Yahoo Finance BORDERS CLOSED: 10 ways Aussies are paying the price
Prime Minister Scott Morrison has reaffirmed that international borders won’t open this year, and has also refused to outline a framework for when they might reopen in 2022.
“For now and for some time yet we need to play it safe because that's what protects lives and it's also what protects livelihoods,” he told 2GB on Wednesday.
The stance has attracted criticism from business groups, opposition, and even his own colleagues in the Liberal Party – and has also had lasting impacts, both to the broader economy and people’s personal lives.
Here’s a list of people and industries that have been affected by the border closures:
1. Aviation and tourism crippled
The tourism and aviation industries remain the hardest-hit by the move to close Australia off from the rest of the world.
Eight-in-10 workers from the travel and tourism industry are estimated to lose their jobs, says the Australian Federation of Travel Agents (AFTA), and while the rest of the economy has rebounded, the Government had to fire a $1.2 billion package and cover half of 800,000 return-flight tickets to give the industry a leg up.
The 2021 Federal Budget contained little extra funding for this ailing industry, with the Tourism and Transport Forum estimating the lack of international tourism has cost the industry $4 billion a month.
And the longer borders stay shut, the bleaker the outlook for tourism operators: 77 per cent of these businesses reliant on foreign visitors would be out of business within a year if borders didn’t open back up, according to a recent Australian Tourism Export Council survey.
More than one-in-three regions saw a 40 per cent drop in visitors in the 12 months to September 2020, according to Tourism and Transport Forum data.
Qantas yesterday announced it was introducing a two-year wage freeze on enterprise agreements and offering redundancies, which it expects to see “several hundred applications” for, in a bid to reduce annual costs by $1 billion.
But CEO Alan Joyce said he was optimistic that the worst of COVID-19’s impact on the airline’s bottom line was over.
“We have a long way still to go in this recovery, but it does feel like we're slowly starting to turn the corner,” he said.
“The fact we're making inroads to the debt we needed to get through this crisis shows the business is now on a more sustainable footing.”
2. The economy loses billions every month
Australia is deprived of $319 million a day due from lost domestic and international air travel, according to Business Council of Australia analysis released in October 2020.
“Every day flights remain grounded costs Australia $69 million or $2.1 billion a month. When you add in international aviation losses at $250 million a day or $7.6 billion per month we are talking about an enormous hit to our economy,” said BCA CEO Jennifer Westacott.
State border closures alone are expensive, too: in mid-2020, then-Tourism Minister Simon Birmingham said state border closures were costing Australia roughly 5,000 jobs a week and the economy $84 million a day.
“Reduced flights between Brisbane and Sydney airport alone have cost Australia’s economy $1.2 billion,” Westacott added in October.
3. Immigration squeeze eats into GDP
Migration levels are actually critical to economic growth – and constricting this cold turkey has had serious ramifications on the economy.
“The delayed reopening of international borders will mean an extended period of negligible migration,” ANZ economists wrote in a recent note.
“Net overseas migration is a significant driver of Australia’s headline economic growth, accounting for 35 per cent of real GDP growth over the decade to 2018-19. In 2018-19, it accounted for almost half of real GDP growth.
“This suggests an extension of restrictions on migration, by itself, would mean lower potential GDP and lower actual GDP growth in the second half of 2021, compared with what would have eventuated if borders had been reopened.”
4. Australia’s rental market sinks
While house prices have been relentlessly climbing over the last few months, this hasn’t been the case for unit prices, leading some to describe this phenomenon as the “two-speed property market”.
“[The unit market is] more highly exposed to renters, particularly students,” realestate.com.au chief economist Nerida Conisbee told Yahoo Finance earlier this year.
But the typical influx of international students and migrant workers isn’t there – and this has driven down demand for apartments.
It means property markets typically driven by tourists and visitors, yet not popular with holiday home buyers, like Cairns, are performing poorly.
5. Universities are getting squeezed dry
Australian education is the country’s third-largest export, contributing more than $40 billion to the national economy in 2019.
But the border closures have already created a $1.8 billion black hole. And that’s just in 2020 alone; a further $2 billion in lost revenue is forecast for 2021, Universities Australia forecasts.
By the end of 2022, the blowout to Australia’s education sector could reach nearly $20 billion, estimates the Victoria University’s Mitchell Institute
In particular, Chinese students – which are the biggest export customers of Australia’s education system – are increasingly turning their backs on Australia as a study destination (though other factors are at play here too, including frosty Sino-Australian relations and concerns over racism).
“Countries, particularly Canada and the United Kingdom, that were ahead of the pack in September 2020 continue to improve their reputation as an appealing study destination, whereas those that remain constrained by closed borders are falling even further behind,” stated a new report from Navitas.
“Australia and New Zealand have fallen to the bottom of the table.”
Not only that, but these students add thousands of dollars per person to the economy.
“International students arriving by air support 240,000 jobs in the country and education exports are worth AUS$40.3 billion,” according to research from the International Consultants for Education and Fairs (ICEF).
“On average, international visitors such as tourists, business travellers and short-term students spend about AUS$5,200 per trip each in Australia. Chinese travellers about AUS$9,300. By contrast, Australians holidaying at home spend about AUS$700.”
6. Botched vaccine rollout drags recovery
Australia’s delayed vaccine rollout has been criticised as holding the country “hostage” – and recent figures from McKell Institute actually puts the cost of this delay at more than $16.44 billion.
That’s if we continue at the current vaccination growth rate, or 81 days of delay. Even by most optimistic estimates, if we followed the USA vaccination rate – 20 days of delay – the economic cost would still come to more than $4 billion.
7. Good news, for some: pay rises ahead
Wage growth was already in the doldrums before the pandemic, but is virtually at a standstill now. Fresh data from the wage price index showed an increase of 0.6 per cent, well below the Reserve Bank’s expectations of 2-3 per cent.
However, miners, tradies, tech workers, financiers and healthcare workers are well-placed to ask for a pay rise, recruitment experts have said, as these workers are in high demand.
8. Mental health issues exacerbated
Combined with the impact of other factors like lockdowns and suddenly being without work, border closures have worsened mental health issues, the Australian Institute of Health and Welfare (AIHW) found.
“The sudden loss of employment and social interaction, and the added stressors of moving to remote work or schooling, and more recently, impacts of sudden, localised ‘lockdowns’ to prevent further outbreaks have impacted the mental health of many Australians,” an AIHW report stated.
“Stress, confusion and anger” became commonplace as a devastating side-effect of the pandemic, it continued.
“And, while many people may not experience any long-term concerns, COVID-19 has the potential to contribute to or exacerbate long-term mental illness including anxiety, depression, PTSD, and substance misuse.”
For fly-in-fly-out families and workers have copped the brunt of hard border closures, according to family psychologist Dr Justin Coulson.
“FIFO families are finding themselves forcibly separated with workers stuck in rural WA, while their partners and children remain behind in other states. Parents have been forced to choose between keeping food on the table and being with their children,” Coulson wrote in a recent blog post.
“Under the hard border closures, that autonomy – that choice – is gone,” he added. “When we don’t have a choice our mental health suffers, our work suffers and even our ability to think suffers.”
The development of children in these situations are affected, too, in multiple ways. “Feelings, behaviour, self-esteem, body image, social interactions, sexual activities and relationships are all negatively impacted when parents are separated from their children through no choice of their own,” Coulson said.
9. Border closures will change the face of Australia
In a piece for The Conversation, former Race Discrimination Commissioner Tim Soutphommasane and Sydney Policy Lab director Marc Stears questioned: What has COVID-19 taught us about the national character of Australia?
The mythical ideal of “Australianness” has been pushed to the limit.
“There were times when we’ve resembled an individualistic rabble, what with the widespread hoarding of supplies in the early stages of the pandemic. A fair go wasn’t necessarily extended to Asian Australians, who have experienced a significant spike in racism during this pandemic.
“One historic aspect of the national character, though, has indisputably come to the fore. We’ve seen a return of a “Fortress Australia” mentality. This sees Australia as an island nation forever beset by threats from outside, whether it’s people or pathogens.”
These sentiments were echoed by Committee for Economic Development of Australia (CEDA) senior economist Gabriela D’Souza, who questioned what the medium-term social impact of border closures would be.
“Our closed borders mark a significant shift in our approach to the outside world. And they pose a threat to our commitment to globalism,” D’Souza wrote in an opinion piece for the AFR.
“Shutting down borders … should be our last line of defence against t
he virus, after contact tracing, vaccinations and proper quarantine arrangements.
“That it’s the first thing we reach for says something about us. And it’s not good.”
10. Personal cost: priceless
Australians – of which nearly a third are born overseas – have been cut off from their support networks, their friends and family.
The pain of being unable to see loved ones for so long isn’t quantifiable, with many taking to social media to describe how it’s affecting them.
Just had a very sad conversation with my Dad in Edinburgh about the budget predicting international borders will stay closed for at least another year. “Why isn’t there a huge public outcry about this?” I don’t know what to tell him. I haven’t seen him since 2018. It’s so hard.😔
— Jill Stark (@jillastark) May 11, 2021
Australia keeping its borders closed until mid-2022, meaning ticket prices won’t be affordable until 2023, meaning It will be five years between visits to my family, is so monumentally depressing I’m not sure I can do any work today. https://t.co/uoxQ0MycaN
— Lance Richardson (@lancerichardson) May 11, 2021
It's INFURIATING. I haven't seen my parents and sister in years. They've missed my child (their only grandson/nephew) growing up. We're vaccinated. They're vaccinated. And yet it's likely to be another YEAR?
— Baz McAlister (@bazmcalister) May 11, 2021
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