Within the space of 4 weeks, the Australian economy has been utterly destroyed by the largest set of economic fiscal and monetary stimulus packages in Australian history, which stands in excess of $AUD 417 billion and which will have long-lasting and detrimental economic consequences.
These stimulus packages were according to the Morrison Government, State and Territory Premiers as well as senior economic officials such as the Governor of the Reserve Bank of Australia (RBA) and the Chairman of the Australian Prudential Regulation Authority (APRA) necessary given the economic impact of lockdown of the Australian economy that was imposed to limit the public health risk of the COVID‑19 coronavirus (COVID-19).
The economic stimulus packages that have been rolled out by the Morrison Government as well as by State and Territory Governments and endorsed by their respective parliaments were conceived and implemented under significant pressure from the mainstream media and vested interest groups, however there has been virtually no public debate as to the medium to long-term cumulative economic ramifications of these packages.
At the time of writing this article of 4 April 2020, it is unclear as to the length of the lockdown, the economic effects of the lockdown and whether additional economic stimulus will be rolled-out.
The Public Health Risk of the Coronavirus
The coronavirus, which is suspected to have originated in Wuhan China as early as December 2019 was officially declared by the World Health Organisation (WHO):
as a Public Health Emergency of International Concern on 30 January 2020;
as a very high-level epidemic threat on 28 February 2020; and
as a pandemic on 11 March 2020.
According to the American organisation the National Center for Biological Information (NCBI), the coronavirus is highly contagious with a R naught value of 2.2 and is transmittable from human to human by symptomatic people as well as when infected humans are asymptomatic.
Moreover, according to the NCBI:
“the overall case-fatality rate (on confirmed cases) was 2.3%. Of note, the fatal cases were primarily elderly patients, in particular those aged ≥ 80 years (about 15%), and 70 to 79 years (8.0%). Approximately half (49.0%) of the critical patients and affected by pre-existing comorbidities such as cardiovascular disease, diabetes, chronic respiratory disease, and oncological diseases, died.”
As of 4 April 2020, the unverified cumulative total from John Hopkins University is that there are over 1.09 million cases of the coronavirus globally which has resulted in approximately 58,786 deaths in countries such as China, Italy, Spain and Iran being severely affected to date.
Within Australia there are approximately 5,330 recorded cases of the coronavirus which have resulted in the deaths of 28 Australians.
The penetration of the coronavirus into Australia has resulted from the influx of international travellers (predominantly from China) by both plane and ship which was possible with lax airport and seaport border controls (e.g. the disembarkment of the Ruby Princess in Sydney on 19 March 2020).
Many western national governments have rushed to implement a series of extreme quarantine, border control and lock down measures which has grinded to a halt commercial and civilian activity based on the modelling results from the WHO Collaborating Centre for Infectious Disease Modelling (a centre within the MRC Centre for Global infectious Diseases Analysis (or GIDA)) at Imperial College in London. The WHO Collaborating Centre for Infectious Disease Modelling have estimated that the Coronavirus could potentially result in 40 million deaths during 2020 in the absence of preventative measures.
the Johnson Government in the United Kingdom who was told via modelling produced by Imperial College that unmitigated action could result in the deaths of 250,000 deaths in Britain; and
the Morrison Government in Australia, who in recent weeks, coupled with State and Territory Governments, have implemented strict legal lock down orders which has in effect sought to address the perceived risk from the coronavirus.
Modelling and Estimation Controversy
It is important to note that in scientific circles, the work of the MRC Centre for Global Infectious Diseases and its director Neil Ferguson have come into question.
preliminary simulation modelling outcomes from a rival modelling group at the Evolutionary Ecology of Infectious Disease Lab at Oxford University suggests that the outbreak of COVID‑19 in the United Kingdom may have started a month earlier than previously thought and that potentially up to 50% of the United Kingdom may be infected with the coronavirus with the vast majority developing very mild symptoms or none at all;
the modelling outcomes generated by Neil Ferguson during the 2009 Swine Flu Epidemic were wildly inaccurate. These results were fed to the WHO given that Ferguson sat on the WHO’S emergency committee during the swine flu outbreak. The WHO was subsequently investigated by the Parliamentary Assembly of the Council of Europe (a European human rights watchdog) whose committee chairman Dr Wolfgang Wodarg declared the swine flu episode to be a ‘false pandemic’ and ‘one of the greatest medicine scandals of the century’.
Ferguson refuses to publish the software code which he has used to conduct his COVID-19 simulation modelling. This code, according to Ferguson, was written in 2007 and has not been independently assessed or verified.
Given these controversies, it is surprising that the modelling work from MRC Centre for Global Infectious Diseases has been accepted by policy makers without any critical examination. This point has been noted by Professor Sunetra Gupta from the Evolutionary Ecology of Infectious Disease Lab at Oxford University who told the Financial Times:
“I am surprised that there has been such unqualified acceptance of the Imperial model.”
Estimation of Infection Rates
Beyond the current controversy about the accuracy of simulation models and their usefulness in informing public policy, another controversy rages in determining what is the true count of people around the world who have COVID-19 (or infection rate).
This controversy exists given the test being applied to determine whether a patient has COVID-19 and the accuracy of the test. Around the world, health officials have, in the main, been using the reverse transcription polymerase chain reaction (RT-PCR) test, which seeks to identify the COVID-19 genetic code within test patients.
According to an article on Live Science published 3 April 2020, preliminary evidence suggests that the RT-PCR test being used to test for COVID-19 has produced a significantly high number of false‑negative test results, potentially up to 30%. The inaccuracy of the RT-PCR test has also been highlighted by the Australian Government’s Therapeutic Goods Administration (TGA).
Such an inaccurate test implies that:
the number of COVID-19 infected patients is likely to be significantly underestimated;
rate of reproductivity (or R naught) of COVID-19 is likely to be higher than current official estimates; and
the lethality of COVID-19 (as measured by the death rate) is likely to be overestimated.
Moreover, estimating the infection rate is also complicated by the large number of COVID-19 infected patients who are asymptomatic (meaning that they do not exhibit any symptoms). The scale of asymptomatic patients includes:
the Diamond Princess cruise ship, who, according to the United States Centres for Disease Control and Prevention (CDC) found that 46.5% (or 331 of 772 passengers) who tested positive for COVID-19 where asymptomatic;
Iceland, who, as of 3 April 2020, have tested 5% of their population and have found that 50% of positive tested cases are asymptomatic implying that the lethality of COVID-19 is lower than estimates suggest given that the infected population is likely to be severely underestimated.
This latter point is materially important in the Australian context because only Australians who have severe symptoms and essential workers (such as public officials) are eligible to be tested for COVID‑19.
Estimation of Death Rates
Not only does controversy exist among estimating infection rates, but significant controversy also exists regarding determining the COVID-19 death rate. As noted by the Financial Times on 31 March 2020, the global death rate estimate of 4.7% (compared to 0.1% for the seasonal flu) is highly unreliable meaning that public concern regarding COVID-19 and government policy responses may be significantly misplaced.
Moreover, as noted by the Financial Times, approximately 153,000 people die globally per day (or 56 million annually) and there is no data to determine of the 58,786 recorded COVID-19 deaths, how many people died directly resulting from COVID-19. This point was also acknowledged by Neil Ferguson who testified to the UK Parliament on 25 March 2020 that up to 50% to 66% of British recorded COVID-19 deaths may have died in any case if COVID-19 had not existed.
In addition, the number of deaths recorded in centres such as Italy and New York are complicated by the local population’s demographic and population health profile. As noted by Professor Mary-Louise McLaws, who is an infection control expert from the University of New South Wales, the COVID-19 death rate of the United States was biased given that the population who died after developing serious cases of COVID-19 were “an older group that have a lot of comorbidities”.
This is materially significant given the admission by Dr Deborah Brix (the coordinator of the US Government’s Coronavirus Task Force), who stated that:
deceased patients in the United States with both one or more comorbidities as well as a COVID-19 infection is being recorded as a COVID-19 death; and
the majority of Italian COVID-19 fatalities had three or more comorbidities.
In the context of Australia, other commentators have pointed to problems in methodological testing procedures which may be producing widely inaccurate infection estimates.
For example, Christopher Joye, portfolio manager at Coolabah Capital has noted that Australia is not performing an antibody test which assesses whether subjects have had a past infection, thus public health officials are failing to account for recovered patients and hence materially underestimating the population-wide infection rates. Underestimating population-wide infection rates implies an overestimation of the lethality of COVID-19.
Effective Quarantine Measures Given the controversies recorded above, the current approach by federal, state and territory governments in dealing with COVID-19 by shutting down the Australian economy appears completely unnecessary especially when historical precedents in Australia and other contemporary international approaches are considered.
Historical Australian Precedents
During the 1918-19 Spanish Flu epidemic, which resulted in the deaths of anywhere between 30 million to 100 million people around the world, Australia recorded one of the lowest death rates in the world, despite a 40% infection rate through a swift and rigorous public policy response which encompassed:
strict maritime and land quarantine;
the shutdown of public gatherings such as schools, cinemas and dancing halls; and
the production of domestic vaccines via the Commonwealth Serum Laboratories.
As noted by the National Museum of Australia:
“In Australia, while the estimated death toll of 15,000 people was still high, it was less than a quarter of the country’s 62,000 death toll from the First World War. Australia’s death rate of 2.7 per 1000 of population was one of the lowest recorded of any country during the pandemic.”
In countries such as South Korea, Singapore, Taiwan and Japan, a radically different policy response to addressing the risk of COVID-19 other than locking down the economy has, to date, proven to be more effective.
For example, South Korea has experienced less than 200 deaths compared to Italy (more than 10,000 deaths) and Spain (more than 7,300 deaths).
To achieve this outcome, South Korea in December 2019 was able to develop a test for the coronavirus and then proceeded to deploy 96 public and private testing laboratories which has allowed the testing of over 20,000 South Korean citizens per day (this includes car drive through testing facilities) at no cost to South Korean citizens.
Results from testing are determined within 24 hours and confirmed or suspected cases of COVID-19 are placed in strict quarantine (including in hospitals) or self-isolation arrangements.
In Singapore, additional procedures of setting up a network of health clinics, tracing contacts rigorously and deploying an effective social messaging campaign have proven to be critical in achieving phenomenal results in containing COVID-19. Moreover, Singapore begun to isolate people via quarantine from 20 January 2020 travelling from Wuhan who had symptoms and then expanded this policy to all people travelling from China on 22 January 2020.
From 2 February to 16 March 2020, Singapore progressively barred visitors from specific countries and denied entry to cruise ships. On 24 March 2020, Singapore denied entry to all visitors.
These approaches have allowed for the economies of South Korea, Singapore, Taiwan and Japan to continue to function without any catastrophic or devastating economic impact.
Amazingly, an aggressive testing regime and strict quarantine appears to be a far superior contemporary public health approach in dealing with COVID-19 than an economic lock-down, especially when noting the population size and population density of east Asian vs European countries as noted in Table 1.
Table 1: Approximate 2019 Population and Approximate 2018 Population Density Per Square Kilometre Estimates
The lockdown of the Australian Economy
Hence, whether it be the Australian 1918-19 Spanish Flu approach or the contemporary approach of South Korea or Singapore, the approach of the Morrison Government of:
lax non-existent border controls during January – March 2020 including at airports and seaports (e.g. the disembarking of infected passengers from cruise ships such as the Ruby Princess);
a lack of rigorous COVID-19 regime testing at both points of entry into Australia and geographically across society (especially for the period of January 2020 to early March 2020) (including for asymptomatic patients);
an initial lack of strict quarantine controls within Australia of infected subjects;
no detailed tracing of the people who came into contact with infected subjects; and
a slow response time to develop a comprehensive response
have materially contributed to Australia’s current public health predicament, thus confirming that a lockdown of the Australian economy was not necessary had an early and effective approach been adopted.
Sufficient information was already in the public domain in mid to late January 2020 as noted by John Adams and Martin North in an In the Interests of the People episode entitled “Has a Chinese Biological WMD penetrated Australia” which was recorded on Sunday 26 January 2020 (but broadcasted on 27 January 2020). In this episode, Adams and North noted that:
it was unclear as to the source of COVID-19 with rampant speculation that the virus originated from the Wuhan National Biosafety Laboratory and not the seafood market;
that a former senior Israeli biological weapon of mass destruction (WMD) expert Dany Shoham suggested that COVID-19 may be part of a covert Chinese Government WMD program;
planes from Wuhan China (the source of the virus) were still allowed to enter Sydney as late as 23 January 2020;
evidence had already been established that COVID-19 was more contagious than the 1918‑19 Spanish flu pandemic;
that Hong Kong had declared a state of emergency and that North Korea had already cancelled commercial flights from Beijing to enter their airspace; and
it was reckless for the Morrison Government to allow people from China to enter Australia without further scientific data concerning COVID-19 and without rigorous testing procedures at Australian points of entry (i.e. airports and seaports).
Importantly, the virtue of implementing lockdown procedures has been questioned in the United Kingdom by Professor Graham Medley, the government’s chief pandemic modeller who has suggested that lockdown ‘buys more time’ but ‘doesn’t resolve anything’ given that:
the UK population does not have ‘herd immunity’ to COVID-19; and
a vaccine does not exist to protect people from COVID-19.
Given that it is estimated that a vaccine may not be ready for mass deployment for another 12 to 18 months, Professor Medley has advocated to let COVID-19 spread thus allowing the United Kingdom to build-up herd immunity.
After his suggestion was formally rejected by the UK Government in March 2020, Professor Medley has repeated his calls for a ‘herd immunity’ strategy given that the UK Government will be formally reviewing the lockdown strategy after 12 April 2020.
The Supposed Need for Economic Stimulus
Given the discussion above, the lockdown of the Australian economy was both avoidable as well as unnecessary. To date, the lockdown has had a devastating impact on the Australian economy with preliminary estimates indicating the largest shock to gross domestic product and unemployment since the Great Depression of the early 1930s.
In response, the Morrison Government in concert with the State and Territory Governments have sought to offset this GDP and unemployment impact through the largest combined set of monetary and fiscal stimulus packages in Australian history.
Importantly, this package is technically not required to address the immediate public health risk posed by COVID-19, but rather is necessary to address the systemic risks posed by the record household and foreign debt bubbles currently present in the Australian economy.
The direct costs of dealing with public health risks posed by COVID-19 were announced by the Morrison Government on 11 March 2020 via a $AUD 2.4 billion package which provided resources for:
100 coronavirus respiratory clinics;
telehealth medical consultations using phone or internet technology;
home medicines services;
an expanded national triage phone line;
a Medicare funded and bulk billed pathology COVID-19 test;
additional aged care and hospital funding;
additional medical research funding;
protective medical equipment ($AUD 1.1 billion);
infection control training and programs for health and aged care workers;
boosting the national medical stockpile; and
a national communication strategy.
Importantly, this package is separate and distinct to the COVID-19 health and hospital spending packages announced by various State and Territory Governments in recent weeks. Moreover, given current international approaches to dealing with COVID-19, the question of whether the Morrison Government’s $AUD 2.4 billion package is the most effective and efficient approach remains an open question.
An Alternative and Radical Scientific Explanation
The above discussion is an analysis of COVID-19 using a critical, but conventional lens.
Having said this, an alternative and radical explanation of COVID-19 has been brought forward by a group of international scientists led by Australian Molecular Immunologist and Evolution Professor Edward J Steele and British Astrophysics and Astrobiologist Professor Chandra Wickramasinghe.
The Steele-Wickramasinghe thesis suggests that COVID-19 is due to a meteorite hitting the stratosphere over Sonjyan City in the Jilin Province of NE China on 11 October 2019 causing a large fireball explosion in the night sky.
Fragments from the meteorite entered the mesosphere and stratosphere at high speed of 30 km/s with the meteorite’s inner core fragments surviving the fireball impact and thus dispersing through stratosphere and troposphere and reaching the earth’s surface through precipitation (i.e. rain). Such dispersible can be highly unpredictable and uneven, both in terms of location and time, given the vagaries of meteorology (i.e. weather patterns).
The Steele-Wickramasinghe thesis suggests that the spread of these fragments have been occurring to date across the 30-to-50-degree latitude belt, but that these fragments could spread to the southern hemisphere in the second half of 2020.
Such a thesis could explain why a significant explosion of COVID-19 cases and fatalities (noting the infection and death rate problems outline above) can be:
seen so far in specific geographical areas such as Wuhan, Iran, Italy, Spain and New York, given that human-to-human transmission is unlikely to be plausible explanation for such logarithmic growth rates in COVID-19 cases; and
not seen in the same way in geographical areas to date with highly dense populations such as India, Egypt or in South American countries such as Brazil.
Moreover, this thesis can explain how some patients in North America and Europe became infected with COVID-19 in February 2020 despite not travelling to China.
The Steele-Wickramasinghe thesis holds that given the nature of the source:
COVID-19 has a much higher infection rate and a much lower lethality (or death rate) than what is understood or acknowledged by the current mainstream scientific community (consistent with the discussion above regarding infection and death rates);
Social distancing and lock downs of economies and civil societies are completely inappropriate and counter-productive public health responses to COVID-19; and
‘Herd immunity’ strategies as suggested by Professor Graham Medley (as noted above). i.e. allowing the virus to spread but extra steps are taken to protect vulnerable cohorts within the general population is a more effective public health response to COVID-19.
If the Steele-Wickramasinghe COVID-19 hypothesis is proven to be correct, the implications for Australia are profound. These include:
the existing domestic COVID-19 scientific and medical analysis within Australia is both conceptually and statistically materially wrong, especially given that the Peter Doherty Institute for Infection and Immunity based their transmission COVID-19 on data from Wuhan, China;
the public policy response of the Morrison Government, coupled with State and Territory Governments, of locking down the Australian economy and unleashing unprecedented economic stimulus was completely inappropriate, unnecessary and counter-productive;
Australia may be vulnerable to an explosion of COVID-19 cases in the second half of 2020 (e.g. September or October 2020) and if meteorite viral laden dust fragments hit the Australian coastline through precipitation in the Australian winter and spring seasons; and
Australia’s health system becoming overwhelmed from an explosion of COVID-19 cases in September-October 2020, especially given that significant public health and financial resources have already been committed for the 1st half of calendar year 2020.
The Monetary Stimulus Packages
With regards to releasing monetary stimulus in dealing with economic fallout of the economic lockdown, the action by the Reserve Bank of Australia (RBA), the Australian Prudential Regulation Authority (APRA) and the Australian Office of Financial Management (AOFM) has been extraordinarily swift.
To date, the RBA has implemented the following measures:
reduced the cash rate by 25 basis points to 0.5% on 3 March 2020;
reduced the cash rate by 25 basis points to 0.25% on 16 March 2020;
the establishment of a $AUD 90 billion three-year term funding facility to authorised deposit-taking institutions (ADIs) at a fixed rate of 0.25 per cent who can access these funds to increase lending to business, especially to small and medium-sized businesses;
the injection of liquidity directly into the banking system through the conduct of one-month and three-month repurchase (repo) operations until further notice as well as the conduct of repo operations of six-months maturity or longer at least weekly, as long as market conditions warrant; and
the commencement of quantitative easing via the purchasing of Federal and State & Territory Government bonds in the secondary market. The purpose of the QE program in the Federal Government bond market is to achieve a yield of 0.25% for 3-year Government bonds.
These latter actions to date have already had a significant impact on the RBA balance sheet. For the period 11 March 2020 to 1 April 2020 (the first 3-week period of unconventional monetary policy), the RBA’s Australian dollar holdings increased by $AUD 86.3 billion consisting of:
$AUD 48 billion in repurchasing agreements via open market operations;
$AUD 25 billion of Australian Government bonds; and
$AUD 5 billion of State and Territory Government bonds.
In addition, the AOFM on 19 March 2020 has been provided with an investment capacity of $AUD 15 billion to invest in wholesale funding markets used by small ADIs and non-ADI lenders to purchase residential mortgage backed securities, other asset backed securities and warehouse facilities.
Moreover, APRA announced on 19 March 2020 that it was relaxing the additional benchmark capital requirements announced in 2016 for Australian Authorised Deposit-taking Institutions thus allowing these institutions to continue issuing credit throughout the Australian economy. APRA also announced on 30 March 2020, a delay to the implementation of the Basel III capital formation standards to 2023 which defers adjustments to the re-allocation of capital across various portfolios.
All in all, the cumulative amount of these monetary stimulus packages are approximately $AUD 191.3 billion.
The Fiscal Stimulus Packages
Coupled with the monetary stimulus packages has been an accompanying fiscal policy response from both the Federal Government as well as from State and Territory governments.
The Federal Government Response
To date, the Morrison Government has rolled out three discrete stimulus packages worth in excess of $AUD 213 Billion which includes:
the first package announced 12 March 2020 of $AUD 17.6 billion;
the second package announced 22 March 2020 of $AUD 66.1 billion; and
the third package announced 30 March 2020 of $AUD 130 billion.
In addition to these stimulus packages, the Morrison Government announced:
a $AUD 1.1 billion package on 26 March 2020 focusing on expanding Medicare and mental health services aimed at stemming the risk of domestic violence; and
a $AUD 1.6 billion package on 2 April 2020 making childcare free throughout Australia during the COVID-19 pandemic.
State & Territory Government Fiscal Stimulus
Beyond the economic stimulus package of the Federal Government, all states and territory governments have launched their own economic stimulus packages (in some instances multiple packages) which are separate to the increased public health expenditure relating to COVID-19.
These stimulus packages are outlined in Table 2 and cumulatively to date commit to more than $AUD 10 billion (excluding direct health costs).
Table 2: Size of State and Territory Government Stimulus Package
Economic Stimulus is an effective bail-out of domestic and foreign banking interests
Whether it be monetary or fiscal stimulus, the key considerations from an economic, public policy and political stand point are:
who stands to benefit from these stimulus packages? and
what would have been the impact had economic stimulus not been implemented?
To date, the panic throughout financial markets induced by COVID-19 has led to both:
a rapid liquidation of financial assets such as the Australian share market; and
a sharp depreciation of the Australian dollar as foreign capital fled Australia, especially in Australian Government bonds which led to a sharp rise in yields.
The injection of monetary stimulus by the RBA to date has allowed for a floor to be established under bond and equity prices, thus ensuring that:
Australian Authorised Deposit-taking Institutions (ADIs) have ample liquidity to maintain operational requirements; and
funding costs remain low.
Moreover, given that Australia has record amounts of household debt and relatively low levels of savings, the current economic lockdown, which has already led to a collapse of household and business income, would have led to a critical mass number of debt defaults by households and businesses in the absence of the fiscal stimulus measures already announced in particular.
Thus, in the absence of the economic stimulus which Australia has witnessed to date, Australian ADIs and institutions involved in the financial sector such as investment banks, hedge funds, etc would have become insolvent either through first order effects or second or third order effects resulting from economic contagion.
Given that Australia has a record quantum of foreign debt (as of December 2019, gross foreign debt was in excess of $AUD 2.45 trillion), declarations of insolvency by Australian financial institutions would in turn have resulted in a default of Australia’s foreign debt obligations (especially foreign debt obligations with a maturity of less than 6 months) which have been sourced from the international credit market.
Thus, while the Morrison Government and other State and Territory Governments have sought to sell the current monetary and fiscal stimulus packages as support for Australian businesses and households, they have in effect saved domestic and global banking and financial interests at the cost of structurally destroying the value of the Australian dollar (whether measured by an ounce of gold or via the US dollar) and imprisoning 2 to 3 future generations of Australians into perpetual debt slavery.
Diagram 1 illustrates the linkages between the fiscal and monetary stimulus packages, Australia’s banking system and financial markets as well as Australia’s international creditors.
Diagram 1: Federal and State/Territory Government – COVID-19 Economic and Monetary Stimulus
The Consequences of Economic Stimulus
The consequences of the domestic Australian COVID-19 fiscal and monetary stimulus packages which have been committed to date and stands in excess of $AUD 417 billion will be both profound and far-reaching over the medium to long-term, especially given the unprecedented co-ordinated fiscal and monetary stimulus unleashed globally.
Australia’s political establishment has incurred generational debt and has inflicted structural damage on the purchasing power of the Australia dollar.
Once the public health risks resulting from COVID-19 dissipate, a commitment to economic austerity and structural economic reform will be necessary, that being:
running a prudent monetary policy (ending QE and raising interest rates);
producing continual budget surpluses through significant reductions in federal as well as state and territory government spending; as well as
restructuring the Australian banking system that encourages lending to productive businesses rather than fuelling asset speculation
among other reforms to promoting robust economic growth, maintaining a stable and trusted currency and reducing public sector debt to more sustainable levels.
Without such economic austerity, governments will be forced to prop up a structurally flawed economy via ongoing budget deficits and ever-increasing public debts financed through money supply inflationism. Such an approach will hamper the prospects of a robust sustainable economic recovery in Australia and will generate ongoing business stagnation and high unemployment.
Under such conditions, both Federal as well as State and Territory Governments, having damaged the economy, will have limited options to deal with this ever-increasing debt burden. The end result is likely to include:
debt restructuring or an outright default of government debt;
increased tax confiscation and wealth confiscation (with superannuation being the prime candidate).
Under all three options, economic and civilian life in Australia would become considerably worse on an economic and social basis. World history is littered with examples of governments who have existed under such conditions, all resulting in disastrous economic outcomes, civil unrest and political instability.
As we have shown in this article, the Morrison Government and various state governments incompetently managed Australia’s response to COVID-19 which has led to catastrophic public health and economics outcomes.
At the expense of sacrificing the purchasing power of the Australian dollar and bankrupting generations of Australian to protect domestic and international banking interests, Australia’s political establishment have unleashed the large quantum of fiscal and monetary stimulus within the last four weeks to defend the biggest debt bubble in Australian history.
This debt bubble came under severe and immediate attack resulting from a premediated induced lockdown of the Australian economy to address the COVID-19 virus which from the available evidence is less of a public health threat than what the global scientific and medical establishment have suggested given:
frightening simulated modelling outcomes by research teams that do not adhere to robust scientific standards and who have a historically poor forecasting record;
an underestimation of COVID-19 infection rates resulting from a large number of asymptomatic patients and false-negative test results; and
an overestimation of the lethality of COVID-19;
a potential misunderstanding of the cause and nature of the COVID-19 virus (if the Steele-Wickramasinghe thesis holds true).
Nevertheless, effective management of the risk of COVID-19 would have:
reduced the exposure of the virus within Australia;
eliminated the needed to lock down the Australian economy; and
eliminated the need for any form of economic stimulus.
Irrespective of when the COVID-19 pandemic comes to end, the consequences of the fiscal and monetary stimulus rolled out in Australia during the period March – April 2020 will be both long lasting, economic and socially destructive and irreversible unless a radical economic austerity agenda is implemented.
The economic hole which Australia found herself in prior to the outbreak of COVID-19 with the largest debt bubble in her history, only got so much larger.
John Adams is the Chief Economist for As Good As Gold Australia
 An epidemic is defined by the US Centers for Disease Control and Prevention (CDC) as “a sudden increase in the number of cases of a disease – more than that’s typically expected for the population in that area.”  A pandemic is defined by the CDC as a worldwide spread of “an epidemic that has spread over several countries or continents, affecting a large number of people.”
 https://www.ncbi.nlm.nih.gov/books/NBK554776/  The National Center for Biological Information is a division of the National Library of Medicine (NLM) at the National Institutes of Health (NIH).  A R naught value of 2.2 means that 1 person with the Coronavirus will infect an additional 2.2 people.  Note that according to the National Center for Biological Information, the SARS epidemic in 2002-2003 had a R naught value of 3.  https://coronavirus.jhu.edu/  https://www.abc.net.au/news/2020-03-25/ruby-princess-coronavirus-someone-needs-to-take-responsibility/12086834  The WHO Collaborating Centre for Infectious Disease collaborates with the World Health Organisation.  https://www.imperial.ac.uk/news/196496/coronavirus-pandemic-could-have-caused-40/  https://www.theguardian.com/world/2020/mar/16/new-data-new-policy-why-uks-coronavirus-strategy-has-changed  The Morrison Government has relied on modelling from the Peter Doherty Institute for Infection and Immunity who published on 7 April 2020, the following draft paper: “Modelling the impact of COVID-19 in Australia to inform transmission reducing measures and health system preparedness” .
This paper states that modelling results which shows that COVID-19 will have a significant burden on the public health system is consistent with the modelling outcomes from the WHO Collaborating Centre for Infectious Disease Modelling.
See the following link: https://www.doherty.edu.au/uploads/content_doc/McVernon_Modelling_COVID-19_07Apr1_with_appendix.pdf  Note that Ferguson is currently advising multiple national governments on their policy response to COVID-19.  https://theconversation.com/coronavirus-theres-no-one-perfect-model-of-the-disease-135137  See the Financial Times article “Coronavirus may have infected half of UK population – Oxford study” via the following link: https://www.ft.com/content/5ff6469a-6dd8-11ea-89df-41bea055720b  During this period, Ferguson advised that UK schools needed to shut to prevent widespread human to human transmission. To read more: https://www.telegraph.co.uk/news/health/swine-flu/5874683/Swine-flu-schools-should-close-to-halt-spread-of-virus-ministers-told.html  https://www.forbes.com/2010/02/05/world-health-organization-swine-flu-pandemic-opinions-contributors-michael-fumento.html?fbclid=IwAR1f3C1JqWo_kpyQvdCYIX8ItknPBI_2eiTjs3faPY2fITErGnlpSUFgiQg#4d5a38a348e8  https://twitter.com/neil_ferguson/status/1241835454707699713?s=20  For criticism of Ferguson, see the following Twitter thread: https://twitter.com/CFDdirect/status/1242088205077356544?s=20  See footnote 15  https://spectrum.ieee.org/the-human-os/biomedical/diagnostics/how-do-coronavirus-tests-work  https://www.livescience.com/covid19-coronavirus-tests-false-negatives.html  The TGA has stated that: “The extent to which a positive PCR result correlates with the infectious state of an individual is still being determined.” For more, see the following link: https://www.tga.gov.au/covid-19-testing-australia-information-health-professionals  https://edition.cnn.com/2020/03/24/us/diamond-princess-cruise-ship-asymptomatic-tests/index.html  https://edition.cnn.com/2020/04/01/europe/iceland-testing-coronavirus-intl/index.html  https://www.theguardian.com/australia-news/2020/apr/07/can-i-get-tested-for-coronavirus-in-australia-a-state-by-state-breakdown  See the Financial Times article “The mystery of the true coronavirus death rate” via the following link: https://www.ft.com/content/f3796baf-e4f0-4862-8887-d09c7f706553  As noted in the article at footnote 27, the scientific advisor to Italy’s health Minister has acknowledged that only 12% of death certificates have shown a direct causality from COVID-19.  See footnote 27.  https://www.smh.com.au/politics/federal/the-puzzle-of-coronavirus-a-huge-variation-in-rates-of-death-and-severe-disease-across-the-globe-20200402-p54gkr.html  For additional information, see the following link: https://www.realclearpolitics.com/video/2020/04/08/dr_birx_unlike_some_countries_if_someone_dies_with_covid-19_we_are_counting_that_as_a_covid-19_death.html  https://www.thedenverchannel.com/news/coronavirus/white-house-explains-how-us-is-counting-coronavirus-deaths  https://www.afr.com/policy/economy/virus-strategy-must-change-to-protect-the-90pc-20200329-p54f07  https://www.nma.gov.au/defining-moments/resources/influenza-pandemic  See footnote 34.  https://www.bbc.com/news/world-asia-51836898  https://www.npr.org/sections/goatsandsoda/2020/03/13/815441078/south-koreas-drive-through-testing-for-coronavirus-is-fast-and-free  https://www.abc.net.au/news/2020-04-07/comparing-australia-with-singapore-coronavirus/12107106  Data from Table 1 has been sourced from www.worldpopulationreview.com/countries  The episode can be seen here: https://www.youtube.com/watch?v=97XX8kQmZ3Q&t=607s  https://www.dailymail.co.uk/health/article-7922379/Chinas-lab-studying-SARS-Ebola-Wuhan-outbreaks-center.html  https://www.washingtontimes.com/news/2020/jan/24/virus-hit-wuhan-has-two-laboratories-linked-chines/  https://www.dailymail.co.uk/news/article-8186507/PMs-virus-adviser-warns-Britain-need-adopt-herd-immunity.html  https://theconversation.com/where-are-we-at-with-developing-a-vaccine-for-coronavirus-134784
 Professor Medley advocated the ‘herd immunity’ strategy on the BBC on 13 March 2020, see the following link: https://www.bbc.co.uk/programmes/p086hjgc  https://www.mirror.co.uk/news/politics/coronavirus-adviser-pm-wants-herd-21811857  https://www.theguardian.com/business/2020/mar/25/coronavirus-pandemic-has-delivered-the-fastest-deepest-economic-shock-in-history  https://www.greghunt.com.au/2-4-billion-health-plan-to-fight-covid-19/  https://vixra.org/pdf/2002.0039v3.pdf  https://vixra.org/pdf/2003.0320v6.pdf  Note that India is an important case study in this context given that India has not implemented to date any lock down or social distancing practices.  https://vixra.org/pdf/2003.0042v3.pdf  https://www.doherty.edu.au/uploads/content_doc/McVernon_Modelling_COVID-19_07Apr1_with_appendix.pdf  https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/government-invest-15b-support-sme-lending  https://www.apra.gov.au/news-and-publications/apra-adjusts-bank-capital-expectations  This stimulus package includes $750 one-off cash payments to welfare recipients, direct cash payments to small and medium businesses between $2,000 and $25,000 to pay wages and hire extra staff (including apprentices), tax relief for small and medium size businesses and assistance to the tourism sector. See the following link: https://www.abc.net.au/news/2020-03-12/federal-government-coronavirus-economic-stimulus/12042972  This stimulus package includes doubling the Jobseeker payment, allowing early access to superannuation, guaranteeing unsecured small business loans up to $AUD 250,000, direct cash payments to small businesses and not-for-profits up to $100,000, with a minimum payment of $AUD 20,000 for eligible companies. See the following link: https://www.abc.net.au/news/2020-03-22/coronavirus-second-stimulus-economy-federal-government/12078982  This stimulus package includes a $1,500 per employee fortnightly wage subsidy payable to businesses. See the following link: https://www.abc.net.au/news/2020-03-30/coronavirus-wage-subsidies-government-businesses-workers/12103108  This package provides $1.1 billion of extra resources into mental health services to deal with the social costs resulting from lock down of the Australian economy. See the following link: https://www.abc.net.au/news/2020-03-28/coronavirus-medicare-mental-health-domestic-violence-package/12100028  https://www.abc.net.au/news/2020-04-02/coronavirus-child-care-free-scott-morrison-announcement/12114110  On 3 April 2020, the NSW Government announced that it was injecting $AUD 750 million into the Small Business Support Fund which would provide $10,000 grants for small businesses across NSW struggling to cope with the COVID-19 shutdown. https://www.nsw.gov.au/your-government/the-premier/media-releases-from-the-premier/10000-grants-to-provide-fast-relief-for-nsw-small-businesses-battling-covid-19/  For more information, see the following link: https://www.treasury.nsw.gov.au/Covid-19Stimulus. Note that the NSW Government has committed additional amounts of spending which are directly related to public health costs in dealing with COVID-19.  For details regarding governments other than NSW, see the following link: https://www.bdo.com.au/en-au/insights/tax/technical-updates/australian-states-deliver-economic-stimulus-packages-in-response-to-coronavirus-including-tax-measur  This comprises of a $AUD 500 million Business Support Fund, a $AUD 500 million Working for Victoria Fund, providing payroll tax refunds for FY 2019-20 for small to medium size businesses with payroll of less than $AUD 3 million as well as rent relief for commercial tenants. See the following link: https://www.premier.vic.gov.au/economic-survival-package-to-support-businesses-and-jobs/  https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/03/COVID-19-economic-response-Relief-for-businesses-and-households.aspx  Note that of the $AUD 1 billion package, $AUD 500 million has been allocated directly to public health related costs. These costs have not been included in Table 2. https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/03/$1-billion-COVID-19-economic-and-health-relief-package-unveiled-.aspx  On 11 March 2020, the South Australian Government announced a $AUD 350 million jobs rescue package which includes major infrastructure maintenance projects including road and hospital upgrades, new tourism infrastructure and an expanded Economic and Business Growth Fund to support local industry are the centrepiece of the new package https://www.premier.sa.gov.au/news/media-releases/news/unprecedented-response-and-economic-stimulus-to-drive-sa-jobs,-economy-in-wake-of-bushfires,-coronavirus2  On 26 March 2020, the South Australian Government announced a $AUD 650 million jobs rescue package which included the establishment of two funds a $AUD 300 million business and jobs support fund and a $AUD 250 million Community and Jobs Support Fund). See the following link: https://www.premier.sa.gov.au/news/media-releases/news/$1-billion-stimulus-package-to-save-sa-jobs,-businesses  Moreover, many retail and industry superannuation funds would have experienced sharp losses threatening their ongoing viability given their significant allocations into unlisted infrastructure and property assets.  The international credit market consists of foreign governments and central banks, foreign commercial and investment banks, foreign hedge funds and other international corporates and investors.