Closing the border made 26m Aussies richer

Australia’s per capita GDP growth during Covid when the borders were shut has been almost double that of the previous two years, when immigration was running at 250,000 a year.

Australia reopened its borders to vaccinated tourists and other visa holders for the first time in almost two years on February 21. Picture: Darren Leigh Roberts

The December quarter GDP numbers delivered two big ‘truths’ – one maybe a little fatuous, the other seriously and challengingly profound and bitingly relevant for decisions that are being made, right now in 2022, both for 2022 and indeed for all of the 2020s.

The first is the old truth of how great it feels when you ‘stop banging your head against a brick wall’.

For most of the last September quarter NSW and Victoria were in – let’s hope they were the last, ever – lockdowns.

That’s nearly 60 per cent of the national economy.

As a result GDP fell 1.9 per cent in that September quarter.

Bad enough as that was, it was way better than the 6.8 per cent plunge in the June quarter 2020 when all of Australia – in sync with pretty much all of the world – was in the initial Covid-hysteria lockdown.

So, when Victoria and NSW came out of lockdown in the December quarter, GDP growth rocketed up 3.4 per cent – or, 13.6 per cent on an annualised basis, as the Americans report their GDP numbers – and making it 4.2 per cent for the year.

For comparison, US December quarter GDP growth was 1.7 per cent, making 5.5 per cent through 2021.

This meant that we were up 3.4 per cent on the last pre-Covid, December 2019 quarter. The US was up slightly less, 3.1 per cent over the two years.

So the bounce-back is great when you stop ‘banging your head’, so to speak; and the worse the head-banging, the bigger the bounce-back.

True, after both of those big lockdown-caused GDP plunges, GDP leapt the same 3.4 per cent in the immediate recovery quarter.

However, the national GDP increase would have been more than 5 per cent in the September 2020 quarter, but for of course, Chairman Dan keeping Victoria and one quarter of the national economy in its own specially curated lockdown, as he set after the world’s lockdown record.

Victorian Premier Dan Andrews. Picture: Ian Currie

He of course finally ‘achieved’ the world record after lockdown #26 - or something, I’m still too locked-in and locked-out punch-drunk to remember exactly.

The second, bigger, more telling, truth is more than a little awkward for our ‘Big Australia’ elites to contemplate.

Simply, that bigger is not just not better, it is categorically worse.

Through 2021 overall GDP growth was 4.2 per cent. GDP growth per capita (per Australian) was only slightly lower at 4.0 per cent.

Contrast that with the last pre-Covid year, 2019. Overall GDP growth was 2.2 per cent and per capita growth just 0.7 per cent; with the previous year almost exactly the same at 2.3 per cent/0.7 per cent.

Indeed, over the two years of Covid, per capita GDP growth has been almost double that of the previous two years, when immigration was running at 250k a year.

The only growth that really matters; the only growth that really delivers rising prosperity – and that doesn’t just mean bigger flat-screen TVs, but more and better hospitals and social services etc etc – is per capita growth.

There’s no point – there is no increase in either average or indeed aggregate prosperity - in doubling the size of the economy if you also double the population. Everyone stands still; and indeed would really go backward.

But that is exactly what we have been doing pretty much all of the 21st century, until March 2020 when Covid brought that game to an abrupt – and, I would hope, permanent - stop,

Indeed, much of that earlier ‘growth’ was simply building more and more infrastructure, just to keep up with the population, not more and better infrastructure for people generally.

Do we have to get to 20-lane toll roads for a 12m population Melbourne before that penny drops? And Sydney?

Originally published as Closing the border made 26m Aussies richer