The Australian economy has suffered twin blows in recent weeks. Much of the country is now under extreme lockdown conditions (martial law) while the price of our most important commodity, iron ore, has pulled back significantly from around US$220/ton to US$165/ton.
State and Federal Budgets were hammered in 2020 due to the economic dislocation caused by government policies. However, just as economic activity was improving, we have reverted back to the same dislocation. This is a body blow for many Australians, particularly small business owners and those in more tenuous private sector work. While personally I’ve been one of the lucky ones, I know there are many who are not.
The economic implications of recent lockdowns will be significant, particularly with no imminent end in sight. The mental health crisis the country is suffering is escalating. Many mental health providers are overwhelmed. Anecdotally I heard a helicopter rescue pilot devastated by a spate of cliff-jumpers in locked down Sydney; including teenage girls. For some reason, these stories and very real costs of lockdowns are not really making into major media outlets. One would hope they are not pushing an agenda of lockdowns, masks and vaccinations as opposed to looking at all evidence and arguments dispassionately. The censorship around counter-arguments is concerning.
The bottom line is the miracle iron ore price has wilted, while budget pain will come again due the loss of employment/taxation revenue from small businesses. The trajectory for Australia, politically and economically, looks less than great right now.