Originally published in The Guardian on October 1, 2020

Richard Denniss
[Originally published on the Guardian Australia, 01 October 2020]

Thank you, Victorians. Your determination to crush the second wave of Covid-19 has delivered me, and the rest of Australia, enormous health, social and economic benefits. Your resolve, your patience and your sacrifice, means that the rest of Australia has been able to open up our personal and economic lives. The nation as a whole is healthier, wealthier, and indeed wiser because of you.

While nothing can be certain, it’s likely that – absent another Ruby Princess or quarantine hotel debacle – Australia will experience a relatively normal, if socially distant, Christmas this year while North America and most of Europe prepare for the human and economic costs of ongoing deaths and disruption. Since July, the United States has averaged around 50,000 new cases per day and, since opening up their interlinked economies too early, countries such as the UK, France and Italy are all now experiencing thousands of new cases per day as their second wave of infections roll across the continent.

When Daniel Andrews introduced stage 4 restrictions for metropolitan Melbourne on 2 August, there were 671 new cases. The stage 3 restrictions introduced in March were clearly not working and while the human and economic costs of the stage 4 rules – including a curfew, 5km rule and business closures – were significant, the short-term health benefits and long-term economic benefits of that decision are enormous, though difficult to quantify.

Back in March, as Australia grappled with the first lockdown, there was a strong sense that we “are all in this together”. But from the moment Covid-19 began to spread in a Victorian meatworks, and then from a poorly conceived hotel quarantine system, the partisan and personal attacks on the Victorian premier have been savage and sustained, and inconsistent and illogical.

Let’s start with health. The United States has shown that low-level restrictions do nothing to eradicate the virus or even significantly push numbers down. The US has settled into a grim equilibrium with around 5,000 people per week dying, every week, since June. If Victoria hadn’t gone to stage 4 in August, then their case numbers and deaths would have kept rising. Those who criticise “dictator Dan” for imposing “draconian” lockdowns need to answer a simple question: as cases spiked in August, should Andrews have acted on the health advice and introduced stage 4 lockdowns, or should he have let it run its course?

Then there’s the economy. The federal government and large swathes of the commentariat have argued that the Victorian lockdowns were responsible for the slow pace of Australia’s economic recovery. Yeah, right.

To evaluate the impact of Victoria’s lockdown on the Victorian and national economies, you first have to ask the question: “What would the economy look like without a lockdown?” Does anyone really think that if Andrews had “let it rip” in August, the Victorian retail and hospitality sectors would have been booming right now? There is strong data from both Australia’s first wave and from around the world that consumer spending falls before lockdowns are introduced because, unsurprisingly, most people don’t want to go out for recreational shopping or dinner when a highly infectious and deadly virus is circulating freely in the community.

And as the well-known lefties at consulting agency McKinsey concluded: “Ending lockdowns alone won’t restore confidence or growth. Only when the novel coronavirus is under control will economic growth resume.”

For the workers and businesses whose income has been flattened by Victoria’s stage 4 lockdowns, every extra week of lockdown is excruciating. But while the shrill calls to change course midstream and end the lockdowns early may have made political sense for those chasing votes, they made no economic or health sense. Opening Victoria up a few weeks ago would have had a trivial impact on GDP and unemployment in a year’s time but would have significantly increased the chances of Victoria, and Australia, suffering a third wave.

While there has been much talk during this pandemic about the “trade-off” between the economy and health, in reality it seems that good preventative health policy is good economic policy. Just as it might seem cheaper to stop providing antibiotics once the symptoms of an infection abate, it can seem “cheaper” to end lockdowns before Covid-19 is under control. But in reality – as with defence policy, occupational health and safety policy and fighting corruption – an ounce of prevention is worth a pound of cure.

Finally, there are the moral arguments. No one has a monopoly on the ability to decide what is the “right” thing to do when it comes to asking individuals to make a sacrifice for the common good. Historically, conservatives have supported conscription on the basis that some must suffer so that all can thrive. Australians died in Iraq and Afghanistan to help “deliver peace” in another country. And many of the same conservatives who oppose the right of the elderly to access voluntary euthanasia argue that a higher death rate among the elderly is an acceptable price for reopening the economy.

The decision to rely on poorly trained private security to guard in quarantine hotels was a mistake, but it was not a uniquely Victorian mistake. A private quarantine guard in New South Wales was not only infected with Covid-19 but then went on to work at a court and the Sydney Market in Flemington. NSW was lucky to not suffer Victoria’s fate.

The Ruby Princess was a mistake, and so too was Treasury’s estimate of the cost of jobkeeper. Mistakes do happen. But regardless of what mistakes led to Victoria’s second wave, the decision to impose stage 4 lockdowns was a monumental success that has delivered health and wealth benefits to the rest of Australia.

If the Morrison government is concerned about the enormous cost shouldered by the good folk of Victoria, they should post a great big cheque – along with a great big thank you letter – to the Victorian people. Don’t hold your breath.

Richard Denniss is the chief economist at independent thinktank The Australia Institute

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