◼ ECONOMICS Bloomberg Businessweek March 8, 2021
central bank now expects the figure to amount to
just 0.2%, the lowest level since World War I.
Part of the drop reflects the absence of tens of
thousands of international students, mostly from
Asia, many of whom become residents after gradu-
ation. Education is Australia’s fourth-largest export,
contributing $A37.6 billion in the 2018-19 fiscal year.
Yet Gigi Foster, an economics professor at the
University of New South Wales, argues there are hid-
den costs, too, saying her research shows that having
a high proportion of non-English speaking students
in undergraduate classes degrades the quality of
instruction and contributes to grade inflation. The
pandemic, she says, is giving Australia an oppor-
tunity to recalibrate: “There’s not huge hordes of
people coming in, so you can think about what you
really want to do.” Foster, who moved to Australia
from the U.S. in 2003, would like to see the govern-
ment and universities raise the bar for international
entrants to attract a more “elite” group.
One area where Australia has become more
selective is investment. A law approved last
year gives the Treasury the right to block deals
even if they’ve been blessed by the Foreign
Investment Review Board. In August, Treasurer
Josh Frydenberg availed himself of his new pow-
ers to block China Mengniu Dairy Co.’s acquisi-
tion of Lion Dairy & Drinks. Then in January, he
nixed a $300 million takeover of building contrac-
tor Probuild on national security grounds.
Will the urge to splurge on wine at dinner fade
once government stimulus runs out? Will millennials
keep heading to Byron Bay once borders reopen,instead of jetting off to Fiji? And will the country con-
tinue to turn away Chinese investment if Beijing and
Canberra patch up their differences? It’s too soon to
tell, but at some point Australians will have to decide
how much they want to return to their old ways.
�Michael Heath35THE BOTTOM LINE Australia’s resilience in the face of border
closures and Chinese tariffs is raising questions about whether it
needs to tweak its economic model.“That’s more than offsetting a A$25 billion decline
in spending in Australia by foreign visitors.”
Looking back on the past 12 months, Alister
Purbrick is amazed that Tahbilk, his family’s
161-year-old winery in the state of Victoria, has come
through more or less intact. “If you’d have said in
February last year that we were going to have the
twin challenges of the pandemic and China essen-
tially shutting its market to us, I think I probably
would’ve had a nervous breakdown,” he says.
Before the outbreak, Tahbilk had been sending
a quarter of its exports to China, which announced
at the end of November that it was imposing tariffs
of as much as 212% on Australian wine shipments.
Although Beijing justified the duties by saying that
Australian winemakers had been dumping product
in China, the move was widely seen as retaliation
for Prime Minister Scott Morrison joining a chorus
of world leaders calling for an investigation into the
origins of the novel coronavirus.
Fortunately for Tahbilk, Australians have upped
their intake of national wines. “People decided
‘we’ve got to eat at home, so we’re going to drink.
OK, let’s buy more and buy well,’” says Purbrick,
who saw sales via online wine clubs surge 60% in
the nine months through January, from a year ear-
lier. “People were trading up, not down as you might
have expected in a crisis.” (For Tahbilk and the rest
of the industry, a 22% jump in exports to Europe in
2020 also eased the pain of being shut out of China.)
The economy’s surprising resilience has become
fodder for a national debate on whether the nation
of 25 million needs to undertake a course correc-
tion. Discontent with Australia’s expansive immi-
gration policies had been building for years, fueled
by rising home prices and growing congestion on
roadways and public transit, as well as by reports
that newcomers are beating out citizens in the com-
petition for jobs. “I think Australia pre-coronavirus
was in the midst of a dangerous experiment,” says
Salvatore Babones, a sociologist at the University of
Sydney. “This crisis is an opportunity for Australia
to dial back immigration to still world-beating, but
more modest, levels.”
In an opinion piece published in May, Kristina
Keneally, who is part of the leadership of the oppo-
sition Labor Party, wrote: “When we restart our
migration program, do we want migrants to return
to Australia in the same numbers and in the same
composition as before the crisis? Our answer
should be no.”
Australia’s decision last March to close itself off to
foreign travelers has already forced a reset—albeit a
temporary one. Its population had been forecast to
expand 1.7% in the fiscal year that ends June 30. The
◀ Visitors at Mungo
National Park in New
South Wales▼ Australia’s annual
population growth▼ Australia’s annual
GDP change
◼ Estimate2.0%1.51.03%0-3Q2 ’00 Q2 ’202015 2021