Australia takes the scenic route back to normality

Australia’s experience of the COVID-19 pandemic was, perhaps appropriately, summed up best by a comedian. ‘Australia’, said Celeste Barber in an August social media post, ‘did the hard part easy — and now we’re doing the easy part hard’.

When the pandemic arrived in 2020, Australia’s border was slammed shut and a pre-emptive lockdown was coordinated among the six states and territories that make up the Australian federation, buying them time to increase their test, trace, and isolate capacities. With millions of workers suddenly out of work, the federal government, which oversees the tax and welfare systems, scrambled to put together a wage subsidy scheme and boosted the rate of unemployment benefits.

Australia’s hard-line response was sometimes chaotic and capricious in its administration, but it met its goals even better than expected, eliminating transmission of COVID-19 throughout most of the country. With most Australians living life as normal, economic activity bounced back after a recession in the first half of 2020 — Australia’s first in almost 30 years.

In 2021, Australia was caught largely unvaccinated by the fearsome Delta variant, while still locked into a policy of suppression, if not elimination, of the virus. With its two most populous states, New South Wales and Victoria, in months-long lockdowns to control Delta outbreaks, the economy will be lucky to avoid another recession this year.

Much of the blame can be put on a baffling decision made in Canberra in the name of ‘economic sovereignty’ to delay buying imported mRNA vaccines to supplement stocks of the locally-made AstraZeneca jab. Poor official messaging (and media fear-mongering) gave many Australians an exaggerated sense of the risks of AstraZeneca’s side effects, encouraging them to hold out for imported vaccines which, when they did arrive, were the subject of national maladministration and political fistfights between different jurisdictions.

The tale of Australia’s pandemic response was in some ways quintessentially Australian: governments got the big policy calls right, then stuffed up some critical details through complacency, bureaucratic silliness, and partisan politics. These problems were on display not only in vaccine procurement, but also in some of the absurdities of lockdown enforcement and poor engagement with migrant and Indigenous communities.

At the same time, comparison with the rest of the developed Asia-Pacific provides evidence against Australian exceptionalism. Japan, Taiwan and New Zealand all made mistakes in planning their vaccine rollouts; Singapore was the outlier in that its government immediately saw that vaccine procurement was a problem best solved by throwing money at it.

In any case, Australians have had to take the scenic route towards living with the virus. Thankfully, with supply issues sorted they are now on the way to very high levels of vaccination — perfect timing, all other things being equal, for Prime Minister Scott Morrison and his centre-right Liberal–National coalition, who must face an election by May 2022.

With the pandemic and that election out of the way, whether Australia’s politicians can show leadership in addressing the ‘long-term and structural’ challenges to the country’s economic future is the big question raised by Tom Westland in our lead article this week.

Foremost among these challenges is that ‘the world is transitioning to a post-fossil fuel future and the markets for coal and gas — which together account for around a third of Australian merchandise exports — will decline drastically.’

Making up for the lost revenues from these exports ‘will require a more serious policy framed around global carbon constraints’ — a reality which Prime Minister Morrison, caught between international opprobrium and domestic political incentives to appease climate sceptics, has belatedly begun to acknowledge. The outlook for one of the biggest and most promising markets for new raw materials exports with the growth of the renewables energy economy in China is clouded by an ongoing bilateral diplomatic stoush.

The pandemic has also exposed ‘an inadequate social safety net’ that over the longer term ‘raises the costs of risk taking and entrepreneurialism’ for Australians.

Then there’s the future of Australia’s skilled migration program, a critical ingredient of pre-pandemic growth. Between the pandemic-era anxiety about the jobs market and the renewed spectre of threats from abroad (and especially Asia), many in Australia have understandable worries about whether the pandemic will leave Australia a more anxious and insular place in the years to come.

The good news is that surveys show that the events of 2020 barely shifted Australians’ opinions on migration and multiculturalism: most still believe — correctly — that migration benefits Australia’s economy and society, and only a small minority let nativist views guide their voting choices. The durability of the popular consensus in favour of an open Australia belies the thinking of some politicians that the pandemic was a good time to wink at anti-migration sentiment.

As important for Australia’s future as keeping culturally and economically open to the world is what the country can contribute to its own region. As Westland points out, if ‘the multilateral system decays or fragments’ under the weight of great power politics, ‘small open economies like Australia’s will become more and more vulnerable’.

In this sense Australia is in the same boat — or submarine? — as most of its Asian neighbours. ‘[W]orking with them to refresh and renew the multilateral order is the top priority for Australian economic and security policy alike’. Submarines and fighter jets on their own won’t achieve that goal. It will need the reinvigoration of Australia’s tradition of proactive diplomacy towards building a global and regional architecture fit for the times.

This article was published by the East Asia Forum.