STEVEN HAMILTON and RICHARD HOLDEN Australia’s Pandemic Exceptionalism. Reviewed by Braham Dabscheck

Australia’s Covid response may have had problems, but Steven Hamilton and Richard Holden argue that our country fared far better than others.

A mere four years ago our lives were turned upside down by the Covid pandemic. For the overwhelming majority of us, Covid now lurks in the mists of time. Economists Steven Hamilton and Richard Holden were active in policy debates about how to deal with Covid in both Australia and the United States, regularly writing opinion pieces for newspapers and other outlets and participating in various forums concerned with public policy.

In this book they examine how policymakers responded to Covid, taking us through the major decisions that were made and the reasoning behind them. The material is enlivened with interviews with key policymakers and commentaries from a wide range of experts.

Their overall conclusion is that Australia’s response was exceptional. They have produced a chart showing that the nations with the lowest death rates per million persons also had the lowest rates of economic decline. Australia exceeded most comparable nations by large orders of magnitude. While at the time it may have felt that Australia was slow in working out what to do, its performance was far superior to most other nations.

Hamilton and Holden put this success down to the quality of what they describe as the administrative state.

Our administrative state was pivotal … If this book is about anything, it’s [about] state capacity. Beyond our political institutions, this includes the quality of our public health systems, our economic infrastructure, our policymaking processes and our public service … Our economic success during the pandemic depended on multiple elements of state capacity … Looking back on the role played by all our institutions during the pandemic, we are left with one simple takeaway: they served us well; we should be grateful for them; and they are worth preserving, protecting and enriching.

In terms of economic institutions, the authors point to the nimble and creative thinking of Treasury, the Australian Taxation Office (ATO) and the Australian Bureau of Statistics. They highlight the importance of investing in economic infrastructure to provide real-time data, enhancing the ability of policymakers to respond to changing circumstances. They particularly note the importance of the ATO having introduced an electronic payroll reporting system – Single Touch Payroll (STP) – prior to the pandemic.

STP is a system designed ‘to better integrate the reporting of information to government into the software increasingly used by business, with the objective of reducing excessive reporting and reporting burdens’. With STP, every time a business processed a pay run for its workforce, it provided the ATO with information on wages, tax withheld and superannuation liabilities. During the Covid lockdown, STP was used by the ATO to process various welfare payments that were provided by the government.

Hamilton and Holden point out that the federal government provided ‘exceptional’, never-before-seen levels of financial support during Covid. This was under a conservative Coalition government.

Call it intellectual enlightenment. Call it a crisis of conscience. Call it a bid for survival. Call it whatever you want. But the fact that in 2020 a Coalition government delivered in the order of a third of a trillion dollars in fiscal support to the economy at its time of greatest need reassures us that, when push comes to shove, regardless of ideological or tribal fealty, our government will step up.

Policymakers realised that the only way to contain the spread of Covid was through isolation, which would involve a shutdown of the economy until a vaccine could be developed. While resources were directed to shoring up hospitals in case of major outbreaks (as a whole, they were not overwhelmed), the major problem was how to manage the shutdown of the economy.

It was decided that it was essential to maintain the operation of businesses, and their connection with their workforces. Not doing so would mean that businesses would disappear, losing firm-specific capital, and there would be no one left to employ workers if and when economic recovery occurred. This would result in a permanent loss of employment and human capital, with longer term social welfare costs.

The public policy response to this was to provide financial support to businesses that experienced downturns and the introduction of a JobKeeper payment of $1500 a fortnight for workers to preserve the connection between employers and employees. There was also a JobSeeker payment of $1100 a fortnight and additional payments for pensioners and other welfare recipients. The policy worked, and the Australian economy recovered quickly once the lockdowns came to an end.

While Hamilton and Holden are highly supportive of the economic stance adopted by policymakers, they are more critical of the advice provided by the medical establishment, such as the federal government’s chief medical officer, the Therapeutic Goods Administration, and the Australian Technical Advisory Group on Immunisation. There are two strands to their criticism.

The first concerns vaccines. Scientists quickly worked out the DNA sequencing of the coronavirus genome. This meant it was only a matter of time before a vaccine would be developed. The American government provided eight pharmaceutical companies with funds to develop a vaccine and paid for purchases in advance. Hamilton and Holden argue Australia should have done the same thing and made advance purchases from all eight companies (at a cost of $2 billion per company) to ensure that Australia could supply enough vaccines for two jabs several weeks apart once a reliable vaccine had been developed. Australia didn’t do this. Rather it gambled, and placed all its bets on two companies, neither of which came up trumps.

Hamilton and Holden maintain that the Australian government should have based its decisions on the lessons of portfolio theory, which says it is best to spread risk, rather than gamble on one or two ‘chances’. The Australian government was also slow to place orders with a firm that did successfully develop a vaccine. They estimate that this resulted in at least a 68-day delay in the delivery of vaccines to Australia at a cost of $50 billion in direct and indirect costs, and avoidable deaths. During the political fallout associated with this vaccine debacle, Prime Minister Scott Morrison said of the production of vaccines, ‘This is not a race.’ Hamilton and Holden disagree. The need for a vaccine was always a race, one we lost to other nations.

The second error concerns testing. The choice was between polymerase chain reaction (PCR) tests and rapid antigen tests (RATs). PCR tests require a specialised laboratory and equipment, cost between $50 and $100 and take a couple of days to report. They are very accurate, able to detect both dead and live elements of Covid. This distinction between dead and live elements is crucial to what follows. RATs can be conducted at home, cost around $5, with results in 15 minutes. They are not as accurate as PCR tests, and don’t pick up low levels of Covid, such as dead elements.

Hamilton and Holden refer to ‘the fetishisation of PCR tests by the medical establishment’. They maintain that the medical establishment’s concern with ‘perfect accuracy’ meant that many people with dead Covid were required to isolate unnecessarily. More to the point, RATs provided an alternative measure that picked up live Covid, the test was easier to take, and substantially cheaper. Because the government followed the medical establishment’s preference for PCR tests it was slow in acquiring and distributing RATs.

Hamilton and Holden concluded that Australia’s response to the Covid pandemic was exceptional, but they are nonetheless highly critical of what they regard as mistakes by the medical establishment. They cannot find an explanation for why policymakers – and here we mean politicians – got it so right with economic advice and so wrong with (macro) medical advice. Remember that both authors were at the centre of developments and had access to various people who were giving advice and knew what happened in meetings.

A possible answer is that politicians do not possess the knowledge to identify what to do when a crisis such as Covid emerges. Given this, the prudent thing to do is to rely on the advice of experts within the various state instrumentalities. When it came to economic issues they trusted economists; when it came to medical matters they trusted medicos.

Stephen Hamilton and Richard Holden have provided an accessible and valuable account of how Australia responded to the Covid pandemic. While there was some initial hesitancy about how to respond, some mistakes along the way and controversies over decisions made, in comparison with other nations Australia’s response to the pressures placed on it by Covid was successful. This they mainly attribute to the quality of the administrative state and the personnel who staff it. This, in the long run, may be the most valuable lesson of their cogent and thorough analysis of Australia’s pandemic experience.

Steven Hamilton and Richard Holden Australia’s Pandemic Exceptionalism: How we crushed the curve but lost the race UNSW Press 2024 PB 272pp $44.99

Braham Dabscheck is a Senior Fellow at the Melbourne Law School at the University of Melbourne who writes on industrial relations, sport and other things.

You can buy Australia’s Pandemic Exceptionalism from Abbey’s at a 10% discount by quoting the promotion code NEWTOWNREVIEW.

You can also check if it is available from Newtown Library.

If you’d like to help keep the Newtown Review of Books a free and independent site for book reviews, please consider making a donation. Your support is greatly appreciated.

Tags: Australian Covid experience, Covid-19, JobKeeper, JobSeeker, pandemic policy, PCR tests, public health, RATs, Richard | Holden, Steven | Hamilton