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Australia prepares for Covid-19 pandemic
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Australia’s federal and state governments have activated their respective pandemic plans, preparing for widespread transmission of the Covid-19 disease.
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Prime Minister Scott Morrison said the National Security Committee of Cabinet had come to the conclusion that coronavirus would become a global pandemic, so the federal government was initiating its emergency response plan.
Meanwhile, federal Health Minister Greg Hunt met his state and territory counterparts to discuss pharmaceutical supply chains and establishing dedicated fever clinics if hospitals become overwhelmed.
The federal government’s response involves an escalating series of steps, from self-isolation of suspected cases, to enforced quarantining of patients and even ordering people to work from home. State government plans include turning sporting stadiums into quarantine sites.
The federal government has also extended its travel ban on visitors from China into a fifth week, with the National Security Committee reassessing the ban on a weekly basis. At this stage the government is not considering travel bans from other countries, despite outbreaks beyond China.
To date, there have been 82,000 confirmed cases of Covid-19, with 2,800 deaths. While the majority of infections and fatalities have occurred in mainland China, the number of new infections outside China have raised concerns the virus is spreading.
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Prime Minister Scott Morrison says the federal government has initiated its response to the Covid-19 outbreak. |
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Government prepares economic stimulus
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The federal government is preparing a stimulus package to mitigate the economic impact of a potential pandemic.
Prime Minister Scott Morrison said the government has asked the Treasury department to develop a scalable fiscal stimulus plan that can selectively target sectors of the economy that may be particularly affected by the virus, such as tourism or exporters who rely on trade with China.
However, if the spread of Covid-19 started to threaten the wider economy, particularly employment, Mr Morrison said the government would be prepared to increase expenditure to help maintain economic growth.
The board of the Reserve Bank of Australia meets this Tuesday to decide on interest rates, although it has little room to move, having already cut rates to an historic low of 0.75 per cent in an effort to stimulate the economy, which was already struggling before the effects of the coronavirus outbreak and the summer of bushfires. Economists widely expect the economy will shrink in the current March quarter.
Meanwhile, analysis by Deloitte Access Economics says the virus will cut A$5.9 billion from the economy in the first half of 2020, with the federal budget A$1.8 billion worse off due to lower iron ore prices, travel restrictions and disruptions to supply chains.
While the federal government had already started to move away from its promised budget surplus after the need to deal with the unprecedented bushfires, the further strain of Covid-19 – on top of weak consumer spending and business investment – means it will likely need to spend further to keep the economy afloat.
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The Australian economy has been facing a number of economic shocks that have been beyond our control.
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— Treasurer Josh Frydenberg
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India a counter to China, says minister
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Australia needs to look to other trading partners, such as India, and reduce its economic reliance on China, according to a government minister.
Minister for Trade, Simon Birmingham, said the coronavirus outbreak had highlighted the need for Australia to diversify its trade beyond Chinese markets. Both supply and demand are being affected in China as parts of the country remain locked down and workers stay at home in an effort to contain the spread of the disease.
As well as affecting the already-fragile European economy, the Chinese slowdown could even spread to the US, where China is the country’s third-largest and most rapidly growing export market. The Australian economy, which is also heavily dependent on China as an export destination, will also be affected.
Speaking in Mumbai, where he has been leading a delegation of Australian businesses, Senator Birmingham said the effects on the Australian economy show how important it is to strengthen trade ties with other nations, particularly India.
However, there is work to do. Australia’s trade with India was worth $A30.4 billion in 2018; while its trade with China was worth A$214.6 billion in the same year. Senator Birmingham said the India Economic Strategy has set out a goal to increase Australian investment in India from A$15 billion in 2018 to A$100 billion by 2035.
While the two countries share much in common, and Australian universities are a popular choice for Indian students, a stronger economic relationship has always proven elusive. The Australian government has long-sought a trade deal with India, but so far New Delhi has demurred.
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Budget prompts innovative financing
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The federal government is reportedly looking at “innovative” financing solutions such as leasing warships and public private partnerships to alleviate pressure on the Defence budget.
While the government has increased its defence spending to almost A$39 billion this year, its wider budget is under pressure due to the impact of the summer’s fires, dealing with coronavirus and sluggish economic growth.
While it has made much of its promise to deliver a budget surplus this financial year, it has begun to manage expectations on that front, arguing that the surplus exists to be spent in order to deal with unforeseen circumstances.
Despite its willingness to let go of the surplus, it will be looking to limit the damage to the bottom line, and Finance Minister Mathias Cormann is reported to have told defence companies to come up with innovative financing proposals.
These could include having Defence lease military equipment, rather than buy it, and offering whole-of-life contracts including acquisition and sustainment. The government is also reportedly looking to defence industry to help deliver its Pacific step-up. Public private partnerships could also be pursued for defence infrastructure, including bases.
Austal, the builder of the Armidale class patrol boats, has reportedly proposed leasing six of its Cape class vessels to the Navy until enough Arafura class vessels – which will replace the Armidales – are ready.
Senator Rex Patrick, who the government often relies on for support in the upper house, said he was concerned the Defence Force would be effectively privatised because the government was losing control of its procurement programs.
It comes amid revelations that the Defence has been forced to use its Integrated Investment Program (IIP) to pay salaries and assault victims as well as clean up pollution. The A$200 billion fund is meant to provide for various Defence programs, including new equipment, technology and infrastructure.
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Questions remain over sub contracts
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The French company building Australia’s A$50 billion future submarine fleet says it will give Australian contractors more than half the work.
Naval Group has told a Senate committee that the entire 12-boat fleet will be built in Australia, with the company’s executive vice-president, Jean-Michel Billig, committing to at least 60 per cent of the contract’s value being spent in Australia.
At present, less than 10 per cent of the total work force is in Australia, with design work being carried out in France.
Naval Group Australia chief executive John Davis had previously told media that some local companies may not be skilled enough to take part in the lucrative project.
His comments prompted discussions between Defence Minister Linda Reynolds and her French counterpart, which led to Naval Group’s 60 per cent commitment. However, it is understood the commitment will not be contractually binding for at least two years.
Industry Voice, a defence industry lobby group representing local small to medium enterprises said that without a contractual arrangement the commitment “is unenforceable and there would be no consequences for a failure to achieve this”.
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Sydney-Canberra rail needs major overhaul
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Australia’s infrastructure advisor says the rail link between Sydney and Canberra needs to be improved within the next five years in order to cope with a growing population.
In its latest Priority List, Infrastructure Australia has identified a pipeline of needed projects across Australia over the next 15 years, worth some A$58 billion. Among them is a need to improve the Canberra to Sydney rail link.
Only 1 per cent of people travelling between the two capitals use the train, which at four hours is significantly slower than the three-hour car journey or one-hour flight. However, with the population between Canberra and Sydney forecast to grow by 1.5 per cent each year to 2036, pressure on the road network and airports is expected to increase.
In order to alleviate the pressure on roads and air links, Infrastructure Australia recommends reducing the rail travel time by straightening and duplicating the track, electrifying and upgrading signals and investing in new rolling stock.
It says the upgrades would not only enable faster rail services between Sydney and Canberra, but would improve customer experience, increase productivity and provide a competitive alternative to driving or flying.
Senior economist Rob Busch said the issue was “nationally significant” due to the congestion, lost productivity and lost opportunity it causes and “improving rail services in this corridor would provide more transport options for travellers, improve travel-time reliability for rail passengers and reduce pressure on the air corridor”.
Both the ACT and NSW governments have invested A$5 million each to investigate upgrades to the line to reduce travel times.
Infrastructure Australia said the federal government should also consider the potential role of high-speed rail in the future and listed a corridor on the east coast as a High Priority Initiative.
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End public-private deals, says inquiry
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A New South Wales parliamentary inquiry into the troubled Northern Beaches Hospital has recommended there be no more public-private partnerships for public hospitals in the state.
The inquiry report has made 23 recommendations and had one finding: that the public-private partnership model “has the potential to negatively affect people from lower socioeconomic backgrounds”.
The key recommendation was that the NSW government “not enter into any public-private partnerships for future public hospitals”.
The inquiry heard that some services, including open-heart surgery and neurosurgery, are only available to private patients. The hospital, run by a consortium led by Healthscope under a A$2.2 billion 20-year contract, also faced accusations that staff were offered a A$500 bonus to encourage public emergency patients to use their private health insurance.
The state’s Health Minister, Brad Hazzard, said no partnerships were being pursued, but would not rule them out.
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Medibank claims don’t add up, says AOA
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The Australian Orthopaedic Association says Australia’s largest insurer, Medibank, has misinterpreted figures relating to prostheses performance in explaining its half-yearly results.
In a statement, AOA President Dr Andrew Ellis said Medibank’s chief executive, Craig Drummond, was not correct in his comments about the comparative performance of hip and knee prostheses in Australia’s private and public hospital systems.
“By promulgating misleading information, Mr Drummond is eroding community trust in an already strained and under-resourced health system,” said Dr Ellis.
He said AOA would welcome the opportunity to assist Medibank in understanding the AOA National Joint Replacement Registry data and the “correct methods of interpreting the highly respected data available”.
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Public hospitals put on notice
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The federal government is pushing to end a loophole that allows public hospitals to profit from treating private patients.
Federal Health Minister Greg Hunt has urged state counterparts to sign a new hospital agreement that ends the incentive to attract private patients over those without insurance in an effort to reduce waiting times for elective surgery.
If a patient presents at an emergency department or is listed for elective surgery, public hospitals can encourage them to use their private health cover, allowing their insurer to be charged and the hospital to profit. Private health insurers claim this is one of the reasons behind their rising costs.
However, Mr Hunt wants to ensure hospitals are paid the same amount for treatment whether patients have private health insurance or not.
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