While governments on both sides of the Tasman are loudly backslapping themselves for their response to the Wuhan virus, hard economic reality is starting to quietly bite.
The Australian federal government has acknowledged the gaping hole its response has opened in public accounts: $320bn, or 16.4 percent of GDP, in financial support alone. Economic activity in key sectors halved and there will be at least a two-year climb to recovery.
As just one indicator of the economic bomb that federal and state governments have dropped, rental vacancies in the CBDs of Australia’s major cities have doubled. Sydney has hit record vacancies. Melbourne’s premium Southbank precinct has hit a vacancy rate of 13 percent. Analysts are calling it a “mass exodus” as businesses shut up shop. Permanently.
Every one of those closed businesses represents someone’s shattered hopes – and lost jobs. Most small-to-medium businesses employ between 4 and 50 people.
My home state of Tasmania is especially rooted.
Tasmania is on course for 12 per cent unemployment, $2 billion net debt and a budget deficit “significantly north” of $500 million.
Premier Peter Gutwein on Tuesday revealed the sharp economic and fiscal downturn, ending years of boom times in Tasmania.
“Boom times” is a relative term, of course, when speaking of Tasmania. Tasmania’s economy has long struggled, hampered by remoteness and scarcity of the big-money resources like minerals, as well as by minority green activists determined to shut down down every industry from forestry to mining to aquaculture. A disproportionately-aged population (thanks especially to an influx of sea-change boomers) doesn’t help, either.
The bulk of economic growth has also been disproportionately concentrated in Hobart – not coincidentally the seat of the government and Tasmania’s bloated public service. Empty shops were already a common blight on the northern hub of Launceston’s CBD, before government lockdowns turned the place into a desert.
But, even if it has come off a low base, Tasmania has at least been one of the fastest-growing economies in Australia.
Say goodbye to that.
While vowing to “rebuild” the economy for a second time, he would continue to prioritise public health and lift COVID-19 restrictions gradually to avoid a “second wave” of infections.
“After only a very few short months, we have a very different-looking Tasmania,” he said. “When we went into this we were leading the country on most economic indicators.”
A state Treasury economic and fiscal update to be released on Friday would show how dramatically those good times had receded in recent months.
“The deficit this financial year will be significantly north of half a billion dollars, we expect by the end of the June quarter more than 27,000 Tasmanians will have lost their job,” he said.
“Our unemployment rate will be around 12 per cent. The slowing national economy and the impact on GST has had a massive impact, along with the impact of our own source revenues.”
Combined with $1 billion in state COVID-19 support and stimulus measures, this would see the state – previously free of net debt – plunge back into the red by about $2 billion at the end of next financial year.
To put that in blunt terms, that translates to at least $4.5 million per COVID-19 infection; $77 million per death. For every infection, 120 jobs have been lost.
Worse, an extra 1500 suicides, most of them youths, are predicted for Australia next year. Tasmania accounts for a disproportionate number of Australia’s suicides: if the rate holds true, Tasmania may see an extra 500 suicides over the next year.
In other words, for every COVID-19 death in Tasmania, we are projected to see an extra 38 suicides. Mostly young people.
You tell me whether it will have been worth it.
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