Hewson's View: Is Morrison really on top of COVID-19?

Prime Minister Scott Morrison is quick to boast that he is "ahead of the game" in responding to Covid-19 having called it as a "pandemic" some two weeks before the World Health Organisation. After mishandling the bushfire crisis, he has been desperate to demonstrate that he can be "proactive", and lead on an issue, especially in a crisis.

Danger: The health and economic future of all Australians is under threat as COVID-19 spreads through the community, but is the government doing enough to protect us? Picture: Shutterstock

Danger: The health and economic future of all Australians is under threat as COVID-19 spreads through the community, but is the government doing enough to protect us? Picture: Shutterstock

Yet, his actions since have been much more tentative and, if anything, on the evidence of the pace and substance of the responses of a number of other countries, he is now lagging somewhat.

The Chinese effectively closed down Wuhan and its province; the Italians the whole country; France and Spain locked up major cities: while Singapore focused more on testing and tracking the virus and enforcing social isolation and quarantine. The UK is now moving more to social isolation, as is the US - both also seem to be behind the game, with the full extent of the crisis not yet recognised.

Those countries that have attempted to "lock down" their economies and society have generally closed borders, schools and universities, pubs, bars, restaurants, theatres, many shopping centres, public transport, and imposed tough limits on public meetings and social interaction - in an attempt to slow the contagion, hoping to manage the demands for testing and for hospital and medical services.

They have mostly backed this up with very significant "stimulatory packages" to "cushion" the impacts on business, and in some cases households, supported by their central banks adding significantly to liquidity.

By comparison, while Morrison too has closed our borders, he has strongly resisted closing schools, universities, and so on, supported much less restrictive limits on outdoor and indoor gatherings, while attempting to "protect" those in aged care.

So far, he has announced only a modest stimulatory package, totalling $17.6 billion, or about 1.2 per cent of our GDP, with additional support of some $750 million to the airline industry, and promising further support to other impacted business sectors, hopefully in the form of concessional income-dependent loans. Our Reserve Bank has also followed those overseas by further easing liquidity.

To provide some order of magnitude to the comparison of stimulatory packages, ABC's Alan Kohler has noted that the stimulatory packages of the US, UK, Spain and France total A$3.8 trillion which, if we were to match that stimulus per capita, would require a package of about $185 billion, or about 14 per cent of GDP.

It seems that Morrison has attached a much higher priority to minimising the likely impact on our economy - hoping to avoid, or at least limit, a recession - by seeking to avoid "closures", and to keep as many as possible at work, for as long as possible. As a result, he is prepared to risk a more significant acceleration in the spread of the virus, and probably more significant concentrated demands on our hospital and medical services.

Don't get me wrong, judging the likely severity and duration of the COVID-19 crisis, and its impact on hospital/medical/aged care systems and services, as well as the broader economic and social impacts, is no easy matter.

Much of the medical modelling is effectively an extrapolation of the experience of the Spanish Flu after World War I, while the focus is mostly on "flattening" the impact curve, given the exponential nature of the virus' impact, judgements differ as to just how best and fast to do this.

The main cost of these strategies will be the ultimate spread of the virus to a significant percentage of the population.

Be clear, the main cost of these various strategies will be the ultimate spread of the virus to a significant percentage of the population, and most importantly affect the final number of deaths. Australia has been warned by the Deputy Medical Officer that our deaths may reach between 50,000 and 150,000. However, what is not clear is how the various responses will differ in determining the final impacts and numbers.

The final economic effects, both in aggregate, and industry-by-industry, will of course depend on what policies are adopted, and how they are implemented and enforced over time. For example, it was important for us to initially block Chinese arrivals, and more recently impose the ban on all overseas travel, but these will have very significant effects on two key sectors, education and travel/tourism, the effects on which are difficult to offset.

Unfortunately, this crisis will be a long-term challenge for our government, indeed, for all of us, and the effects will be very significant and long lasting.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.