Western Australia is in better economic shape than any other state as it navigates the challenges of the pandemic.
Western Australia is in better economic shape than any other state as it navigates the challenges of the pandemic.
WA dropped 100,000 jobs in first two months of COVID-19 last year but has gained more than 140,000 since then.
Exports remain strong, despite recent falls in the iron ore price.
Consumer confidence has lifted retail spending beyond the levels seen before the pandemic hit.
There have been one or two bumps in the road.
The Bankwest Curtin Economics Centre modelled the loss in retail trade turnover in WA from the short lockdown in February this year to be close to $170 million.
But this pales into insignificance compared with the huge losses suffered in the eastern states.
Sydneysiders have just emerged, blinking into the light, from more than 100 days of lockdown restrictions to control the Delta strain.
And at what cost?
The latest Australian Bureau of Statistics data on retail turnover gives some indication of the impact of lockdown restrictions on spending activity across Australia.
New South Wales retail turnover dropped by $9.4 billion – a full 8 per cent – in the three months to August 2021.
To put that in context, the drop in retail spending alone from the three-month lockdown period is equivalent to 6 per cent of the total value of the NSW domestic economy.
Add into the mix the impact on NSW jobs, with 220,000 fewer people in work in August compared with May, before lockdown restrictions were introduced.
The same is true for other states and territories that have been forced into lockdown.
Retail spending fell by 4.2 per cent in Victoria in the three months to August, and by 3 per cent in ACT. That lockdowns hurt is no real surprise.
But the costs for WA of complacency, and of not preparing to live with COVID-19, are potentially even greater.
WA is playing Russian roulette with the Delta strain of COVID-19.
There seems to be false sense of security in some WA community quarters that closed borders offer enough protection to the state; that we live a charmed life in which Delta strain will never cross the Nullarbor.
But defending the border indefinitely from COVID-19 infection is untenable, and lockdowns, however short, still impose significant economic and social costs.
The opportunity costs to WA from vaccination delays are potentially severe.
A recent report released by Commonwealth Treasury estimates that the national economic cost of managed community transmission at a vaccination rate of 50 per cent would be $2.7 billion per week.
At vaccination rates of 80 per cent, the estimated cost would reduce nearly fivefold to $590 million.
The WA government’s projections in the recent budget expect more spending to leave the state than come in once interstate and international borders reopen.
This may or may not eventuate, but if it does, it will be a short-term problem.
Far more important is WA’s place over the longer term in a world that’s learning to live with the virus.
If WA continues with its vaccine complacency, we run the very real risk that skilled workers, tourists and students may well overlook WA in favour of other states and jurisdictions that have moved faster on vaccination rates and opened more quickly.
WA has always been an attractive place for people to live and work, or to visit, and that will remain the case if the state is fully vaccinated, with open borders.
• Professor Alan Duncan is Director of the Bankwest Curtin Economics Centre
