The BFD | Aussie, Aussie, Aussie!

Chris Penk

The BFD is serialising National MP Chris Penk’s book Flattening the Country by publishing an extract every day.

Aussie, Aussie, Aussie!

In my experience (and I did live there for a few years), our Australian brethren are commendably direct. Indeed directness is sometimes one of their most endearing qualities.

Taking a leaf from the trans-Tasman book, then, I’ll be so bold as to note that the Australian PM probably doesn’t get as many gigs gracing fashion mag covers as does ours. Fair dinkum, though, ScoMo is the real deal. You have to imagine me saying that in a Queensland accent.

When push comes to shove, like so many Kiwis-Kangaroos league tests have done, Australia has performed exceptionally well when it comes to the coronavirus crisis.

As noted in an outstanding piece of research and writing by the consultancy Castalia:

From this comparative analysis, Australian policies appear, on the limited evidence, to be effective with fewer negative impacts on wider wellbeing. Australia also appears better placed to rebound when restrictions are lifted. New Zealand’s policies have contained people to household “bubbles” with consequential impacts on activity such as work and education. New Zealand may have more difficulty rebounding.

The States and New Zealand are good comparators because all have similar urbanisation rates (between 86 and 90 percent), demographic profiles, cultures and legal systems.

The report’s authors go on to note a key difference in approach: “Australia’s restrictions are activity based. Activities are limited where people can randomly encounter one another, but most workplaces are able to continue operating subject to compliance with social distancing rules”.

By contrast, they point out, “New Zealand’s restrictions confine each household to their own “bubble”. Leaving home is only permitted for acquiring essential items and for exercise. A limited set of essential services and businesses may continue.”

In similar vein, the Wall Street Journal summarised our respective situations under the following headline: “Both New Zealand and Australia Contained Coronavirus, but One Is Set to Pay a Heavier Price”.

Its readers learned that, “[e]ach country has seen new infections drop markedly, but the economic costs of New Zealand’s strict approach are expected to be significantly higher”.

That assessment by the WSJ was explained in the following terms:

New Zealand imposed one of the strictest lockdowns in the world, aiming to stamp out the new coronavirus.

Australia took a different approach, adopting social-distancing restrictions but keeping more of its economy open, in an effort to suppress the pathogen.

Both strategies appear to have delivered similar health outcomes: New infections have dropped markedly—to just a couple a day on average in New Zealand and around 10 a day in Australia. But the economic and social costs look likely to be significantly bigger in New Zealand, providing a cautionary example of the potential trade-offs as countries weigh imposing and lifting restrictions.

Not many New Zealanders will be expecting to hear our government’s strategy described as “controversial” – in the international media, shock horror – but the article goes on to quote one of our own and a highly qualified one at that: Simon Thornley. This lecturer in epidemiology at the University of Auckland has been arguing that striving for elimination is bound to fail and will generate worse economic and health outcomes than the virus itself.

Writing in the New Zealand Herald, meanwhile, Paul Glass (executive chairman of Devon Funds Management) noted Australia’s “more pragmatic approach to lockdown” with approval.

He went on to highlight that “every day that goes by with unnecessarily strict rules, which have no beneficial effect, will result in more job losses and a greater level of national debt that will ultimately need to be repaid by our children”, summing up cause and effect in the following way:

While, right now, New Zealand and Australia have almost identical Covid-19 health outcomes per capita, the economic damage in NZ has been much worse than is occurring in Australia.

Our annualised GDP is forecast to fall by about 13 per cent vs 5 per cent in Australia and our unemployment levels to be close to 15 per cent vs Australia’s 10 per cent or so.

Before we dive too deep into the statistics, let’s take a minute to establish that these are not lone wolves howling. Or boys crying wolf. Or that any other wolf-related metaphors apply.

One of the most fascinating appearances before the Epidemic Response Committee was that of Australia’s Chief Medical Officer, Brendan Murphy.

As the ABC reported:

When asked whether Australia, like New Zealand, should set its sights on trying to eliminate COVID-19, [Dr Murphy] said it was one of the “potential strategic options to consider”.

While the good doctor was being admirably diplomatic (with a good bedside manner, you might say), he was nevertheless prepared to diagnose the potential problem that awaits us here in New Zealand:

“The challenge with elimination is that nobody yet knows whether it’s possible,” he told RN Breakfast.

“You have to keep the most aggressive border measures in place for a very long time, potentially until you’ve got a vaccine.”

Dr Murphy’s overall message was that he could see few signs that Australia needed tougher measures in the interim. “Our track record over the past few weeks is looking pretty good.”

So what difference will this divide across the ditch actually make?

In a clear headed and compelling piece under the auspices of

the NZCPR, Dr Muriel Newman put it this way:

According to the OECD, the Prime Minister’s lockdown will result in New Zealand suffering one of the biggest declines in economic activity in the world – almost 30 percent.

In comparison, Australia’s decline will be lower at around 22 percent, as a result of Prime Minister Scott Morrison adopting the best practice approach of managing the outbreak while preserving the fundamental integrity of their economic system.

Lest we forget that statistics are just expressions of many human faces, Dr Newman also gently reminded us about the quality of life implications:

Unlike here, Australian families have been able to visit each other, schools have remained open, people have been able to buy food from butchers and greengrocers as well as supermarkets, they’ve been able to have haircuts, public transport has continued to operate, and weddings and funerals have still gone ahead albeit with reduced numbers. Throughout the period, while working from home has been encouraged, businesses have remained open.

Before we finish playing the national numbers game, let’s give the last word to the Wall Street Journal:

Their differing growth trajectories now, however, reflect the severity of New Zealand’s lockdown. Economists expect New Zealand’s economy to contract by more than 20% in the three months through June, compared with the quarter immediately prior, whereas Australia’s economy is expected to shrink some 13% over the same period. […]

ANZ expects New Zealand’s economy to be 10.4% smaller at the end of 2020 than it was at the start of the calendar year. For Australia, the contraction is forecast at 4.7%.

New Zealand’s jobless rate may rise to 13.5% from 4% at the end of last year, according to government forecasts. Australia’s central bank has forecast the country’s unemployment rate will roughly double to 10% by June.

Aussie, Aussie, Aussie. Ouch, ouch, ouch.

Sources:

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