Closed Borders and Lucky Generals

The ‘Lucky Country’ and its General

Scott Morrison, Australia’s Prime Minister since 2018 is a devout Christian. He certainly seems to have the heavens on his side. Backroom manoeuvres saw him rise to the leadership of the Australian Liberal Party (which is actually quite right-wing) and inherit the federal Premiership. He won a general election in 2019 by a whisker, some say it was pure luck, and despite a bad ‘bushfire season’ seemed to have a tight hold on to Australia’s top job.

Then came a mysterious virus and on March 26, 2020, Australia’s Prime Minister imposed a lockdown and slammed the country’s borders shut. The new virus, known as COVID-19, was sweeping the globe. Australian health authorities knew that the last known global pandemic, the 1918 Spanish Flu, had resulted in the deaths of around 1% of Australia’s population, an awful toll but lower than in most other countries. The geographical isolation of the colony (as it was then) had helped alleviate the worst of that dreaded disease. Determined to preserve that record, the PM used his authority as head of the federal government and acted quickly, isolating Australia again.

At the time many called it an overreaction. It certainly seemed to be hastily thought out, with the initial requirement for entering Australians being ‘self-isolation’ later raised to mandatory government-supervised quarantine. States were left to impose their own quarantine regimes and ‘contact-tracing’ systems – a phrase that was soon to become a familiar one.

The restrictions were largely successful, albeit with some setbacks. Melbourne in particular had to endure several lockdowns, as the virus leaked out of an inadequately monitored hotel quarantine program. Several states imposed their own restrictions, with Western Australia isolating itself from much of the country for extended periods of 2020. But COVID-19 was successfully kept at bay, and life in Australia today is largely normal. Other than a travel ‘bubble’ with New Zealand though, Australia’s international borders remain closed.

The law of unintended consequences

Australia has long been a magnet for international tourists. An estimated 9.5 million foreigners arrived in 2019, in addition to more than 700,000 international students. Doomsayers forecast a cataclysmic effect, of the pandemic, on the nation’s tourism and hospitality industries. The government predicted that the economy would contract, and unemployment would reach almost 9%. After enjoying 30-plus years of economic expansion and practically full employment, this was likely to be a huge shock. Unprecedented government measures were put in place to cushion the population, causing the federal budget to go into deficit, instead of recording a comfortable surplus.

Australia’s airline sector was affected immediately. Qantas acted fast, grounding its entire long-haul fleet, laying off hundreds of staff, outsourcing many ground-based positions and renegotiating labour agreements. CEO Alan Joyce, who has been at loggerheads with the airline’s unions for many years, rightly saw this as an opportunity to make sweeping changes.

Virgin Australia (VA), the country’s second largest airline, did not have the bottom line to withstand the shock and went into voluntary bankruptcy. VA has since relaunched as a purely domestic operator, with a smaller fleet of Boeing 737s and a new CEO. VA’s entire fleet of widebody aircraft was returned to the lessors as part of the restructuring process.

Australia’s economy did contract for one quarter, but the remaining six months have seen the largest quarterly lift in Gross Domestic Production (GDP) since the 1970s. What had been expected to be an economic Armageddon turned out to be the best back-to-back quarters of growth in Australia’s recent history! Australia seemed to have found its ‘Lucky General’.

What happened?

It turns out that even the mandarins at the Treasury misunderstood Australia’s economy and spending patterns. More than 11 million Australians travelled overseas in 2019. Those travel-addicted Aussies had spent billions overseas, but in 2020 they were forced to either save that money or spend it locally.

In addition to travel restrictions, many households were showered with cash as a nervous federal government delivered generous subsidies to much of the working population and pensioners. The majority of the money seems to have been spent on retail sales and investments, but internal travel has seen a sharp resurgence, with subsidized domestic holiday programs wooing the frustrated traveller.

Regional Express, a.k.a. ‘Rex’, a purely domestic airline that operated turboprop aircraft to smaller cities, saw this as an opportunity. Acquiring several surplus VA Boeing 737s, Rex has morphed into a rival to Qantas and Virgin – the first time in decades there have been three major airlines in the country.

With record-low interest rates adding to their savings, Australians have pushed up house prices to record levels. Car prices have soared too, with second-hand vehicles appreciating 45% over the last year. New cars have been selling rapidly, particularly in the luxury sector, as cashed-up Aussies treat themselves to a flash new vehicle. If you can’t go to Milan, buy a Ferrari instead!

The net benefit of the border restrictions to Australia’s economy in the December quarter alone is calculated to be AUD 7.5 billion. The full-year benefit may approach 30 billion. Little wonder that PM Morrison has stated that the borders will remain closed ‘… for the foreseeable future’.

Which brings us to the Generals

Napoleon famously said, “Don’t bring me good Generals, bring me lucky Generals.” The charismatic and visionary French leader understood that in war, as well as life, luck is often the deciding factor. Some individuals seem to have a knack of being ‘in the right place at the right time’ and achieving spectacular results that seemingly more capable rivals cannot deliver.

Sri Lanka’s military achieved a spectacular victory against a resolute and capable enemy in 2009. This was accomplished because of many factors. Among them was the political will displayed by the government; the logistical capacity developed at great cost by the military; the sacrifices made by the civilian population; and the fighting qualities of the individual soldiers, sailors and airmen. But somewhere down the line, luck played its part too.

Now the Sri Lankan military with accomplished Generals in charge, is again at the forefront of combating a new, wily and invisible enemy that we thought had been defeated. COVID-19 is currently counter-attacking ferociously, and if Sri Lanka is to win this war too, those same qualities of service, sacrifice and skill will have to be tempered with a dose of luck. I pray we succeed, for the consequences of failure are too terrible to contemplate

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