A 12-month delay in reopening Australia’s borders to international travel could cost the economy $226.2 billion and 1.39 million jobs over the next 10 years, finds new analysis from the AEC Group.
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Three key takeaways:
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The Property Council has welcomed the release of the federal government’s international travel framework and warned all governments of the economic cost of potential delays.
“New economic analysis shows the massive costs to the economy, to jobs and to government tax revenues of delaying the reopening of our international border and normalising population growth,” Ken Morrison says.
“One of the biggest losers would be state and territory governments themselves, which would collectively miss out on $7.6 billion in GST revenue over a decade if border reopening was delayed by just 12 months.
“We now have a federal announcement that provides a framework for international reopening as vaccination levels meet the Doherty Institute milestones. We urge state and territory governments to align with this plan.”
Morrison acknowledges that reopening international borders when vaccine milestones are reached will require “detailed work from all governments”.
But he says federal budget assumptions underscore the challenge ahead. Australia’s population growth will be limited to 0.2 per cent over in the next financial year. Net overseas migration is forecast at negative 77,000 in 2021/22, with a return to normal levels of migration not expected until 2024/25.
The AEC Group analysed a 12-month delay scenario relative to the federal government’s 2021/22 Budget assumptions. A 12-month delay would result in a cumulative reduction of $226.2 billion in gross domestic product over 10 years and a reduction of $104.0 billion in wages and salaries.
More than 1.39 million full time equivalent job years would be lost over the next 10 years, if international travel was delayed by 12 months, with professionals making up nearly half of the forgone jobs.
The cumulative reduction in tax revenues would equate to eye-watering shortfalls in GST receipts, including $2.22 billion in New South Wales, $1.91 billion in Victoria, $1.61 billion in Queensland and $353.1 million in Western Australia.
Morrison says the research is a “wake-up call” for policymakers. “Delaying normal international travel comes at a huge economic cost, with the consequences to be felt for a decade,” Morrison concludes.
Download AEC Group’s report, Economic impact of delaying the opening of Australia’s border.