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As borders reopen, the economy and Aussies are set to fly!

Peter Switzer
8 February 2022

Step-by-step, economic and real-life normalcy is creeping back and the Morrison Government’s decision to open our international borders to all double-vaccinated foreign visitors and visa holders from February 21 is a case in point. It’s a gamble that the Premier of WA, Mark McGowan would never have taken if he was PM as he shudders opening up his state to fellow Aussies, unless it’s for sport!

On a personal business level, I saw the steps back to normalcy in my office yesterday, when we christened our new studio, which has taken an eternity to build and is still waiting to be completed, thanks to the virus restrictions and a broken goods lift in our building (but that’s another story!). Seeing Jun Bei Liu from Tribeca Alpha Plus fund actually come to the studio was a glimpse of how our world operated before we heard of the Coronavirus! (My interview with her looked at the beaten-up tech stocks that one day could rebound in a more normal, fast economic growth world. You can see it here.)

Despite pleas from business groups to state and federal leaders to do more to get staff back to offices in CBDs, there are even signs that some workers are starting to resume their pre-pandemic work arrangements. That said, many are banking on employers embracing a hybrid model of some work from home.

That undoubtedly will become a part of the new normal for businesses that can see benefits in the innovation born out of the Coronavirus. But to many businesses, the old normal of open borders, flying overseas, the return of foreign workers and the resumption of immigrant arrivals, are important ingredients in getting our economy to grow again with real, sustainable oomph.

When the new normal is more set in concrete, then governments can stop financially supporting individuals and businesses and they can start trying to get their budget houses in order.

That’s why this step to open our borders is so important on many levels and not least in the stock market yesterday.

Flight Centre’s share price spiked 7.8%, Qantas 4.6%, Webjet 6.17% and Corporate Travel Management 7%. That’s dollars chasing the returns that come out of the new normal coming down the pike.

Immigration that has actually gone negative since the pandemic was declared in February 2020 will be reinstated, with the old cap of 160,000 a year. And that will be an important piece of stimulus to get the economy growing strongly going forward.

And it’s growth that’s critical to ensure the budget deficit and associated debt it racked up can be paid down in the future.

Open borders and the return of foreign workers and immigrants will mean those pubs and restaurants that have been operating on a reduced number of days and hours open, will be able to get back to normal trading.

Pandemic-affected businesses will not only be more profitable again, but they will also be easier to sell for those owners who’ve had enough of trying to make a profit in an increasingly challenging virus-infected economy and new age labour market.

Spearheading that growth will be the tourism sector, which the AFR says in the financial year before the pandemic struck “generated more than $60 billion for the Australian economy, with more than 660,000 jobs dependent on the industry”.

The following chart shows how our economy has responded to the end of lockdowns.

That blue line slumped on the arrival of the Coronavirus and the national shutdown. It shot up when we came out in June. It slumped when Victoria went into its long lockdown and with other state lockdowns but each time the reopening led to a big rebound in economic activity.

The opening of borders and us learning to live with Coronaviruses will lead to a very big economic recovery and that will be the biggest deliverer of the new normalcy as a chain of positivity and great economic outcomes flow out of the end of this damn-infected life we’ve lived for two years.

I can’t wait to say “bon voyage” to our soon-to-be-high-flying economy.

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