Australia’s coronavirus response

The opening round of the Formula One world championship in Melbourne was cancelled on Friday (pictured), hours before cars were due on track. By day’s end, nationwide bans were issued for gatherings of over 500 people. The Minister of Home Affairs Peter Dutton and actor Tom Hanks had tested positive in Queensland, Australia had thrashed New Zealand at an empty Sydney Cricket Ground, and it was clear the crisis had catapulted from toilet-paper hording to becoming a threat to life and livelihood.

Cancellations spread like the bushfires that raged over the summer. The F1, the Royal Easter Show and the Melbourne International Comedy Festival were all scrapped. Even the Pixies pulled their Opera House performance. Where is my mind?

Prime Minister Scott Morrison said he would support his favourite rugby league team for a last time in person before the restrictions came into effect on Monday. (Yes, he combined his announcement of the ban with saying he would attend such an event on the weekend — again leaving both critics and comedians unchallenged.) Within hours he reversed his decision.

The ban is the first on mass gatherings since the Spanish Flu killed 15,000 Australians in 1919. “As we slow it, as we manage it, that ensures that the national health system will be able to accommodate the increasing demands we’d expect to see as a result of the coronavirus spread throughout Australia,” Morrison said.

The Australian government didn’t hesitate in its initial response to the threat, denying entry to foreign nationals who’d been in China, and then Iran, South Korea and Italy, before cases developed domestically. The early and aggressive stance towards China was particularly brave, drawing criticism from the Chinese embassy in Canberra. China receives a third of Australia’s exports, making the Australian economy the most China-dependent in the developed world. Additionally, 200,000 Chinese students pay to study in Australia and 1.5 million tourists visit from there each year. The travel ban decision will have economic implications.

Australia has enjoyed a world-record run of 28 years since its last recession. That is about to end. But, fortunately, its economic position makes it, along with Germany, one of only two developed countries in a position to address the threat with a stimulus package, as pointed out by the OECD. So, with hopes of minimising the effects of the virus on the economy, the government announced a AU$17 billion package on Thursday, which may turn out to be the first of several. The package will deliver one-off $750 cash payments to approximately 6.5 million lower income Australians, up to $25,000 to small and medium-sized businesses to contribute to salaries, wage subsidies for apprentices, as well as business investment incentives. The package is equivalent to one per cent of GDP.

“You don’t prepare a line item in the budget for a global pandemic,” said Treasurer Josh Frydenberg after releasing the plan. “We had a clear set of principles and we just knew this economic challenge was occurring and we needed to front-end the package to really get the money flowing early. It’s a watching brief and obviously we are not ruling out any further programs should it be required.”

Frydenberg and the government have bailed on their commitment to return the budget to surplus in light of the coronavirus. Not only will the bottom line suffer the expense of the stimulus, but also the consequences of the pandemic. For example, last year Chinese students and tourists added AU$16 billion to the economy, which will not be repeated this year. On Friday, the share market was manic depressive, losing 8.1 per cent before finishing the day 4.4 per cent higher, as Australian stocks had their highest turnover ever — AU$18.2 billion. Last Monday almost AU$140 billion was wiped off the market.

Unconfirmed reports from an internal government briefing on Friday, following a meeting of the chief medical officers of Australia, the United Kingdom, the United States and Israel, highlighted the severity of the coronavirus threat. It expects that 60 per cent of Australians will end up infected by Covid-19, though the mortality rate should be only 0.6 per cent, as seen in South Korea. The main danger is to people over 70 years old, where mortality rates are 10-15 per cent. The pandemic will reach its peak in June, ease by September and be done by December. In all, tens of thousands of Australians will die. The economic effect will also be severe, compounded by 30 per cent of the workforce being sick, causing a recession.

These revelations are consistent with the evidence of New South Wales chief medical officer, Dr Kerry Chant, who on Thursday said she expected the first wave of the virus to infect 20 per cent of the state, around 1.5 million people, and result in close to 80,000 high-needs patients inundating the state’s hospitals. English counterpart Chris Whitty, who is also chief medical adviser to the UK government, said under worst-case scenarios, 80 per cent of the country would contract the virus, leading to as many as half a million deaths.

The pandemic does not yet have widespread community transmission in Australia. As of Saturday morning, there were just 197 confirmed cases of Covid-19, with three fatalities. Though in Italy, cases soared from 300 to over 15,000 in just two weeks. In general, infections are doubling every six days. At that rate, Australia will reach 10,000 by the end of next month. To meet the need, the country has 695 public hospitals with 62,000 beds and an additional 630 private hospitals with 33,100 beds. There are combined roughly 2,000 intensive care unit beds.

Reassuringly, other than for the sick and the elderly, Australia’s chief medical officer, Professor Brendan Murphy, has described the coronavirus as a “very mild condition”. Panic, more than the disease itself, is what will determine the damage left in its wake.