When Queensland behind interstate barriers opened to intrastate tourism, we see that tourism operators were ‘ecstatic’ about easing restrictions if you scroll down this article:
- Tourism Tropical North Queensland chief executive, Mark Olsen, said… the region lost more than $200 million worth of bookings in March, with the impact to the end of April estimated at $500 million in lost visitor spending and thousands of jobs lost.
“Over the last 24 hours, the phones have been ringing off the hook with travellers from the south-east corner confirming their accommodation and looking forward to their journeys, ” Mr Olsen said.
It raises the question as to how much scope there is in the intra-state tourist market, and secondly whether business is suffering too much through trying to wipe out the coronavirus.
Mediterranean Europe is opening with much higher comparative case loads to capture the summer tourist market. In Greece I’ve heard that 30% of the economy depends on tourism, in Italy 15%, I heard that Spain gets over 80 million visitors each year. This Qld Government site gives the key metrics:
- More than 26 million domestic and international overnight visitors come to Queensland each year.
- The industry directly and indirectly employs 217,000 Queenslanders – or 9.1% of all people employed in Queensland.
- Tourism contributes $12.8 billion directly to the Queensland economy, accounting for 3.9% of Queensland’s gross state product (GSP). The industry indirectly contributes an additional $12.5 billion to the state’s economy, making the total contribution $25 billion, or 7.8% of total Queensland GSP.
So it’s significant. Of course to some businesses and localities it is everything, and there were real questions as to how much of the industry would survive if it missed the winter season. The Courier Mail’s Steven Wardill put together an article looking at how much various centres drew from the Queensland market in the past. This is what he found:
Gold Coast 48.2
Sunshine Coast 72.4
Far-north Qld 67.7
Wide Bay 87.3
South West Q 79.9
Fraser Coast 75.6
Overall it was more than I thought.
We have to consider now that people might not have as much money to spend on holidays. On the other hand tourism was a net import industry for Australia. That is to say, more Australians went overseas than foreigners coming here. So the unavailability of overseas holidays may help the local industry and compensate fto some extent for the lack of interstate and overseas tourists.
There is still a question as to how to best set the balance between suppressing the virus and strangling the economy. One with a strong opinion is economist Gigi Forster in an AFR article Correctly counting the cost shows Australia’s lockdown was a mistake.
I’ll start with some raw statistics, which she doesn’t, to give some idea what she’s on about. There are around 160,000 deaths in Australia each year. That’s roughly 440 per day. Not many of them make the news. However, most of the 102 deaths (so far) from Covid 19 did make the news. If you scroll down this site you’ll see that most of them were over 70:
More than half the total were made up of around 29 cruise ship passengers and crew, together with 26 nursing home residents.
Foster’s claim is firstly, that the actual modelling used overestimated the cases and deaths by orders of magnitude, and secondly that the true welfare costs of the lockdown were either ignored or calculated using full value-of-a-statistical-life (VSL) numbers, rather than age-adjusted VSL or quality-adjusted life years.
With reference to the second, she links to an article by Richard Holden and Bruce Preston, professors of economics at UNSW and Melbourne respectively, The costs of the shutdown are overestimated – they’re outweighed by its $1 trillion benefit. They assume that if we let the virus rip it would be stopped by herd immunity. With deaths at a 1% level this would have given us 225,000 deaths. They say the Australian government does actually use a ‘value of a human life’ at A$4.9 million (in the US it’s US$10 million.)
In their world government spending doesn’t cost anything, because you are simply moving money from one part of society to another.
So even though they see GDP taking a 10% hit ($180 billion), they come out with a cost of only $90 billion and benefits of $1 trillion.
Foster discounts oldies, because they, and society, are only shaving a few years off the end of their lives.
That is as may be. Oldies are typically devalued in our society. The real value of Foster’s article is that she reminds us of the direct and secondary negative effects of the lockdown other than loss of life. Here are some:
- Many people suffer psychologically from the lockdown. Some have put this at 25% for serious effects. Deaths through suicide can result. Psychological effects can be long-lasting and affect life prospects.
- Lower GDP now and going forward means lower levels of government services on education, healthcare, research and development, infrastructure, social services, and myriad other things that keep us happier, healthier and living longer.
- Kids education will be disrupted. Career prospects will be changed, with effects lasting years.
- Discoveries of cures for diseases other than COVID-19 will be delayed; IVF babies won’t be born; our progress on lifting up the tens of thousands of Australian children who live in poverty will be set back.
- The future we’ll now have is worse than the future we could have had without the policy responses we have seen.
That comparison of what-we-will-have to what-we-could-have-had can be expressed in terms of quality-adjusted life years (QALYs) and wellbeing-adjusted life years (WELLBYs), and compared directly to estimates of the QALY and WELLBY costs of the COVID-19 deaths and suffering that our policies have averted.
When you make this comparison, correctly, the evidence is clear that Australia’s lockdown has been a mistake.(Emphasis added)
The modelling which Foster claims got things wrong by orders of magnitude was done by Tony Blakely, Professor of Epidemiology at the University of Melbourne in Coronavirus modelling shows the government is getting the balance right – if our aim is to flatten the curve. The article was published on 22 March, after the initial decisions were made to restrict the size of gatherings on 13 March, but before schools and work places were closed. The first result was shocking:
500,000 cases per day is a big number. In fact in the real world the whole planet has recently broken through the 130K/day barrier, to everyone’s alarm.
At the time the epidemiology we had came out of China, and the horror of Italy was revealing just itself. On 21 March Italy had gone from fewer the 100 cases per day to over 6,500 per day in the course of about a month. This is what Australia’s graph looked like at the time:
Blakely was assuming a reproduction rate (RO) for the virus of 2.5, which he assumed could be brought down to 2.0 by the end of March. At the end of the article he worries that the model assumed that the cases were doubling every four days, whereas in real life cases were doubling every three days.
Blakely found that with the immediate implementation of “extreme social distancing” daily new cases could be lowered to 100,000 in Australia, or roughly where the whole world is now.
In real life, as it turned out, much more was done than social distancing in closing borders, contact identification, testing, isolating and closing borders. Everyone knew we could not clobber the virus the way China did, but no-one thought to look at Taiwan. There is no country in the world where nothing is done, even in Brazil, where the president may not care, but, like Australia, decisions on lockdown are made at lower levels of government.
Initially the talk was “flatten the curve”. While the virus could not be stopped it could be slowed down so that the health system could cope. However the aim was herd immunity. So we had curves like this:
The problem with this was that you end up with as many deaths as doing nothing. Futhermore, the number of hospital beds, the ICU’s, the ventilators and the specialist medical staff were nowhere near adequate, so graphs like this were appearing:
Because the area under the lower graph is smaller than the other, herd immunity would not be achieved. This means that we would have to create the capacity to suppress the virus and control it while still having a population vulnerable to infection.
So we gave suppression a red hot go, with a lockdown a bit less severe than New Zealand (we kept Bunnings and Officeworks open, and allowed exercise) and less severe than places like Italy. It worked, with effects within a week or so, as I showed in this graph:
Now look at this graph of daily new cases from the worldometer site:
Since 10 April we’ve had fewer than 100 cases per day. From 20 April we’ve mostly been under 20. Here’s the comparable graph for Germany, where restrictions were eased from about 6 May:
When they eased the lockdown the 7-day moving average was over 1,000 cases per day. They’ve been doing the kinds of things we are doing, and the average is now down to 343. Here’s the German country site.
Using Gigi Foster’s arguments, you could mount a case that we should have eased restrictions 6 to 8 weeks ago.
Meanwhile over the ‘ditch’ New Zealand drops Covid-19 restrictions after nation declared ‘virus-free’.
Right now we have SA, WA, Tasmania and the two territories effectively virus-free. Queensland says that we’ll always have to live with the virus, but is acting as though it also wants to be virus-free.
The federal health authorities are saying that we will have to live with outbreaks, and that we now have the ability to squash them as they appear, so we can. In recent times we have had the case of the Bundaberg fruit picker who dramatically brought the virus from Melbourne, causing 250 or so people to be tested, and at last count 44 have had to isolate.
As we open up to the world, which we must, this kind of thing is going to happen. As Gigi Foster says, the cost of staying locked down is considerable.
I like the idea of the German Ethics Council to advise government, where the members are strictly forbidden to have any connection with government. Neither epidemiologists nor economists should have the final say. That should rest with government.
I note that in Germany the decisions also rest at the second level of government, with the states and city-states.