Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Monday, 29 June 2020

ECONOMIC STATE OF PLAY 2020: "Under these latest forecasts Australia’s economy next year would be 0.7% smaller than it was last year. That is the first time since 1983 that our economy would be smaller than it was two years earlier."


The Guardian, June 2020:



Since the virus hit there has been a belief, maybe a hope, that this was just a momentary thing. 


Sure, the fall would be sharp and deep, but the recovery would be fast coming. 

You could hear it in the talk of “snap back” from the prime minister and treasurer. 

There was almost a sense that this recession is not really a recession – because this was driven by health, not the economy. The underlying economy, this argument went, was solid (the foundations were strong!), and thus once those restrictions were dispensed with, we would be back as good as ever. 

The problem was that the foundations were not strong (productivity growth, household incomes and the domestic private sector were all flat-lining). Just because the causes of this recession were unusual does not alter the fact that all recessions bring with them massive job losses and a fall in production. 

And this recession is the worst we have seen since the Great Depression. 

This week the IMF issued a revised set of estimates for GDP growth this year and the next. And there was some good news to be had.....

In April the IMF forecast our GDP this year would fall by 6.7%; now it estimates it will “only” fall by 4.5%. 

Unfortunately though, the treasurer neglected to point out that, other than Malaysia, Australia had the biggest growth forecast downgrade for 2021. 

In April the IMF estimated our economy would “bounce” back in 2021 with 6.1% growth; now it sees just 4%. 

Overall, the IMF’s changed estimates are such that they expect our economy at the end of 2021 to be virtually the same size they were expecting it to be in April. Hardly a ringing endorsement that government policies are doing better than expected. 

What this means is we need to very quickly disabuse ourselves of the notion that the economy will “snap back” in 2021 and all will be well. 

Under these latest forecasts Australia’s economy next year would be 0.7% smaller than it was last year. That is the first time since 1983 that our economy would be smaller than it was two years earlier. 

But even that rather hides the impact. 

In October the IMF estimated that for the next five years our economy would grow by around 2.5% each year. That is pretty miserable growth, but it was largely in line with the average since the GFC. 

But now, even with these new and improved estimates for our economy, by the end of next year we are still tracking to be 5.3% below where we were expected to be. 

That is the equivalent of around $105bn less being produced – or roughly the total amount produced in a year by the entire manufacturing industry. 

That is a chasm of economic waste. 

If the economy was to keep growing at (a very strong) 4%, it would take us until 2025 to get back level with where we were expected to be before the virus. If it grows at the more realistic 3% from 2022 onwards, we will not get back on par until well into the 2030s. [my yellow highlighting]

The debate very much needs to shift from the language being used in January and February. 

Forget “fundamentals being strong” and “sensible budget management”. It was spin then; it is just embarrassingly irrelevant now. 

We are in a deep recession and the political and policy debate needs to recognise this fact.


Friday, 26 June 2020

Australian Prime Minister is urging states to push ahead with reopening despite COVID-19 outbreaks


We always said that we were not going for eradication of the virus. Other economies tried that and their economy was far more damaged than ours. And so we have to ensure that we can run our economy, run our lives, run our communities, alongside this virus.” [Australian Prime Minister & Liberal MP for Cook Scott Morrison speaking on ABC radio program PM, 22 June 2020]

Financial Review, 22 June 2020:

A fresh outbreak of coronavirus in Victoria should not stop moves to reopen the economy, according to Scott Morrison, as one state delayed plans to reopen its borders and others contemplated new travel restrictions.

With Victoria recording a spike in cases because of what experts said was tardy adherence to safety protocols, thousands living within six local government jurisdictions were told not to leave their area unless essential.  

As the state introduced the toughest COVID-19 measures currently in Australia in an effort to contain the spike, the Prime Minister agreed it was a "wake-up call" but said setbacks were anticipated when he announced more than a month ago that the states were to reopen their economies by July. 

"This is part of living with COVID-19. And we will continue on with the process of opening up our economy and getting people back into work,'' Mr Morrison said.....

This was Scott Morrison at his uncaring, bullying best last Monday.

So what does "living with COVID-19" actually mean?

Well for 104 people it meant death, with 3 elderly victims dying at home and 30 in nursing homes.

It means there are still active COVID-19 cases in 4 Australian states and some people are still becoming sick enough to require an intensive care hospital bed.

Living with COVID-19 also means community transmission of the disease remains an issue in Australia, as well as people entering/exiting the country while infected.

The pandemic growth may have significanly slowed in Australia but it has not stopped, every day the average number of confirmed COVID-19 cases grow by around 12 people.

All this clearly indicates that the SARS-CoV-virus is not passively responding to successive state public health orders. What was happening is that collectively we had gone to great lengths to avoid coming into contact with this deadly virus thereby avoiding spreading COVID-19 disease.

When this collective action begins to fragment as more and more businesses, entertainment and sporting venues open, state borders are no longer closed and more international flights are allowed into the country, the virus which lives only to mindlessly replicate in as many human bodies as possible will quickly begin to infect larger numbers of people again.

It is highly likely that the resultant disease growth rate will not be able to be described as a "spike" or "setback". For Scott Morrison is stubborn. He will force the states and territories, along with communities and families, to keep exposure to the virus at a dangerously high level simply because he intends to open up the economy and go full bore ahead by July.

So why does the economy have to 'open' in July? 

Not because Morrison really cares about one of his favourite slogans, "jobs and growth". No, 'Emperor' Scott is afraid his own party and its financial backers will finally realise that he has no clothes and the economy is that scrap of cloth he is clutching to cover his nakedness.

It's all about hanging on to personal political power and his lucrative salary as prime minister - and he doesn't care how many people have to die or become chronically ill in order to achieve this.

Tuesday, 16 June 2020

So how is your super fund weathering the COVID-19 pandemic?


Apparently superannuation funds across the board have felt the impact of the global economic downturn caused by the COVID-19 pandemic.

However, it was the retail super fund and self-managed fund sectors which experienced the largest contractions. 

Despite the total savings pool falling slightly the outlook is positive according to Rainmaker Information's assessment of the Australian industry on 5 June 2020:

Australia's superannuation savings pool has withstood the COVID-19 financial crisis so far, falling just 0.3% in the 12 months to 31 March 2020, while bolstering cash reserves. 


Australia's prudential regulator for the superannuation system, APRA, has just released its latest quarterly industry snapshot. It shows the superannuation system is in remarkably strong shape given the economic shock of COVID-19. 

This should give Australia's 12 million super fund members and their families confidence that while their superannuation has been buffeted by COVID-19, their superannuation savings are safe. 

Illustrating this, while APRA's figures show Australia's superannuation savings pool contracted 7.7% during the three months between December 2019 and end March 2020, over the 12-month period to end of April 2020, it decreased by just 0.3%. 

2019 was one of the best years ever for superannuation savings in Australia. 

"Compared to the 23% fall in global stock markets in first quarter of 2020 as well as the 14% fall over the 12-month period to March, this is a stunning result," said Alex Dunnin, executive director of research and compliance at Rainmaker Information. 

Dunnin said even though the SelectingSuper MySuper performance index, which is compiled by Rainmaker, fell 11% during this three month period, over 12-months the index is down only 4%. 

As a result, Australia's superannuation savings have only fallen to March 2019 levels. During the 2008-09 Global Financial Crisis the SelectingSuper index fell as low as -21%. 

But not all parts of the superannuation sector are weathering the COVID-19 crisis equally. 

The not for profit (NFP) super fund segment comprising corporate, public sector and industry super funds, contracted 5% in the March quarter. 

Comparatively, the retail super fund sector contracted more than twice as much, up to 12%. And Self-managed super funds (SMSFs) contracted 9% in the same period. [my yellow highlighting]

"Two-thirds of the decrease experienced across the superannuation savings pool came from APRA-regulated NFP and retail funds." 

"While the retail super segment holds roughly one-quarter of superannuation savings assets compared to the NFP segment that holds half, each segment fell by about the same amount in dollar terms." 

"APRA figures show the retail super fund segment holds 24% of their investments in Australian equities, compared to just 15% by NFP funds. 

"Retails funds are more vulnerable to fluctuations in equities markets, however, industry super funds with a larger share of their investments in unlisted assets such as real property, infrastructure and private equity were better insulated from the worst of these equities falls.

" Liquidity also became a concern for some superannuation market commentators and politicians when the government announced the Early Release of Superannuation scheme on 22 March, with speculation that some super funds may find it difficult to pay these early redemptions. 

Super funds with investments in unlisted assets such as property, private equity and infrastructure were singled out for special mentions because of concerns they may have too little set aside in cash reserves. 

However, APRA's superannuation snapshot has revealed that super funds $273 billion in cash at the end of March, which is 27-times the amount of money that has so far been paid out in Early Release claims. 

To appreciate the total amount held in liquid assets held by super funds, Dunnin said you should also include the additional $466 billion held in bonds. 

"The 14% held in cash and the 22% held in bonds means super funds have $739 billion or 36% of their total investments held in liquid assets. 

"NFP funds have 37% of their assets available in cash and bonds, marginally exceeding the 36% held by retail super funds. Industry funds hold 31% of their assets in these instruments." 

During the March quarter, funds received $29 billion in contributions, taking the value of total contributions for the past 12 months to $121 billion, further adding to these funds' liquidity. 

"This is the highest contributions inflow in more than two years," said Dunnin. "These added contributions are often missed when analysing these 'vulnerable' funds. 

"Sure they may have a higher than average proportion of younger members, however they receive hundreds of millions in contributions each month." he said.

Australian Prudential Regulation Authority (APRA) key statistics for the superannuation industry as at 31 March 2020 can be found at https://www.apra.gov.au/news-and-publications/apra-releases-superannuation-statistics-for-march-2020.

Saturday, 13 June 2020

Quote of the Week


"Alone in the developed world, Australia navigated the last major global financial crisis without going into recession, without mass job losses and without a spike in suicides. Those days are gone. That competent Government is gone. Instead, Australia is now among the global losers. Last Wednesday’s (3 June) quarterly report on the national accounts by the Australian Bureau of Statistics (ABS) shows Australia’s economy contracted by 0.31 per cent in the three months to 31 March….It was not inevitable that Australia’s economy would contract in 2020, despite the impact of the pandemic.” [Alan Austin writing in IndependentAustralia, 8 June 2020]

Tuesday, 19 May 2020

How will up to 7.2 million Australians respond to Scott Morrison's willingness to abandon them in the worst global recession since the Great Depression


"Fiscal measures will need to be scaled up if the stoppages to economic activity are persistent, or the pickup in activity as restrictions are lifted is too weak."  [IMF WORLD ECONOMIC OUTLOOK: THE GREAT LOCKDOWN, April 2020] 

Brisbane Times, 15 May 2020:

Something has changed in the Liberal Party since John Howard was prime minister. Key business lobbies now have such a grip they can frogmarch the government towards political suicide.

It is only weeks since a million Australians lost their jobs by government decree to protect us all from a health crisis. Most are yet to receive their first benefits, but the government has said the guiding principles on the way out will be self-reliance and personal responsibility.


The Prime Minister and the Treasurer have moved in recent weeks to flag that the JobSeeker and JobKeeper programs are a short-term aberration and will be returning to their traditional small-government, competitive-individualism philosophy.


‘‘Open markets will be central ... not government,’’ declared the Treasurer on Tuesday. ‘‘The values and principles that have guided us in the past ... encouraging personal responsibility, maximising personal choice, rewarding effort and risk-taking’’ will be central.


It is hard to imagine a more tone-deaf piece of communication to the hundreds of thousands of Australians who are now gripped by sleepless nights about where their next job is going to come from and whether they will lose their houses.


Social movement research has found that you only need 2.5 per cent of people to be in a political movement for it to be large enough to drive major political and social reform. That is enough for everyone to have friends and family involved and to feel personally connected to the issue.


Almost every Australian will have someone they love who has lost a job in the past six weeks. Telling people they are on their own has to be pretty much at the top of the "what not to do list" in the political leadership manual. Yet Scott Morrison is not an idiot or an ideologue, so why is he doing it?


Even if the government was privately planning this approach, you wouldn’t expect the Prime Minister to say it publicly. The announcements suggest he is having to quell his own political storm and there is a pile-on going on behind the scenes. It is the wrong message for most Australians, but it is the right message for those who dictate his grip on power.


Some of it will be the same Coalition ideologues cum powerbrokers who are worried the pandemic response is a symbolic loss. These tribal warriors are not going to let the fact the country is in the grip of an unfolding catastrophe distract them from the red team-blue team contest.


However, they are not the only force in play. Leaders of our largest businesses are embracing the maxim "Don’t waste a good crisis". They are circling the carcass of the not-yet-cold COVID economy, and seeking to take the opportunity to drive through some long-sought-after tax cuts and industrial relations reform.....


One has to wonder how Prime Minister Scott Morrison and Treasurer Josh Frydenberg came to believe that the 1. 7 million people expected to be unemployed by September 2020 will fare well going into the worst recession since the Great Depression where the unemployment rate is predicted to be 13 per cent for starters. 

Or why he believes the up to 5.5 million workers, hanging onto insecure jobs which are only guaranteed for as long as businesses are receiving government wage subsidies for their workers, will all keep those jobs when the subsidy ends on 27 September 2020.

This is the changed reality that the Liberal & National parties must face:

The Sydney Morning Herald, 14 May 2020







If Scott Morrison continues down this track, what will Christmas look like?

Monday, 18 May 2020

Unemployment in Australia in March to May 2020


According to the Australian Bureau of Statistics Labor Force, Australia, April 2020, there were 832,500 unemployed persons at the end of April based on original data, which resulted in an unemployment rate of 6.3%.

That was a rise of 63,800 unemployed persons since the end of March 2020.

A number which could have been much higher if it were not that those registered to receive JobKeeper subsidised wage payments are considered employed - even those with no active job to go to.

On 14 May 2020 the Prime Minister announced a seasonally adjusted unemployment rate of 6.2% and the Treasurer stated that 594,000 people had lost their jobs since COVID-19 public health restrictions began to affect businesses.

However, both Morrison and Frydenberg fail to point out that those 594,000 newly unemployed are in addition to the est. 238,500 already unemployed persons‬

Even with JobKeeper payments now keeping unemployment figures down by an est. 3.3 to 5.5 million people Treasury expects that the unemployment rate will rise to around 10% by end of June 2020.

According to a Senate estimates hearing on 30 April 2020, an est. 400,000 more people are expected to lose their jobs by September, at which time the unemployment rate is predicted to be around 13%.

September is of course the month indicated by Morrison as the period in which he intends to start rolling back enhanced unemployment benefits - a month in which the Dept. of Social Services expects 1.7 million people to be receiving the Jobseeker payment.

According to the Morrison Government it expects to have returned 850,000 people to employment by the time all the public health restrictions have been lifted.

If in around four months time as many as 7.2 million Australians are expected to be either unemployed or in uncertain employment because their jobs depend on government subsidied wages, one wonders why the Morrison Government is boasting of so low a figure - less than 12% of that 7.2 million. 

Wednesday, 6 May 2020

Translating Australia's hard right prime minister in 2020


Scott Morrison makes sure his press conferences are transcribed for posterity at the Prime Minister Of Australia’s Media Centre in a manner which meets with his approval.

There is often some hours lag before a version of any particular press conference is posted online. Though sometimes, as occurred on 5 May, Morrison is not happy with how a press conference panned out and subsitutes a media statement instead.

Probably hoping that nobody will remember to report this:

The Prime Minister concedes #COVID19 infection rates will rise in Australia as restrictions ease to get the economy moving. “Of course, you will see numbers increase,” he says. “That is to be expected.” ⁦[National Affair Editor Hugh Rimington, @10NewsFirst, 5 May 2010]

Due to the time lag at Morrison's media centre, mainstream media usually fills the gap on their own online platforms.

These are the opening paragraphs of a news report on the press conference of Tuesday 5 May 2020.

SBS News, 5 May 2020:

Addressing the media on Tuesday after a historic national cabinet meeting that featured a brief appearance by New Zealand Prime Minister Jacinda Ardern, Mr Morrison reiterated that one million Australians had lost their job in a single month as a result of the pandemic.

"We now need to get one million Australians back to work, that is the curve we need to address," Mr Morrison said.

"As long as these restrictions are in place, they are costing our economy some $4 billion each week ... it certainly puts enormous pressure, as it should, on the timetable as we seek to move Australia back to that safe economy."…..

For some of the growing number of people who are irritated or angered by the Liar From The Shire’s carriage, demeanor, opinions, obfuscations, downright untruths or chronic refusal to answer journalist’s questions, this barebones news reporting sometimes suffices.

For others, real time social media descriptions of Morrison’s press conferences are preferred.

Here is one example…...

Ingrid M @iMusing, 5 May 2020, Thread commencing at approx. 2:29pm:

prime minister is up. He is focusing on the topic of “getting Australia back to work” today. Heavy breathing. Opening spiel is as usual self-congratulations.

a million out of work, says Morrison. He tips a nod to the Treasurer. Lies that “children are unable to go back to school”. He means many children are not *in classrooms*. The $4 billion a week cost of restrictions figure is going to do a lot heavy lifting here.

getting a million Australians back to work, more than a million Australians have had their claims for jobseeker processed. So given eligibility requirements and the number of pre-roni unemployed people, there are well over one million unemployed now.

Morrison has a slide show. Babbles out a list of sectors and jobs figures. Arts and recreation services, hospitality and food services, the agricultural sector, restaurants and cafes are closed. Note the absence of humans from this rhetoric.

oops, spoke too soon. The grower and the chef got a mention. Morrison says the job losses will be greater in Victoria because the restrictions are stronger so now we can begin to see where that $4 billion a week is. How unpolitical of him.

confidence. I love it when some economist explains the confidence variable to politicians. They never get it, as a predictive nor explanatory factor. Astrology for white dudes.

Christian Porter is up, as IT minister today. Workplace “safety” legislation is his brief, an area the Liberal Party is renowned for deliberately dismantling - see the double dissolution election Turnbull called using the ABCC bill.

babbles a bit about a dynamic and fluid environment whatever. The safe work Australia website is being re-built? Expanded. It will provide a “granular level of detail”. Porter has swallowed a buzzword list today.

I guess the queries function and info on the safework Australia website will be as efficient as jobkeeper application processes ie it will work for applicants whose application is consistent with Liberal Party ideology and political objectives and a clusterfuck for everyone else.

next up is covid committee chair and mining industry CEO Nev Power. Maybe no construction giant grifters whose greed kills workers were available to speak on workplace safety today.

unions are the main repository of workplace safety expertise btw but we have a business guy and couple of politicians from the party of business here instead.

the Morrison goldfish gulp and malapropic garbling is worse than usual today. Why is he so tense?

questions. Who is Greg? He starts with the fucking nonsense the Trump administration is spewing to try and cover for its monumental public health failures.

Morrison obliges by repeating the semiotic anti-Chinese racism terms a number of times.

schools. Morrison says “not opening schools fully is costing jobs and it does cost the economy”. So he has stopped lying about using schools for his political-economic objectives, at least.

Power adds lots of words and not much meaning on businesses adapting as restrictions are eased. Recall the vast majority of businesses - outside hospo - were not closed by official roni restrictions but by going to the wall (or into “hibernation”).

K Murphy asks about the trans Tasman travel bubble and contextualises with federalism - state and territory border closures. Morrison is very defensive. He is essentially telling premiers and chief ministers to open the borders. He *forgets* the trans-Tasman part of the question.

after being reminded, Morrison pretends to answer the trans-Tasman travel bubble question. But other than fetishising the alleged firstness (it isn’t) of the NZ PM being at National Cabinet, there is nothing specific to announce. “We are working co-operatively together” he says.

they have a stronger biosecurity regime and so do we? says Morrison. What does that mean?

Coorey. He is told this is about a covid safe economy (there’s the slogan for the near), Morrison tells him. The $4 billion a week gets another outing. Grattan. Gets a stream of self-congratulatory gibberish. We have tripled our ICU capacity. Okay.

Probyn: you have talked about pubs and restaurants.
Morrison: no I didn’t.
Probyn: well Neville was. When can the two Andrews, I mean the two Dans, legally have a drink together?
Morrison: they can now, just not in a pub. Andrew.




Nev and I, says Morrison quickly. Subtext: don’t wedge me, mate. Andrew.

PvO. His friend was stood down today.
PM indulges some bullshit federalism rhetoric. National cabinet has more to discuss about easing restrictions. Flattening the curve has come at a price.

Looks like no agreement on anything at all was reached in national cabinet today.

asked again about schools, Morrison says it wasn’t on the agenda today. He is happy to “encourage non-state schools by bringing forward funding”. The Premier of Victoria can make decisions about state schools, that’s his bailiwick.
Yes, Morrison said bailiwick.

asked whether he was against Barilaro contesting Eden-Monaro because Barilaro would have been a destabilising force if he won (the Sunday Savva thesis) Morrison says no and no.

okay I’ve had enough. Tl;dr: national cabinet was an unproductive and discordant session today, Morrison is therefore delivering a set piece with his biz CEO mate, which is essentially gaslighting workers and babbling bullshit.

Sunday, 26 April 2020

A perspective on society and the COVID-19 pandemic



This is a Twitter thread created by Janette Francis, a Walkley-award winning journalist, TV Presenter and podcaster.

Jan’s Twitter account was created in 2009.

The debate on the best responses to the COVID-19 pandemic is global and one cold-blooded aspect of this debate is currently found in British, American and Australian mainstream media articles and on social media - save the investments and assests of the well-off because old people and the chronically ill are going to die anyway.

This is Jan's contribution to this debate.

Jan Fran @Jan__Fran, 21 April 2020:

I keep hearing folks describe this pandemic as a kind of trade-off between public health and the economy. This trade-off is often framed around loss of life. 1

It usually goes something like this: if we ease the lockdown we’ll see people die from the virus. If we prolong the lockdown we’ll see people die from the consequences of possible economic collapse (i.e suicide, depression, poverty, ill health, violence). 2

We are led to believe that attempts to limit one set of deaths, will increase the other, that one group of people will have to sacrifice for the other. But whose lives are more important? 3

Do we sacrifice the sick now to save the healthy later; the old to save the young; the poor to save everyone else? We are led to believe that this is our dilemma and it is an impossible one. 4

Hey, here’s a fun thing to think about: guess how much money Jeff Bezos made today? 5

Jeff Bezos made 17,000 dollars. But he didn’t make it in one day. He made it in ONE SECOND. Every single second Amazon is reaping 17 thousand dollars worth of sales (this is AUD BTW) & this is happening SPECIFICALLY during this pandemic as more people seek deliverable supplies. 6

Jeff Bezos is now worth 216 BILLION dollars and good on Jeff Bezos, I say! I mean, the man is clearly providing a service that people need and reaping the rewards. That is #inspo, amirite?! Please speak at my conference, Jeff. 7

Thing is, there's a wee bit more to the world we live in. 8

We live in a world where, in the middle of a pandemic, one man makes 17 thousand dollars A SECOND and another is buried in a mass grave because his family can’t afford a funeral. 9

It’s a world where the homeless sleep in socially-distant quadrants in a hotel car park, while above them thousand-dollar-a-night rooms sit empty. It’s a world where folks are protesting their right to get sick in a country they can not afford to seek treatment in. 10

One thing this pandemic has done is exacerbated the gross inequalities we always knew existed. It has exposed them, brought them to the surface as the bodies of the poor and the desolate continue to be stacked beneath the ground. 11

The framing of this pandemic as ‘lives lost now V lives lost later’ is really just us tryna work out which sections of our society are more productive, more useful. Which sections are going to best replicate the system that was in place before all this Covid/lockdown malarky. 12

I mean, we all wanna get back to how it was ASAP, right? Now that we think about it we were having a great time. The system was working. But for who? 13

Not for the man whose body now sits in a mass grave on Hart Island NY, it wasn’t. Not for the homeless sleeping in their car park quadrants, it wasn’t. Not for the nearly 40 million Americans living below the poverty line, it wasn’t. This is the system we will replicate. 14

It is right to talk about sacrifice in this dark and uncertain time. I guess we all have to make sacrifices at some point so if not now, when? If not me, who? Before you answer that, know this … 15

Twenty-six individuals own as much wealth as HALF the world’s population - Lemme say that again: TWENTY SIX people (two. six) own the same amount of wealth as 3.8 BILLION PEOPLE. 16

That’s worth remembering the next time some legend waxes lyrical about why you might need to sacrifice yer nan for the sake of the economy. Maybe those 26 people should sacrifice the spoils they’ve reaped from a system that now needs saving from itself. 17

We do indeed have a dilemma but it might not be an impossible one. Maybe we actually don’t need to ask those who have the least to sacrifice the most, maybe it’s the other way around. Maybe that’s the trade-off? 18

Anyway, thanks for letting me share my thoughts on this website twitter dot com. 19/19

Thursday, 23 April 2020

222 economists advise that lifting COVID-19 restrictions too soon will not help the Australian economy. But will Scott Morrison listen?


The Conversation, 20 April 2020:

In recent weeks a growing chorus of Australian commentators has called for social distancing measures to be eased or radically curtailed.

Some have claimed the lives saved by the lockdowns are not worth the damage they are causing to the economy.

Others have claimed the case for easing is strengthened by the fact many of the hardest hit by COVID-19 are elderly or suffering from other conditions.

Some might expect economists, of all people, to endorse this calculus.

But as economists we categorically reject these views, and we believe they do not represent the majority of our profession.

We believe a callous indifference to life is morally objectionable, and that it would be a mistake to expect a premature loosening of restrictions to be beneficial to the economy and jobs, given the rapid rate of contagion…..

Open Letter from Australian Economists
19 April, 2020

Dear Prime Minister and Members of the National Cabinet,

The undersigned economists have witnessed and participated in the public debate about when to relax social-distancing measures in Australia. Some commentators have expressed the view there is a trade-off between the public health and economic aspects of the crisis. We, as economists, believe this is a false distinction.

We cannot have a functioning economy unless we first comprehensively address the public health crisis. The measures put in place in Australia, at the border and within the states and territories, have reduced the number of new infections. This has put Australia in an enviable position compared to other countries, and we must not squander that success.

We recognise the measures taken to date have come at a cost to economic activity and jobs, but believe these are far outweighed by the lives saved and the avoided economic damage due to an unmitigated contagion. We believe strong fiscal measures are a much better way to offset these economic costs than prematurely loosening restrictions.

As has been foreshadowed in your public remarks, our borders will need to remain under tight control for an extended period. It is vital to keep social-distancing measures in place until the number of infections is very low, our testing capacity is expanded well beyond its already comparatively high level, and widespread contact tracing is available.

A second-wave outbreak would be extremely damaging to the economy, in addition to involving tragic and unnecessary loss of life.

Sincerely,

Professor Alison Booth, Australian National University

Professor Jeff Borland, University of Melbourne

Professorial Research Fellow Lisa Cameron, Melbourne Institute, University of Melbourne

Professor Efrem Castelnuovo, University of Melbourne

Professor Deborah Cobb-Clark, University of Sydney

Assistant Professor Ashley Craig, University of Michigan

Professor Chris Edmond, University of Melbourne

Professor Nisvan Erkal, University of Melbourne

Professor John Freebairn, University of Melbourne

Professor Renée Fry-McKibbin, Australian National University

Professor Joshua Gans, University of Toronto

Professor Jacob Goeree, UNSW Business School

Professor Quentin Grafton, Australian National University

Professor Simon Grant, Australian National University

Professor Pauline Grosjean, UNSW Business School

Distinguished Professor Jane Hall, University of Technology Sydney

Assistant Professor Steven Hamilton, George Washington University

Professor Ian Harper, Melbourne Business School

Professor Richard Holden, UNSW Business School

Professor David Johnston, Monash University

Professor Flavio Menezes, University of Queensland

Professor Warwick McKibbin, Australian National University

Assistant Professor Simon Mongey, University of Chicago

Professor James Morley, University of Sydney

Professor Joseph Mullins, University of Minnesota

Professor Abigail Payne, Melbourne Institute, University of Melbourne

Professor Bruce Preston, University of Melbourne

Emeritus Professor Sue Richardson, Flinders University

Professor Stefanie Schurer, University of Sydney

Professor Kalvinder Shields, University of Melbourne

Professor John Quiggin, University of Queensland

Associate Professor Simon Quinn, Oxford University

Economic Advisor James Vickery, Federal Reserve Bank of Philadelphia

Professor Tom Wilkening, University of Melbourne

Professor Justin Wolfers, University of Michigan

Professor Yves Zenou, Monash University

Full list of signatories available on the economists open letter website.