Billion-dollar upside to Australia’s COVID-19 border closures, new Commonwealth Bank report reveals

The economic impact of closed international borders as the global pandemic rages may not be as detrimental as initially feared, according to a new report. Analysis by Commonwealth Bank showed that despite both tourism exports and imports collapsing due to international border closures, education exports have remained buoyant in 2020. The number of international students in Australia as at April 2020 was up by 3 per cent over the year, according to the latest data from the Department of Education, Skills and Employment. Commonwealth Bank head of Australian economics Gareth Aird said it meant the economy was still reaping the benefits of foreign student spend. He also said lost money from international tourists was being offset by Australians not being able to spend money abroad. “In 2019, the total amount spent by Australians overseas was $51.9 billion, and Australians spent $13b holidaying overseas in the first quarter of the year,” he said. “If you assume 2019 was going to be replicated this year, then there’s $38b that we were going to spend over the second half of 2020 that we won’t be spending. “So how much of that would we need to spend to offset the fact that no one’s coming here for a holiday, and it’s only about half of that.” Mr Aird said concern around a sharp drop-off in foreign students and therefore education exports ‘was a story for 2021 and not 2020’. The report stated it was unknown how much of the $38b saving would be spent on the local economy. BDO’s legal principal and national leader for migration services Maria Jockel said that with the recession and some 2.5 million Australians looking for work, the closure of the borders meant those who can holiday must do so in Australia. “While this is positive for the economy, unfortunately many Australians are tightening their belts because they’re not certain what the future holds in light of uncertainty around JobKeeper payments and the 2021 budget,” she said. However, WA’s peak business body said as the country’s most trade-engaged state, WA had more to lose if international border closures lingered. Chamber of Commerce and Industry WA chief economist Aaron Morey said as local businesses have been allowed to incrementally reopen, WA has recovered around 60 per cent of the fall in business confidence since the height of the pandemic. “There is still a big distance to cover just to bring our economy back to the position it was in pre-crisis,” he said. “More than half (55 per cent) of WA businesses cited international border closures as damaging their business, with the most serious impacts being in the accommodation and food, transport and manufacturing sectors. “Although local tourists spend more abroad than international tourists spend here, some tourism businesses rely almost entirely on international and interstate visitors, and are unlikely to get close to their normal revenue levels even with Western Australians holidaying at home.” Mr Morey said although some regional tourism hotspots have benefited from increased visitors within WA, in aggregate businesses in WA’s regions were isolated and uncertain about the coming year.