Will the penny ever drop that recovering from Covid19 shutdowns will take a lot longer than governments admit?

The most widely accepted narrative about the Covid-19 virus says that Australia has fared better than most countries because the virus has not spread that widely here.

Despite some mistakes (e.g. Victorian security guard failures, not quarantining Ruby Princess passengers, inadequately protecting aged care homes), Australians, it is suggested, ought to be grateful to their governments and officials for all the lives saved to date. The Commonwealth also introduced JobKeeper, as well as a raft of other Budget spending measures, to reduce the short-term pain. According to the narrative, lockdowns, distancing restrictions, contact tracing, and border closures (mainly imposed by the states) helped minimise spread of the virus.

It is further believed that the number of Covid cases will remain suppressed (some think the virus can be eliminated), so that all we need to do is wait for a vaccine to become available sometime next year, and (hey presto!) life can return to normal. In the meantime, despite soaring public spending and deficits, (paradoxically) those still earning a decent income are just about to enjoy big income tax cuts courtesy of the recent Budget.

Our eventual national debt ($1.4 trillion by the middle of the decade) is a downside but officialdom says it is "manageable" because it will be paid back over the long term, and will be assisted by current ultra-low interest rates and by quantitative easing (printing money). Voters are widely expected to show their appreciation (for being saved from Covid) by voting incumbent governments back for another term.

The problem with this majority-accepted paradigm is that the outlook being hyped is more than a little optimistic, and the inherent backslapping somewhat undeserved.

My own expectation is more pessimistic.

Vaccines are now not expected to become available until sometime next year, suggesting that Australia faces at least another twelve months of restrictions. Aspects of Victoria's lockdown are being further extended, and some state border closures look like lasting into next year. Hospitality and travel, in particular, are still badly affected.

Domestic tourism will pick up somewhat as state borders re-open and could almost fully recover within 12 months. International travel will take much longer to resume normality (2022 or later?), and it is said that business travel may never return to pre-Covid levels. Commercial property (hit by shutdowns, growth in internet shopping, lease breaks, and office staff working from home) similarly may take years to fully recover. Business bankruptcies and the effects of ending six-month loanrepayment deferrals may also not fully impact until 2021 and beyond. Altogether, recovery from Covid will be far from instant.

Based on worldwide experience, every time restrictions are relaxed, Covid 19 starts to spread more quickly again. A big problem is that citizens have widely become tired of restrictions and want to resume normal social and working lives.

A major reason why Covid spreads so easily is that it is now known that infected people can transmit the virus both when they have symptoms and when they don't. Some people acquire the virus but never show symptoms. The World Health Organisation (WHO) has warned that the Covid-19 pandemic is now being driven by people in their 20s, 30s and 40s, who don't know they are infected. (At any given time, about 30 per cent of infected people are in the latent period, three to five days after they have been infected, when the virus is not yet detectable).

A government-funded study of around 3,000 people has led health experts to believe there may have been many more cases of Civid 19 in Australia than originally thought. Researchers suggest that the number of people exposed to the virus back in July could have been as high as 71,400 before Victoria's second wave. The study tested for antibodies in people's blood, searching for traces of the virus.

Government handouts to alleviate economic impacts of Covid 19 are easy to announce but (politically) much harder to later take away. When the special handouts come to an end, unemployment in Australia is certain to soar, and unviable businesses will be unable to stay open any longer. Schemes like JobKeeper (planned to end last month) have already been extended by six months (to March 2021). It is virtually guaranteed that, as March 2021 approaches, there will be calls to extend largesse for yet another six months because any vaccine almost certainly won't be available in the required quantities until later in 2021. If governments cave-in, budget deficits and expected debt levels are certain to blow-out further.