 per cent bigger than it was pre-pandemic. The underlying trend, however, is that after a strong recovery from the lockdowns last year, growth weakened in the June period, down from growth of 1.8 per cent in the March quarter. The damage from the current lockdowns in Victoria and NSW is yet to be fully felt. The Australian Bureau of Statistics said current lockdowns had a minimal impact on domestic demand in the June quarter, with the prolonged stay-at-home orders in NSW beginning only later in the quarter.

Business Council of Australia chief executive Jennifer Westacott said the June quarter figures did not reflect where we were today. “The economy is resilient but the longer hard border closures and prolonged lockdowns remain, the less resilient and less competitive we become,” she said. “The enviable position we were in during the June quarter is rapidly slipping away from us. The national reopening plan is vital to recovery.”

State and federal leaders also must recognise the rising costs of lockdowns on embattled communities, including mental health. Business leaders said in their open letter to politicians their first-hand experience was that Australia was juggling a mental health emergency at the same time as a pandemic. Some impacts of current lockdowns were hidden and the effects would be long lasting, they said. Flight Centre managing director Graham Turner wrote on Wednesday that in future pandemics it was likely harsh lockdowns would be used only by authoritarian regimes.

The results of a comprehensive YouGov survey published on Tuesday and Wednesday show the public mood is changing towards lockdowns and border closures. Respondents say they are now more concerned about the effect on jobs and other health impacts than they are about Covid-19. Most Australians want fully vaccinated people to have preferential treatment over the unvaccinated, allowing them to resume normal life and travel freely interstate and overseas. And as the number of vaccinated people increases, the pressure for change is sure to increase further.

Mr Andrews now concedes that living with Covid-19 is going to be the future. This is a difficult reality that all leaders ultimately will have to accept. It is going to be a difficult transition for states currently without cases. Western Australia already is resisting moves to open up when the national vaccination rate hits 80 per cent. Deft politics is needed to get the nation back on the same page.