Christopher Niesche: A shot in the arm for Australia's economy from October

Australian Prime Minister Scott Morrison discusses the Government's plan to 'live with the virus' during a press conference at Parliament House. Photo / Getty Images

OPINION

Until recently Australia – like New Zealand – has been remarkably lucky in how little the coronavirus affected us.

While the virus has brought with it many personal tragedies – premature deaths, people unable to farewell dying loved ones, and businesses and livelihoods lost – in aggregate we got off lightly compared with the rest of the world.

Our Covid-19 fatality rate is the second-lowest in the developed world and the death rate is a tenth of what it was last year. Our economy remains in good shape, or at least in no worse shape than it was in pre-pandemic.

We now have an opportunity to take advantage of that luck, if we continue rolling out vaccines and start to cautiously reopen our economy.

We learned last week that Australia has just avoided falling into a recession for the second time in 12 months – but the reprieve might be temporary.

What happens next will depend on whether the state premiers keep their economies shuttered or open them up.

The economy grew 0.7 per cent in the three months to June.

With the September quarter certain to be a retraction thanks to lockdowns, a negative result in the June quarter would have met the technical definition of a recession – two quarters of negative growth.

The state premiers' adherence to Scott Morrison's plan to live with Covid and reopen the economy after certain vaccination thresholds are met is crucial.

Under Morrison's plan, the economy will open up as more people get vaccinated.

When 70 per cent of the adult population (those aged 16 or over) is fully vaccinated, lockdowns will rarely be needed, according to modelling provided by the well-regarded Doherty Institute for Infection and Immunity.

Fully vaccinated people will face fewer restrictions during future outbreaks, enjoying more freedom to move around and travel overseas. More students and foreign visitors will also be allowed in.

When vaccinations hit 80 per cent, vaccinated residents would be exempted from all domestic restrictions, according to the modelling. The abolition of caps on vaccinated Australians returning from overseas would be abolished, and restrictions on outbound travel for vaccinated Australians will be lifted.

With Australia expected to hit the 70 per cent mark in October, this should give an immediate shot in the arm to the economy.

We saw how quickly the economy snapped back after lockdowns ended last year and this time it should be no exception.

The big question is what the state premiers choose to do.

So far only NSW and, as of Thursday, Victoria have signed on to the plan. Other states are reserving the right to keep their borders shut and go into lockdown.

The federal government sees vaccination as a gamechanger, even in the face of the Delta variant of Covid. It will allow states and cities to open while Covid circulates in the community, because far fewer people will get sick and very few will die.

Queensland Premier Annastacia Palaszczuk walked away from the national plan on Wednesday, saying the epidemiological modelling for reopening never envisaged 10,000 cases in NSW.

"You open up this state, and you let the virus in here, and every child under 12 is vulnerable ... because they are the unvaccinated," Palaszczuk said. (Vaccinations for 12-15 year old children will begin on September 13).

Western Australia believes it can isolate it way out of the pandemic.

Morrison's argument is no other country in the work has successfully contained Delta, and the only solution is to live with it.

But Australia's chief marketing officer doesn't have much credibility when it comes to dealing with the pandemic. Many argue it's his fault that so much of the country is in lockdown.

His failure to build adequate quarantine facilities, despite urging from the states, allowed the Delta variant to spread to the general population.

Then his failure to secure adequate supplies of vaccines for Australia and push ahead with the rollout – "it's not a race", he famously said last year – ensured the population was vulnerable to Delta when it arrived on our shores.

And in a bungled late-night press conference, he sewed doubt and confusion about the safety of the AstraZeneca vaccine Australia was relying on, deterring many people from getting a vaccine.

The latest wave of lockdowns came towards the end of the June quarter, so had little effect on the economy.

A strong lift in household and business spending, government infrastructure investment and housing construction activity offset a fall in mining export volumes to help the economy grow, despite 29 days of lockdowns across five states and territories in the June quarter.

According to Deloitte, just 7 per cent of the population were locked down on any given day during the June quarter. In the current quarter, 45 per cent of the population has been locked down, including in the economic powerhouses of Sydney and Melbourne.

What the next quarter will bring is up to the premiers.

Australian business writer Christopher Niesche is a former NZ Herald business editor and deputy editor, national, for The Australian.