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COVID Is Exposing Australia’s Neoliberalized Health System

In Australia, decades of neoliberal policies have crippled our capacity to respond to public health crises like COVID.

New South Wales police officers talk to locals on the Bondi Beach promenade in Sydney, Australia as part of their high profile lockdown compliance patrols. (James D. Morgan / Getty Images)

As Australia lurches into another round of sadly necessary lockdowns, many of us are beginning to lose patience — and with good reason. The social impacts of repeated lockdowns and border closures are devastating. While it’s clear we need lockdowns right now, there has been little level-headed discussion of their consequences or how we can avoid them in the future.

It’s true that Scott Morrison’s government has botched the vaccine rollout. Along with the Queensland government, Morrison has also given damaging and inconsistent advice on the AstraZeneca vaccine. However, the failure of Australia’s pandemic response goes far deeper than this.

Decades of privatization and cuts are ultimately to blame for Australia’s flawed pandemic response. When Labor PM Bob Hawke introduced Australia’s version of neoliberalism in the early 1980s, he began a long social transformation that hollowed out the state’s capacity to ensure our welfare. Hawke’s successor Paul Keating continued this market-driven agenda while unleashing a wave of privatization. Neoliberalism has remained a bipartisan consensus ever since.

Cuts, marketization, and privatization dramatically reduced the state’s capacity to organize the enormous resources of Australia and civil society toward positive ends. A growing chasm emerged between political institutions and society, making it impossible to mobilize a social response to the pandemic. Lockdowns and border closures have been the only effective primary responses to the pandemic available.

Instead of mobilizing civil society, governments have demobilized the population by ordering us to remain isolated at home. Politicians and the media increasingly blame new outbreaks on individuals, at times mercilessly shaming them. Successfully managing the pandemic has become synonymous with lockdowns and restrictions.

Lockdowns Are Necessary — But They Shouldn’t Be

The debate about lockdowns is increasingly hollow. The libertarian right calls for an immediate end to lockdowns in order to protect business profits. Many on the center left have embraced lockdowns with growing enthusiasm, while ignoring the structural failures that make them necessary. “We’re all in this together,” Queensland Labor premier Annastacia Palaszczuk tells us. Only last year, her government cut a billion dollars from Queensland Health.

Instead of this empty debate, we should be asking why lockdowns are our main tool for fighting outbreaks. And more importantly, we must start addressing the devastating social harms they create. Far from undermining lockdowns or our response to the pandemic, recognizing these harms is crucial. Doing so highlights the need for a massive overhaul of our welfare and public health systems that could reduce our dependence on lockdowns and border closures in the future.

There is strong evidence that lockdowns have contributed to increased rates of mental illness and distress and a spike in domestic violence. The mental distress caused by lockdowns also continues to entrench social isolation and loneliness in the months after. This is likely to have tragic long-term consequences. A 2015 study found that loneliness and social isolation increased the rate of early death by 26 percent and 29 percent respectively.

Perhaps most alarming is the impact lockdowns have on childhood development. The Victorian government recently released survey results indicating that as a result of lockdowns, many children “spoke of experiencing mental ill health for the first time, and a disturbing number spoke about concerns of suicide and self-harm.” The impact on children who are vulnerable and/or from poor families is likely to be even worse.

Statistics and studies can’t convey the full picture, either. Humans are social beings. The joy of life comes from social interaction. Losing that, sometimes for months on end, is awful.

If neoliberalism atomizes and alienates individuals, then lockdowns are a quintessentially neoliberal response to the pandemic. Instead, the Left needs to articulate an alternative pandemic response built on solidarity and mobilizing society.

We Need a Public Vaccine Manufacturer

In 1994, the Keating Labor government privatized the Commonwealth Serum Laboratories (CSL). CSL was Australia’s only publicly owned pharmaceutical company. Selling it off deprived us of a key public resource for fighting COVID-19, leaving Australia dependent on a multinational, privately owned pharmaceutical industry for vaccine production and manufacturing.

While the privatized CSL may be manufacturing the safe and effective AstraZeneca vaccine in Australia, this country has no capacity to manufacture mRNA vaccines like Pfizer. Nor can we coordinate significant national resources for developing multiple vaccine candidates and manufacturing them on a mass scale.

Like all businesses, pharmaceutical companies are driven by profit. Profitability dictates research and development decisions and determines which drugs are progressed past stage three clinical trials to full-scale production. The only long-term solution is to reestablish a national, publicly owned and controlled pharmaceutical industry.

In such a publicly owned industry, decisions about research and which drugs progress beyond trials, to production would be dictated by health, not profit. A network of publicly owned and funded research institutes and laboratories, overseen by a parent public pharmaceutical company, could develop and manufacture vaccines in Australia. It could also manufacture antibiotics and other crucial medical products at scale.

Cuba is a much smaller and poorer country than Australia, yet in May 2020, Cuban president Miguel Díaz-Canel directed its state-owned pharmaceutical industry to develop a vaccine. The results were impressive — Cuba produced five vaccine candidates, and in June 2021 announced that Abdala was 92.28 percent effective against COVID-19. In spite of the crippling US trade embargo, Cuba now has the capacity to manufacture ten million vaccines per month, which it plans to export for free or at cost to its South American neighbors.

For-Profit Pharmaceuticals Have Failed

A public pharmaceutical company could also strategically develop vaccine candidates in anticipation of potential future pandemics. Three vaccines for the SARS virus had the potential to be effective against COVID-19. When they were deemed unprofitable and unnecessary, however, the US government cut funding for their development.

This is part of a long-term structural decline in investment in vaccine production and research identified by a study in the New England Journal of Medicine. The authors note that two major reasons for this decline are

…the diminishing numbers of vaccine manufacturers able to devote the necessary resources to research, development, and production; and the prevailing business model, which prioritizes the development of vaccines with a large market potential.

The problem isn’t that pharmaceutical companies lack the resources to develop vaccines. The private pharmaceutical industry only spends a fraction of its revenue on research and development, compared to spending on marketing, dividends, and share buybacks.

In 2013, the Grattan Institute found that Australia overpays for pharmaceuticals by $1.2 billion. The Commonwealth government has just signed a deal with CSL to pay $1 billion for medical products that the company had already developed when it was still under public ownership.

Like all privatized pharmaceutical companies, CSL became a profit-hungry corporation. Between 2010 and 2020, it spent $14 billion on marketing and share buybacks, but just $6 billion on research and development. The estimated average cost of developing a vaccine is between $500 million to $1 billion.

Advocates of the market argue that it drives innovation, but the private pharmaceutical industry is structurally geared toward wasteful spending and relies on public research to develop genuinely new drugs. Between 2010 and 2016, every new drug approved by the US Food and Drug Administration was publicly funded, yet private corporations pocketed the profits.

A public pharmaceutical industry would make it possible to reinvest proceeds into research and development, creating a positive feedback loop accelerating new breakthroughs. Similarly, a publicly owned pharmaceutical industry could focus on less profitable yet life-saving medicines. For example, we need new antibiotics to counter increasingly common antibiotic-resistant infections, yet pharmaceutical companies haven’t dedicated significant resources to this because it’s not likely to generate enough profit.

Health Care and the Public Service

Four decades of outsourcing and cuts have made governments dependent on private companies while depriving our public service of the expertise and capacity to coordinate large-scale responses to crises. The federal government alone spends $5 billion per year on private contractors. In 2019, the federal public service shed twenty-five hundred of its staff. Services Australia, the department that runs Centrelink and Medicare, was among the worst affected.

The authorities have outsourced virtually every aspect of Australia’s vaccine rollout to private corporations, from distribution to data tracking and monitoring. The Department of Health has contracted PricewaterhouseCoopers as the government’s “delivery partner” for the vaccine while relying disproportionately on private GP clinics to administer it.

Politicians have imposed repeated cuts on our health system, forcing hospitals to run at near 100 percent capacity. In 2019, Queensland’s Chief Health Officer had to activate the State Health Emergency Coordination Centre when major hospitals hit capacity because of a bad flu season. The government ended up spending $3 million renting beds in private hospitals.

In 2020, in the middle of the pandemic, the Queensland Labor state government cut $1 billion from the already underfunded and overcapacity public hospitals. Our public health system is under so much stress that last month, doctors and nurses across the country sounded the alarm, warning of burned-out medical professionals and patients at risk.

In 2019, a global health expert warned that a serious outbreak of influenza could easily overwhelm Queensland’s health system, noting that emergency departments are chronically under pressure. In the same year, modeling found that a hundred initial cases of smallpox would overwhelm Sydney’s contact tracing system. The pandemic vindicated this prediction, with the problems with contact tracing felt most acutely in Victoria and New South Wales.

Australia is well below the OECD average on hospital beds per capita. In 2017–18, we had 3.84 beds per thousand people, compared to Japan with thirteen, or Germany with eighteen. If you only count public hospital beds, the figure drops to 2.51 beds. For Australia to reach Japan’s standard, we would need to build the equivalent of 214 extra major metropolitan hospitals.

This means that lockdowns became our only effective weapon against COVID-19. State governments rightly feared that even a moderate caseload would overwhelm an outstretched public hospital system. The Queensland government locked the state down in January this year over just one case, citing the need to give the contact tracing system time to catch up.

A Better Public Health System

To imagine a better society after neoliberalism, the Left must articulate a program for reversing decades of privatization and outsourcing that can rapidly expand health and welfare resources under public control. As a first step, Australia should establish a network of dedicated infectious disease hospitals and isolation wards servicing all major population centers across the country.

This would ensure the necessary latent capacity to handle sudden outbreaks of infectious disease without overwhelming the broader public health system. South Korea did something similar following its struggle with a MERS outbreak in 2015.

A well-funded center for disease control could coordinate permanent contact tracing systems, bolstering our capacity to handle large outbreaks. It could also carry out regular scenario planning and practices to test this capacity.

Meanwhile, we should expand our public hospitals and emergency wards to ensure a far greater latent capacity of nurses, doctors, and hospital beds. This must include better funding for regional public hospitals. Bringing private hospitals into public ownership would be a dramatic step toward this goal while also helping to eliminate the elective surgery waitlist in public hospitals.

At a local level, we should establish a network of public health clinics with publicly salaried GPs, nurses, and specialists to take pressure off emergency wards and ensure that communities without easy access to a bulk-billing GP can access free primary health care. These clinics could establish trusting relationships in thousands of communities.

They would ultimately act as part of an important network to rapidly distribute vaccines, carry out testing, and quickly distribute urgent public health information. Public clinics could engage in active outreach and preventive health programs. As well as offering proactive health checkups, education initiatives, and vaccination drives, this would help break down social isolation and loneliness.

To realize these plans, we need to train thousands more nurses and doctors. To achieve a ratio of nurses per capita comparable to Norway, for example, Australia would need 144,000 additional nurses. To match Cuba, we would need 109,000 additional doctors. We could train these hundreds of thousands of extra doctors and nurses by actively recruiting students from the diverse working-class communities often most alienated from government services.

These steps would require us to boost Australia’s expenditure on health from roughly 10 percent to 12.8 percent of GDP. This would still be well below the United States, whose health care spending accounts for 17.7 percent of GDP — the result of billions wasted on private, for-profit health insurance, pharmaceuticals, and hospitals.

A Better Pandemic Response

While Deputy Premier Steven Miles was chastising Queenslanders for the state’s low testing numbers, people were queuing for up to five hours to be tested. It was a stark illustration of the limits of Australia’s public health infrastructure.

Imagine that we had experienced three decades of progressive expansion of our public health system and state capacity instead of neoliberal regression. What might our pandemic response have looked like?

In late January 2020, as the scale of the international pandemic became clear, the federal government could have ordered the publicly owned and funded Commonwealth Serum Laboratories to begin developing multiple vaccine candidates. State governments would have been able to activate a network of infectious disease hospitals at full capacity, obviating the need to rely on the flawed hotel quarantine scheme.

A network of public health clinics could have spearheaded a public campaign, offering information, proactive testing, and free masks and hand sanitizer. Income and housing assistance would have aided the sick and those in self-isolation while alleviating the danger of workers spreading the virus by being forced to work. Mass testing and well-funded contact tracing regimes could have allowed us to detect clusters far earlier.

With generous social provision, well-trusted public institutions, and a state with significant capacity to mobilize resources quickly and effectively, it wouldn’t have been necessary for governments to turn so aggressively to coercive and draconian laws.

Within five months, Australia’s public pharmaceutical industry could have been testing multiple vaccine candidates and preparing to manufacture them at scale. Within eight months, Australia could have vaccinated over 80 percent of the population and begun to distribute vaccines to neighboring countries.

Even in this scenario, it’s likely that we would have needed lockdowns and border closures in the early months of the pandemic. But we wouldn’t have endured anything like the pattern of repeated lockdowns we’ve seen over the last eighteen months.

We are all sick of lockdowns. We all want the pandemic to be over. But if you want to blame something, don’t blame people going to a hardware store or lining up for croissants. Blame neoliberalism — and the politicians who remain doggedly committed to it.