Brisbane Lockdown 2.0 – the sequel no one wanted

To keep Queenslanders safe, our state government has decided to lock down the over
2 million residents of Greater Brisbane for the next three days, but its sudden, unexpected announcement at 8am sparked immediate panic buying in our supermarkets, and an exodus of people from the capital to the regions and other states, possibly spreading the mutant UK COVID strain there. Great job, Queensland Government.

The National Cabinet is supportive of the lockdown so I will withhold judgment for now, other than noting it would have been good for our Premier or Chief Health Officer to have signalled earlier this week they would even contemplate doing this. It came as a bit of a surprise, given we only have one reported case (so far) of the mutant UK strain, the cleaner from the Grand Chancellor, and thankfully she doesn’t appear to have travelled many places.

It’s too early to predict what the economic implications of this will be, as so much depends on whether the mutant COVID bug has been spreading in the community. That said, we fear this Brisbane lockdown will extend well beyond three days, as the Health Minister has suggested it could (e.g. check out this Brisbane Times report). When I dropped into my office at the Johnson Hotel this afternoon, I saw one of my neighbours, an engineer, and his partner carrying out two widescreen monitors from his office. He needs them to work on his spreadsheets and CAD diagrams, and he’s obviously thinking this is going to last much longer than three days.  

We may need to rush that vaccine out after all if the mutant COVID strain is spreading. Otherwise, we will see further lockdowns and loss of economic activity, possibly requiring an extension of JobKeeper, meaning larger deficits and more debt.

On financing the COVID-19 government debt, I spoke with UQ Associate Professor Begoña Dominguez earlier this week, and our conversation is now available as Episode 69 of my Economics Explored podcast. I interviewed Begoña about a thought provoking video she recorded for the UQ Economics School at the end of last year on Financing the COVID-19 Government Debt. One idea of Begoña’s that I really like is that we should think of support provided during COVID in the context of a social contract, whereby in an emergency like a pandemic we readily assist people but if it turns out we have over-compensated people (as we may have in Australia as I noted in my 9 December 2020 post) we have some mechanism to claw back some of that assistance. Conversely, if it turns out we’ve under-compensated some people, we increase assistance to them or give them a tax rebate in the future. Possibly, assistance could be generous in a pandemic, given the radical uncertainty about the future, but the assistance could be given as an income-contingent loan.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com

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4 Responses to Brisbane Lockdown 2.0 – the sequel no one wanted

  1. Martin says:

    The mechanics of a claw-back option are great, but there are a couple of risks.

    If claw-back is known to be a prospect, there will be a reduced propensity to spend a stimulus, reducing its efficacy.

    If the stimulus is generous and to otherwise marginal businesses, some owners might strip the assets (especially if they are liquid, as stimulus generally is) and close the business.

  2. Katrina Drake says:

    Hello Gene,

    You cannot blame the Government for the exodus, or the panic buying. That was Queenslanders themselves, decisions individuals made, and actions individuals took.

    Queensland emergency preparedness plans advises every household to have food and water for three days in case of an emergency. Ii would be interesting research to know why there was panic buying, and what people were buying? I had the Christmas ham bone and a packet of dried peas – pea and ham soup should see us through the weekend.

    The exodus of people – amazing that the population is so mobile, with alternative accommodation to head towards at short notice. I imagine the government would like the workforce to be as mobile when it came to fruit picking and regional employment opportunities. Generally I think most Australians will do the right thing, and are heading to the location were they will be the safest, as we are well supported.

    Perhaps we are all just twitchy as we are approaching the 10 th anniversary of the 2011 flood crisis.

    My Brisbane suburb of Toowong is like a ghost town today, haven’t heard a car on the streets, perhaps you and I are the only ones here…..

    Contemplating the different connotations of
    locked down
    locked up
    locked in
    locked out
    locked ‘n loaded
    locked, locked, locked……..

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