While the Morrison government rails at the states to end border closures and pressures Daniel Andrews to reopen Victoria, its own international border closure is costing hundreds of thousands of jobs and tens of billions of dollars in lost export revenue.
The economic damage inflicted by Morrison’s international border closure is invariably absent from the extensive media commentary on and reporting of yet more efforts by the federal government to “ramp up” pressure and “turn up the heat” on state governments over border closures, but is far greater than limits on who can enter Western Australia or Queensland.
The biggest victim is the tourism industry, which employs around 700,000 people. With partial reopening of the economy and Australians prohibited from leaving the country, greater domestic tourism by Australians blocked from holidaying overseas will partly offset the loss of 9 million international visitors.
Consequently, disentangling the impacts of domestic tourism versus international tourism is thus difficult, but Margy Osmond of the Tourism & Transport Forum Australia recently told a Senate inquiry that international tourism normally accounted for around $4 billion a month, and that:
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…at any given time there are probably about 700,000 direct jobs. According to our projections at the moment, we’re sitting at only about 230,000 employed. So the jobs are 65% down. Even at our best moment, which would conceivably be next January, after the Christmas holidays, and with a bit of a domestic boost if some of those borders open up, we’re still looking at being 40% down on the normal job load. It’s a devastating impact.
That’s around 280,000 jobs still missing while the international border remains closed (the 700,000 jobs estimate is one backed by the ABS; other tourism bodies claim up to 900,000 people work in the sector).
International tourism also generated around $22 billion in exports in 2019, according to the government’s own figures, making it the sixth largest source of Australian exports, though tourism imports have also been severely curtailed by the travel ban.
Tourism employment is often located in more economically marginal regional areas, meaning the job losses and lost revenue from visitors has a greater impact than in large urban centres.
Higher education has already lost thousands of jobs as foreign student arrivals collapse: 3000 jobs had been announced by universities at the end of July. It’s expected that 21,000 higher education jobs will be lost by year’s end, reflecting a sector that the federal government has not only refused to support, but which it has attacked with funding changes designed to deter students from choosing humanities courses requiring critical thinking.
The financial impact on the sector, according to Universities Australia, is likely to be between $3 billion and $4.8 billion this year, and $16 billion over the next four years. The sector also generated $40 billion in export revenue in calendar 2019, making it the fourth largest source of exports.
To these numbers should be added at least some of the job cuts announced by Qantas — 8500 so far — which reflect the shutdown not merely of international aviation but much of the domestic aviation industry as well. (Virgin is also shedding 3000 jobs as part of its administration process.)
These are only the direct costs of Morrison’s border shutdown. Potentially much larger are the indirect costs: to jobs created by servicing the additional demand generated by foreign students; to businesses unable to secure temporary migrant workers, to the construction sector facing a dramatic slowdown in demand for residential construction as a result of a massive cut to migration, to businesses that supply food and other services to the hospitality and tourism sector.
KPMG — a firm that works assiduously to help multinationals avoid tax, thus inflicting their own economic damage on Australia and the rest of the world — estimates that a long-term border closure would cost $117 billion over a decade in lost GDP, primarily from lower migration in the absence of a vaccine.
Apart from the travel agent sector and right-wing economists, few people are arguing for an immediate end to the international border lockdown, even to countries like New Zealand or China that have got on top of the virus.
But when it comes to state border closures, we seem to go through the looking glass, and emerge into a world where, at least according to the federal government and much of the media, the economic costs of sealed borders are horrendous and the risks of infection trivial.
Three hundred thousand Australians who’ve lost or are losing their jobs might disagree. So too might economists watching a solid chunk of $60 billion worth of exports vanish.
Should the government be talking about how much the international border closure is costing? Let us know your thoughts by writing to [email protected]. Please include your full name to be considered for publication in Crikey’s Your Say column.