The 2022 Australian federal election will be a de facto referendum on the handling of the pandemic.
Like a novice outplayed by a grand master, policymakers have conceded to the forever virus. But on economic matters, platitudes about “building back better” notwithstanding, the fault lines exposed by Covid-19 do not seem to have registered.
First is the abject lack of preparedness. The pandemic was predictable. Recent outbreaks (Sars, Mers and bird flu) were ignored. Governments failed to take the threat seriously. The focus on immediate savings ignoring later costs has meant chronic underinvestment in public health, preventive healthcare and related services, all central to the problems of managing Covid-19.
Strategies, including the current “learning to live with the virus” formula, have been haphazard, rarely surviving the briefest contact with reality.
While a vaccine was developed quickly, vaccination programs, testing and supplies, such as PPE, doses or rapid antigen tests, have been blighted by repeated failures. It is not a shortage of funds but the lack of competence in building capacity, acquiring and training staff and procuring essentials.
Second, Australia’s dependence on personal mobility is evident. Travel restrictions exposed reliance on immigration, foreign workers, educational services and tourism. In recent years, growth has been driven by immigration (at around 1.5% annually among the highest in developed countries). Net arrivals have predictably fallen sharply.
Loss of international students and inbound tourists has reduced demand and export revenues, especially affecting some regional economies. Loss of skilled foreign workers and low cost itinerant labour have impacted many sectors, including hospitality and agriculture. A rapid reversion to the pre-Covid status quo remains unlikely.
Third, Australia’s service-based economy, focused around health, wellbeing, hospitality, entertainment and leisure, is problematic. This sector, which provides over 80% of all jobs, is vulnerable to social distancing and limits on movement. Even without formal prohibitions, uncertainty, caution and isolation requirements can cripple demand and workforce availability.
Few personal services can be delivered virtually. They are also non-storable, perishable products. A hairdresser who has to close for a month may find it difficult to make up the entire lost revenue. In contrast, a manufacturer can meet demand for physical goods where the buyers are willing to wait. This permanent reduction of income makes services more exposed to disruptions of operations.
Fourth, the pandemic re-emphasised Australia’s dependence on global supply chains. Decades of outsourcing and offshoring have lowered costs of products, but even essential supplies (food and medical) and strategic products (defence equipment and refined fuel products) must now be imported.
As empty shelves and the scramble to secure anything and everything during the pandemic showed, limited onshore manufacturing diminishes policy choices and sovereignty.
Fifth, there is little acknowledgment of the accelerant role of inequality in the pandemic. Today, over 40% of the “uber-ised” Australian workforce are casuals or contractors, effectively piece workers. Most small businesses are sole proprietorships or familial concerns, effectively a form of self-employment. Lacking paid leave, continuity of income and adequate financial resources to weather a downturn, they are unable to stop working and act as vectors for transmissible diseases.
Health, aged care, food production and many essential services rely on marginalised workers. Low incomes condemn them to sub-standard, often crowded accommodation and long commutes on public or shared transport making infection control and avoiding economic interruptions difficult.
Reduction of financial support measures increases vulnerability.
Sixth, the pandemic showed that Australia is actually eight municipalities – the states and territories . Differences in economic structure and cultures led to inconsistent health responses and border rules. The constitution and division of powers is not fit for purpose and a barrier to dealing with national issues in a coordinated manner.
Finally, the pandemic highlighted the deficit in international cooperation. As of late 2021, around 54% of the global population had received at least one Covid-19 vaccine dose. The rate for low-income countries was around 6% due to developed country vaccine nationalism and hoarding. Compounding the problems, Australia is now seeking to poach medical professionals from developing countries denuding them of vital trained resources.
Australia, alongside high-income nations, faces human and economic backdrafts from their choices. The continued circulation of Covid-19 increases the risk of further mutations, new waves and disruptions. Poor countries may incubate future public health crises, like new viruses or antibiotic resistant infections.
All sides of politics, wary of becoming wedged into electorally damaging positions, avoid confronting these challenges. Emollient slogans – ‘we are in good place’ or ‘push through’ – cannot address these problems.
These issues vital to Australia’s future may not even make it onto the election policy agenda.
Satyajit Das is a financier and author whose latest books include A Banquet of Consequences – Reloaded (March 2021) and Fortune’s Fool: Australia’s Choices (forthcoming March 2022).
