By George Bai
In a mere two months, the coronavirus has transitioned from a novel media curiosity into a global pandemic that threatens the foundations of Australia’s financial, economic and societal institutions. To overcome this crisis, the Australian government must act decisively with strong, consistent health messaging and well-reasoned monetary and fiscal policy.
Yet, even the best responses may not be enough to avoid heavy unemployment, death, and a vastly altered cultural landscape.
Modelling the Coronavirus
In order to predict the impact of the coronavirus on Australian society, it is necessary to understand the modelling and objectives of the Australian government.
In a similar manner to other responses around the world, the Australian government seeks to ensure that the supply of hospital workers, ventilators, and protective medical equipment meet the demand at any given point in time. When a situation of uncontrolled transmission occurs, the threat is that a large surge of infected individuals will overburden Australia’s medical facilities, leading to inadequate care and potential triage scenarios where doctors would have to decide life and death for patients. In this scenario, it is possible that case fatality rates could reach up to 12%, as seen in the epicentre of the Wuhan epidemic.
In a situation where herd immunity occurs at 60% of the population infected, it is estimated that approximately 200 000 Australians would die if the government allowed the coronavirus to spread unchecked. These numbers are considered unacceptable, and in order to prevent the spread of the coronavirus, the Australian government has implemented social distancing measures such as bans on overseas travel and gatherings of more than a hundred people.
These measures act to starve the coronavirus of potential infection targets, which slows down the spread of the coronavirus to a more manageable pace, minimising the time and extent with which our healthcare systems are overburdened. In this scenario, the case fatality rate can likely be reduced to around 1% , saving the lives of around 100 000 Australians, even without considering any further medical advancements that may occur in the meantime.
Further social distancing measures, such as the closing of schools and universities, household quarantines and isolation of the elderly may in the best case scenario reduce the coronavirus fatalities down to around 20 000 Australians.
The key problem that government officials face with the coronavirus is that a vaccine is estimated to be around 12-18 months away. In order to save the most amount of lives with a strategy of heavy disease suppression, the social distancing measures would have to remain effective until the vaccine is available. This appears almost impossible, and it is estimated that social distancing measures will only remain effective for three to four months before people are unwilling to abide by them. Even if the first wave of cases slow down, this will simply cause the coronavirus to spread again in the community, which has the potential to lead to the disastrous results the Australian government wanted to avoid in the first place.
Moreover, the economic cost is already staggering, with Australia projected to enter a recession, and financial markets having collapsed around 30% from their peaks. Unemployment could reach double digits, and monetary policy is reaching its limits as RBA cash rates have already dropped to 0.25%, leaving little room to stimulate the economy in the event of a sustained economic shutdown. Airlines are likely to go bankrupt without government assistance, and tourism and the arts have been eviscerated by the social distancing measures.
In such a situation, the cost of social distancing may be too heavy to bear, and it may be evaluated that the indirect impacts of the coronavirus on our economy will cost more lives and utility than it is worth. The government faces no good options, and in such a crisis, decisions will have to be re-evaluated as new scientific evidence and economic modelling comes to light.
For people who may be living paycheck to paycheck, it may be difficult to have faith in the government. Still, it is likely an inevitability that the Australian government will provide as much money as necessary in order to sustain people through the duration of the outbreak. The Australian government will be offering stimulus packages providing cash flow to businesses and those who need the income most urgently, and more stimulus packages are likely to follow as the situation develops. If more support isn’t presented, it is more likely that the Australian government has decided to allow the coronavirus to spread rather than to not provide continued support to Australians in need.
The reason why the Australian government is willing to provide so heavily is because economic time has paused, but financial time hasn’t. If all Australians were to be put in a year long cryogenic freeze until a vaccine was found, nothing would particularly change in terms of infrastructure or labour quality. The problem is simply that bills have to be paid, and paychecks must still be sent out despite business grinding to a halt. Under these circumstances, the Australian government is likely left with little choice other than to burden themselves with the majority of the cost, or risk a Great Depression style economic collapse.
For students, the switch to online education may be extremely difficult and may require support from parents in order for focus to be maintained. Teachers may have little experience teaching in an online environment, and it may be difficult for them to force students to pay attention or to do their work like in a traditional classroom. It seems likely this this will exacerbate the learning outcome disparity between low income households and high income households, as students from low income households may lack access to internet and may have comparatively less comfort in an online learning environment.
Also, in all likelihood, the HSC will likely be delayed until later in the year, or will perhaps continue as planned but with less exams and more take home assignments. There is even the possibility that the HSC will continue as planned, with more weighting being placed solely on the HSC exams due to an inability to provide proper internal assessment. After all, it seems difficult to imagine how a subject like maths would be assessed properly, whether by assignment or an online exam. Whatever the case, it is likely that there will be increased volatility in marks and stress, which may simply be unavoidable.
The hardest hit group in Australian society will likely be the elderly, who are disproportionately affected by the worst of the coronavirus. In order for social distancing to save lives, they are the group who need to follow the guidelines the most. However, social distancing will inevitably involve an increase in loneliness, which poses heavy health risks for the elderly, such as faster cognitive decline and weaker cardiovascular health. It may be necessary to incentivise community figures and their family members to see them more, and to teach and provide them with the tools necessary to communicate online.
There must also be a reduction in unnecessary hoarding, as Australia has more than enough food production to provide for the entire population, and the demographic most hurt by the hoarding will be the elderly population, who will likely find it difficult to acquire essential supplies. A community effort is necessary to ensure that they are cared for and properly equipped to handle and avoid the effects of the coronavirus.
The Australian government appears to be listening to scientific evidence, and it seems difficult to criticise them for that. They need to manage a careful balancing act with regards to lives lost, our economy, and our education, which is already problematic in the best of times.
I wish the Australian government the best of luck in managing the outbreak.
*Note: The estimations provided of fatalities are my personal, simplistic guesses extrapolating from an Imperial College paper, which may not be wholly accurate as Australia’s healthcare system and demographics differ from that of the UK and the US.