When the last budget was delivered in October, the government noted that Australia’s international border would begin to reopen towards the end of 2021. Tuesday’s Federal Budget confirmed it is now unlikely to open until ‘at least’ mid-2022 — and economists are warning that ongoing costs to Australia’s economic recovery will add up.
In the budget document, the federal government said it doesn’t expect to see pre-pandemic levels of international travellers return until 2024-25.
This its worth noting, is also a forecast that depends on having no significant COVID-outbreaks or state border closures and some international green lane travel returning in 2022.
“Inbound and outbound international travel is expected to remain low through to mid-2022, after which a gradual recovery in international tourism is assumed to occur,” the Budget reads.
On Wednesday, Treasurer Josh Frydenberg reasserted that the decision to keep borders closed was based on medical advice and a commitment by the government to avoid another extended lockdown like that experienced in Victoria.
“That is what we are seeking to avoid, and the economic recovery does require us to continue to be successful on that front,” he said.
The budget also suggested Australia will have a “population-wide” COVID-19 vaccination program in place by the end of the year, providing the first target since the initial vaccination rollout plan was scrapped in April.
Though just a day after the budget update, prime minister Scott Morrison told Leigh Sales on ABC that Tuesday night’s budget suggests that the population would be fully vaccinated by the end of 2021 was merely a goal and not a certainty.
“There is a general assumption of a vaccination program likely to be in place and by the end of this year,” he said,
“But what that means is that there is an understanding that over the course of this year, the vaccination program will continue to roll out. And will reach as many Australians as we possibly can.”
“That could happen with two doses, one dose. It could be months either side of that and that will not have a material impact on what’s in this Budget and it would be a mistake to think it did,” said Mr Morrison.
Speaking to Business Insider, Michael Buckland, executive director of policy think tank the McKell Institute, who authored a recent report that costed out the impact of border closures, said that the message from the Budget compounded uncertainty around Australia’s borders.
“A delay like this will lead to a reduction in economic activity in the tens of billions of dollars,” Buckland said.
“Looking into 2022, you get to the 40 billion mark,” he suggested of the ongoing economic impact but added that number reduces if Australia creates travel bubbles with other countries similar to that already in place with New Zealand.
In recent months, Singapore, Hong Kong, Fiji and the Pacific Islands and Vietnam are all countries that have been flagged as potential countries to begin green lane arrangements with.
According to the McKell Institute, their most recent modelling found that ending Australia’s international border closure would increase economic activity by approximately $203 million per day.
Buckland told Business Insider that despite the Budget’s stated goal to have Australia fully vaccinated by the end of the year, there still doesn’t seem to be a sense of urgency around the flow-on effect of a vaccinated population and opening up borders.
“Borders are not going to open until we are heavily vaccinated,” he said.
Buckland also suggested a lack of precise dates around both borders and vaccinations would hurt the economic recovery.
“Everyone’s calling out for certainty on it,” he said.
“We need to be told ‘it will be done by this date.” That’s why we need a plan so that we can say “if we all do the right thing and get vaccinated, this is when we can reopen.”
Furthermore, he told Business Insider that assumptions outlined in the Budget for pathways for international students to return in the latter half of the year and skilled migrants would undoubtedly help, but that he didn’t see this happening until either the majority of Australians or incoming travellers were vaccinated.
“The budget last night should have been about the vaccination program because that’s what needs to get done to lock in the recovery,” he said.