Big test ahead for economy & will we regret all the lockdowns?

The latest retail trade figures from the ABS illustrate the challenge the Australian economy faces over the next few months with JobKeeper and the JobSeeker Coronavirus Supplement ending soon. Household disposable incomes have been boosted by all the generous assistance and this has pushed retail turnover to an elevated level. But retail trade fell 1.1% in February, as it starts to return to more normal levels (see chart below). The withdrawal of JobKeeper and the Coronavirus Supplement will detract from economic growth over the next few months, and we may see some disappointing numbers.

What happens over the next few months will help us understand whether the harsh measures our authorities have imposed to control COVID-19 since March last year have been beneficial in net terms. I expect many Australians will reassess whether all the harsh measures were really necessary. Did we succumb to mass panic back in March last year? I know that I was very worried and agreed with the lockdown in the early days, but I’ve been critical of interstate border restrictions and subsequent lockdowns since then.

Our governments and Chief Health Officers tried their hardest to frighten us about COVID. Reading a Quadrant article from last May by UNSW Finance Professor Peter Swan AO recently, I learned of one more questionable decision made by Queensland’s Chief Health Officer. It turns out our CHO recommended measures based not just on the science, but on the messages they would send. Here’s what the Brisbane Times reported last April:

Dr Young told Ms Palaszczuk to shut down schools on March 26.

She says while evidence showed schools were not a high-risk environment for the spread of the virus, closing them down would help people understand the gravity of the situation.

“If you go out to the community and say, ‘this is so bad, we can’t even have schools, all schools have got to be closed’, you are really getting to people,” Dr Young says.

“So sometimes it’s more than just the science and the health, it’s about the messaging.

That’s one of several eyebrow-raising statements from our CHO that would have led anyone concerned about good public policy and civil liberties to oppose the extension of the CHO’s emergency powers, as I did earlier this year (see Industry wants changes to Qld CHO emergency powers extension bill). I wish I’d read Peter Swan’s piece prior to the Parliamentary inquiry into the bill, because it would have helped me with my arguments before the committee.

I was lucky enough to interview Peter earlier this week for my Economics Explored podcast, and you can listen to our conversation which I’ve published as EP79 Running the numbers on COVID-19 measures.

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

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