Bubble ‘a $3.6bn boost to economy’

A travel bubble between Australia and New Zealand would pump $3.6bn into the economy and restore 24,000 full-time jobs, according to new modelling.

The trans-Tasman bubble framework would act as a model for other nations to follow and included plans for airlines and airports to keep ‘transit passengers separate from passengers coming in from Australia’, says Jacinda Ardern. Picture: Getty Images

A travel bubble between Australia and New Zealand, which has been delayed by the Melbourne coronavirus outbreak, would pump $3.6bn into the economy and restore 24,000 full-time jobs, according to new modelling.

New Zealand Prime Minister Jacinda Ardern on Sunday said the second wave of COVID-19 infections in Victoria was holding-up the trans-Tasman travel plan, which The Australian understands may not begin until September or until Australia contains the spread of new virus cases.

Modelling by EY, based on three Australia-New Zealand travel bubble scenarios, said if the plan was enacted this month and kept in place until December, the struggling tourism sector would benefit by $2.4bn.

EY chief economist Jo Masters said the travel bubble would help “ease the fiscal cliff”, get Australians on JobKeeper and JobSeeker back to work and increase consumer sentiment.

“This is policy action that costs nothing but delivers a benefit through stronger economic activity and fewer people on social welfare,” she told The Australian.

“We need to look at different mechanisms to address the current economic challenges, and opening an Australia-New Zealand travel bubble would be a small step in our return to the new normal after COVID-19.”

Under the three-stage COVIDSafe Australia roadmap released by Scott Morrison in May, all interstate travel was expected to be in place by July along with consideration of cross-Tasman, Pacific Island and international student travel. Borders between Australia and New Zealand have been closed since March 20.

Ms Ardern said New Zealand would not budge on its hardline COVID-19 border closures because other countries “have paid the price”.

She said a coronavirus vaccine was not the only consideration for New Zealand, which is mulling widening the country’s biosecurity screening measures to combat the COVID-19 threat.

Ms Ardern said the trans-Tasman bubble framework would act as a model for other nations to follow and included plans for airlines and airports to keep “transit passengers separate from passengers coming in from Australia”.

“At the moment, Australia wants to move as a country rather than state-by-state and obviously issues in Victoria are delaying that,” Ms Ardern told TVNZ.

“It’s their decision whether or not they choose to go state-by-state or Australia in its totality. At the moment, the view seems to me they want to move as a whole but ultimately that’s their call.”

Ms Ardern said New Zealand was looking at travel bubbles with other countries, with criteria including not having community transmission, enhanced contact-tracing capacity and strong testing regimes.

The EY analysis of the economic impacts of the Australia-New Zealand travel bubble said the “potential gains from allowing travel between our two countries could be significant”.

“According to Tourism Research Australia’s international visitor survey, New Zealand tourists spent $2.2bn in Australia for the year ending December 2019. According to TRA’s National Visitor Survey, Australians spent $3.6bn in New Zealand,” the EY analysis said.

“In total, each New Zealander visitor to Australia spends $1686, where Australian visitors to New Zealand spends $2740.”

The EY analysis showed a “business as usual” and “keen and eager” scenarios would fall well short of a “turbocharged” option.

Ms Masters said the travel bubble would also increase hours for workers in the tourism and aviation industries.

“Tourism and hospitality workers are ready to return to work, making any increase in tourism an effective and meaningful stimulus measure for the Australian economy,” she said.

“The economic growth challenge coming out of COVID means all options need to be put on the table.”