I am grateful to the Queensland Parliament’s Health and Environment Committee for inviting me to speak to the Committee this Friday 22 January regarding the Government’s bill to extend the COVID public health emergency and the Chief Health Officer’s extraordinary powers until the end of September. I will have 3 minutes to address the Committee from 4.05pm before being asked questions by the Committee on my submission. You can check out the schedule for the day on the Parliamentary website.
The CHO, AMA (Qld), CCIQ, and QTIC among others will all be speaking earlier in the day, and I must say I’m looking forward to what they all have to say. Unfortunately, it looks like Griffith Associate Professor Kate Galloway, who wrote a scathing submission to the Committee on the lack of parliamentary oversight of COVID decision making in Queensland, isn’t available to appear before the Committee (check out my Sunday post on Dr Galloway’s submission).
If you’d like to follow the Committee proceedings on Friday, tune in to Parliament.TV.
Almost certainly 2021 should be better than 2020 for the Queensland and Australian economies, and we’ve seen a range of encouraging indicators (e.g. job vacancies, home loans, etc.). But, in my view, we shouldn’t get too excited just yet, given a lot of the confidence and retail spending (see chart below) we’ve seen in recent months is related to the extraordinary stimulus measures (JobKeeper and JobSeeker supplement) of the federal government’s, which are already being wound down and will end this quarter. The temporarily high level of retail spending in the second half of 2020 was well illustrated by the announcement from JB Hi-Fi of an expected 86% increase in profit in the first half of the financial year (see Online sales drive JB Hi-Fi to bumper first half result). This was no doubt related to stimulus measures and also to people spending money they would otherwise have spent on overseas trips. On just how generous the stimulus measures were, check out my post from last month (Aussies over-confident after being over-compensated by Gov’t for COVID-recession).
We also need to see how much financial damage was done to companies which were able to push back creditors last year due to temporary changes to bankruptcy law. With that protection having ended on 1 January (check out the AFSA website), it’s expected we’ll see a surge in insolvencies in the first half of this year, especially when JobKeeper finishes on 28 March. So, as then PM Kevin Rudd said about the global financial crisis in mid-2009, we’re not out of the woods yet. Over the next six months, Treasurer Josh Frydenberg is really hoping consumers and businesses will spend a lot of that reported $200 billion in savings they’ve accumulated over the last year, as reported last week (Australian households and businesses amass $200 billion in savings during COVID-19 pandemic).
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Submissions to the Queensland Parliamentary Inquiry into the extension of the COVID-19 public health emergency and the Chief Health Officer’s extraordinary powers have been published on the Parliamentary website. I can highly recommend a brilliant submission from Griffith Associate Professor of Law Dr Kate Galloway, who makes a strong case for greater transparency and accountability regarding the actions of Queensland’s CHO. I tried to make similar points to Dr Galloway in my submission to the Inquiry, but Dr Galloway makes the points much better than me and absolutely shreds the government’s bill to extend the CHO’s emergency powers, which have gone far beyond what should be tolerated in a parliamentary democracy. Dr Galloway writes in paragraphs 3.1 and 3.2:
3.1 The borders have been closed, people have faced criminal prosecution for leaving their homes without ‘valid’ reason, and businesses have been shut down—all by order of the CHO and without Parliamentary debate.
3.2. These measures constitute radical incursions into existing rights and assumptions about the way that Queenslanders live. These have been imposed solely through the authority of the CHO, as a member of executive arm of government, without Parliamentary oversight or transparency.
The Parliament’s Health and Environment Committee should take Dr Galloway’s submission very seriously. She is not necessarily saying that all the state government’s COVID-19 measures were bad measures, but rather that the process by which they were decided upon was illegitimate, and I completely agree with her there.
Here is Dr Galloway’s summary of her submission which succinctly makes her case and identifies what needs to change:
1.1. Given that Queensland is likely to need to rely on the advice of the CHO for some time, the Bill is an inadequate response to the government’s responsibility for good governance including: accountability, transparency, and publicity.
1.2. This submission urges Parliament to adopt in the Bill a balance between desirable manoevrability in government decision-making and the principles of good governance.
1.3. The Bill should be reconsidered to acknowledge the development beyond an emergency situation, to a ‘new normal’, and incorporate effective measures to: a. Provide oversight of and accountability for directions to Parliament; b. Record and publicise directions in accordance with legislative norms; and c. Provide transparency of law-making overall.
Well done, Dr Galloway.
Finally, none of this should be read as criticism directed at the CHO, Dr Jeannette Young. She is trying hard to do the best she can in what is probably the most challenging job in the state at the moment. After all, regarding COVID-19, the Premier has said she doesn’t make the decisions; the important decisions are made by the CHO. Of course, as Dr Galloway’s brilliant submission suggests, this represents a clear abdication of responsibility by the Premier and her Cabinet.
Historic low interest rates and easy access to housing finance, combined with a relative lack of suitable properties in Brisbane’s middle-ring suburbs due to zoning policies, have combined to create an odd sight at suburban Gaythorne on Brisbane’s North-side today, as reported by the Courier-Mail:
Brisbane’s property boom is showing no signs of slowing with record turnouts across open homes and property experts declaring buyer interest at its highest in 20 years.
More than 200 hopeful buyers queued on Saturday for up to an hour in 30C heat to inspect just one three bedroom Brisbane home.
That was 200 people lining up to inspect an old Queenslander worker’s cottage at Gaythorne. As argued back in 2013 on QEW by my then colleague at Marsden Jacob Brad Rogers, zoning policies such as heritage protection are restricting housing supply in Brisbane suburbs, leading to a range of undesirable outcomes – i.e. relatively fewer suitable properties, higher property prices in Brisbane suburbs with restrictive zoning policies, and urban sprawl (check out Old Queenslanders in a New City). The adverse effects of Council zoning policies were also identified by two UQ geographers in recent work which I posted on last month (Bad planning policies leading to poor outcomes in Brisbane City according to UQ researchers).
Zoning policies mean that we tend to end up with plenty of development in either inner-city once commercial/industrial areas (e.g. apartment blocks in Milton, West End, Teneriffe) or in the outer suburbs (e.g. housing estates in Ripley, Springfield, etc.). This is evident, for example, in a thematic map of building approvals for the Brisbane metro region (see map below).
On where the property market may be heading after its somewhat surprisingly encouraging comeback after the pandemic-induced slump, check out Pete Wargent’s post Housing lending surges to record and the chart below showing the surge in the total value of loans for owner-occupied housing.
I recorded a great interview with my colleague Craig Lawrence of Lytton Advisory earlier this week on the concept of a Circular Economy, which is creeping into economic and environmental policy discussions and into government publications. For instance, the Circular Economy is referenced in the Queensland Government’s waste strategy , which includes a waste levy to divert waste from dumps and various measures to promote recycling. According to the Queensland’s Waste Strategy website, the waste strategy “focuses on transitioning to the principles of a circular economy to help retain the value of material in the economy for as long as possible.” But what on earth is a Circular Economy, and does it make any sense?
I thought Craig would be a good person to chat with regarding the merits of the Circular Economy concept, as Craig does a lot of consulting work on the economics of waste and recycling, and he’s a former manager of teams of economists in Queensland’s State Development department. Craig thinks that there is some merit in the Circular Economy concept, but we need to apply hard-headed economic thinking when it comes to the specifics. This is a great point from Craig, because Australia’s Productivity Commission has repeatedly questioned the merits of a range of environmental policies such as plastic bag bans and measures to promote recycling (e.g. check out Is banning plastic bags the best option to tackle litter and reduce waste? and Container deposit scheme very likely a costly bad idea).
Toward the end of the conversation, Craig notes:
I think that there’s an opportunity here [with the Circular Economy]. The linear concept, I don’t think is sustainable. And so we need to do something different. But I don’t think that there’s a blanket solution or an easy panacea. And I still think the economist in me wants to analyse and collect data, and look at individual markets and look at specific opportunities and weigh them up…I don’t want to be running or pushing a green solution for the sake of a green solution. I want to know that it’s something that is actually workable, viable, something that is going to increase economic utility, consumption, and can also engage with business properly as well.
Nicely said, Craig. I’ve now published my conversation with Craig as Episode 70 of my Economics Explored podcast. So if you’d like an overview of the Circular Economy concept and a hard-headed assessment of it from an economic perspective, check it out and let us know what you think. Finally, thanks to Craig for the interview and for his sharing of it on his Lytton Advisory website.
Yesterday 5pm was the deadline for submissions to the Queensland Parliamentary Inquiry into the bill to extend the COVID-19 public health emergency and the Chief Health Officer’s emergency powers until 30 September. Queensland’s Parliament has only one chamber and the Government has a large majority in it, so there’s no doubt the bill will pass. So making a submission to it was probably a futile exercise, but I thought I’d prepare one to help clarify my thoughts on our COVID-19 response.
I know the pre-emptive Greater Brisbane lockdown was popular with the majority of Queenslanders, but I’m worried our CHO is too quick to resort to the authoritarian lockdown method, which should only be a last resort when your contact tracing and testing methods have failed to control the spread and your public health system is at risk of being over-whelmed. With the concerning news coming out of the Grand Chancellor at Spring Hill, I expect the CHO will be considering another Greater Brisbane lockdown, so I’ll be tuning in to every Queensland Government COVID media conference for the next week or so.
The text of my submission to the Queensland Parliament’s Health and Environment Committee is reproduced below.
PUBLIC HEALTH AND OTHER LEGISLATION (EXTENSION OF EXPIRING PROVISIONS) AMENDMENT BILL 2020
Thank you for the opportunity to provide this submission to the Committee regarding the Public Health and Other Legislation (Extension of Expiring Provisions) Amendment Bill 2020. I am a former public servant, at the national and state levels, and a professional economist with a Brisbane-based consulting business, and I believe I can make a useful contribution to this inquiry regarding the Queensland Government’s decision-making process on COVID-19 measures. My contribution is structured around five propositions.
1. Queensland is relying heavily on one unelected official, but none of us is infallible.
I do not support the Bill as currently drafted, and I believe the Queensland Government should rethink its current COVID-19 decision making process, which places too much reliance on an unelected official, the Chief Health Officer (CHO).[i] It has been disappointing to see the Premier declare she has not made important decisions affecting the lives of millions of Queenslanders, but has delegated that decision making to the CHO, who, again, is unelected and not fully accountable to the public.
2. The Premier and her Cabinet should be the ultimate decision makers and they should seek outside advice and second opinions on controversial measures such as the Brisbane lockdown.
The Greater Brisbane lockdown was controversial, and the Premier should have sought out external views before agreeing to it. This decision appears to have been made with no appreciation of the importance of people’s civil liberties. It was done due to an excessive application of the Precautionary Principle. But as the Obama administration’s regulation czar Cass Sunstein has written in his book The Cost-Benefit Revolution (on p. 173):
…there is a serious, even devastating problem with the Precautionary Principle, at least in its crudest forms: risks are on all sides of social situations and efforts to reduce risks can themselves create risks.
What about the risks posed by lockdowns to mental health and to victims of domestic violence? How are these risks weighed up in decision making?
The CHO’s call on the Greater Brisbane lockdown may not have been the correct one. The Committee is no doubt aware that ANU Professor Peter Collignon criticised the lockdown on 2GB radio, as reported by the Courier-Mail on Monday 11 January 2021:
A leading Australian infectious disease expert has criticised Greater Brisbane’s snap three-day-lockdown, saying it was an “unreasonable” over-reaction that “won’t solve the problem”.
We also know that, as advised by the World Health Organization (WHO), lockdowns should be a last resort measure, when your public health system is at risk of being over‑whelmed, given the fact lockdowns bring their own economic and social costs.
3. Public policy decision making depends on value judgments, and those value judgments are best made by elected Ministers, accountable to the public via the Parliament and at the ballot box.
In his 2020 Keeble Lecture to the Planning Institute of Australia (Qld) on 5 November 2020, former Queensland Government Minister Ian Walker made the timely and correct point that:
No expert advice is free of value based factors. There is no “neutral” advice. Don’t ditch your values—but acknowledge that they are there and own them where appropriate.
Even if they are not always explicit about it, economists tend to adopt the same normative premise, that articulated by Jeremy Bentham, that our governments should act to achieve the greatest good or happiness for the greatest number. I would like to see the CHO explain the normative or ethical premises that take her from her ‘is’ statements to ‘ought’ statements. How does she resolve David Hume’s is-ought problem? This has not always been clear. Some decisions of the CHO’s appear to be based on a very strong Precautionary Principle (e.g. the Greater Brisbane lockdown), but others appear more Benthamite or utilitarian (e.g. decisions around movie stars and footballers). It is legitimate to question what value judgments the CHO is making and whether she is being consistent in her decision making.
4. While it is right for governments to protect public health, too little regard is being paid to civil liberties, and we should be very wary of making ordinary behaviour illegal.
Last weekend, 2 million plus residents of Greater Brisbane were subjected to a lockdown, even though at the time there was only one reported case of someone with the mutant COVID-19 virus.
Supporters of the lockdown could argue it was necessary to control the spread of the mutant COVID‑19 virus. Possibly, but necessity could be used to justify highly undesirable interventions in the future. In 1783, in the House of Commons, the British statesman William Pitt the Younger said:
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
We should have a strong preference for governments simply recommending particular actions over requiring particular actions be performed with the threat of fines or charges if they are not.
5. None of this is to say that the economy should come before public health, but we need to recognise that some COVID-19 measures are highly costly and undesirable and need to be applied with caution.
Obviously, we need to control the spread of COVID-19 which is undeniably a serious disease. On 13 July 2020, I told the Queensland Parliamentary Inquiry into the Government’s economic response to COVID‑19:
Austan Goolsbee, who was chair of President Obama’s Council of Economic Advisers, said that, in a time of pandemic, the best thing you can do for the economy has nothing to do with the economy.
The public health response is critical to ensuring the economy can safely re-open and can return to some semblance of normality as soon as possible. On the public health response, the government deserves credit.
It may be that in future years, after we’ve had a detailed look at evidence from across the world, we learn a different public health response may have had less of a short-run economic cost. But, at the moment, we’re not 100 percent sure of the optimal public health response, and decision makers need to exercise their judgement.
I stand by that statement, although I have disagreed with some state government decisions since then, particularly regarding some interstate border restrictions and the Greater Brisbane lockdown. I think we can apply a more rational approach to decision making in the future, one which is not solely reliant on the CHO’s advice and one in which the Premier or her Cabinet makes the decisions.
I understand the CHO is doing an exceedingly difficult job under incredible pressure, and she has generally done well. I do not mean to be too critical. I am expressing these views because I think we can do even better in our response, and prevent unnecessary job losses and business failures.
Thank you again for the opportunity to make this submission. I would be happy to discuss my views with you or Committee members at a mutually convenient time in the future.
[i] I recognise that the Premier or the Health Minister cannot be expected to make every decision relevant to public health, so the relevant provision should be drafted in a way that allows the delegation of powers to officials to direct certain individuals (infected with COVID-19 or suspected of being infected) to get tested, isolate, or go into quarantine. But any decisions pertaining to whole populations in a geographical area should only be made by Ministers, in my view.
The Grand Chancellor Hotel in Spring Hill is around the corner and up the hill, around a 300m walk, from my office at the Johnson Hotel on Boundary St. I never imagined it would end up being the place from which the UK mutant COVID-19 strain would spread into the Queensland community. Hopefully the community transmission remains limited to the cleaner and her partner (not counting the quarantined guests infected in the hotel) and we don’t end up in another lockdown. The Premier has rightly suggested we need to review quarantine arrangements for international travellers to Australia (check out this Perth Now report). This is a point that was well made in a comment on my last Saturday post by QEW reader Paul, who made it in the context of a critique of my views on the Greater Brisbane lockdown, and I’ve hoisted it from comments to reproduce it below:
The current issue is not whether lock-downs are necessary (they are) but how the more transmissible strain of the virus got into Australia. This is clearly a failure of quarantine at international borders. Hotel quarantine in major cities is an extremely foolish idea. You can’t contain a highly transmissible virus in a commercial hotel. Of course some people will break quarantine, of course some people will make mistakes, of course some people are stupid and ignorant – that’s just the human condition and quarantine procedures must take this into account.
All incoming overseas travellers should quarantine for 2-3 weeks in purpose built facilities in isolated areas before being released into the Australian population. For example demountables built near the RAAF northern bases (RAAF Scherger or RAAF Learmonth). Remote and isolated, nothing but kangaroos and crocodiles. The airstrips are designed for fighter jets and transports and can take overseas commercial planes. Plenty of locally built air conditioned demountables built for the mining industry. A mere $100M (petty cash in the Federal Budget) would be enough to bring Australians home and restart the immigration program. These demountables could be used by defence subsequently in northern exercises.
Quarantine in remote locations is not a new idea. It was standard practice near ports in the nineteenth century.
Quarantine in remote locations is obvious to any one dealing with human or agricultural animal/plant quarantine. We can keep agricultural viruses such as ‘foot and mouth’ disease in cattle out. Hard to think of any reason it is not done with Covid 19 other than wanting to help the economy of inner city hotels and perhaps of party donors.
While Paul and I aren’t fully in agreement on lockdowns, I think he’s made some excellent points about hotel quarantine and his idea is well worth consideration by National Cabinet. Hopefully, they’re already considering something along these lines.
The Queensland Government needs to improve its COVID decision making process after the absurd three-day Greater Brisbane lockdown, which thankfully wasn’t extended beyond 6pm last night. ANU Professor Peter Collignon yesterday criticised the lockdown on 2GB radio, as reported by the Courier-Mail:
A leading Australian infectious disease expert has criticised Greater Brisbane’s snap three-day-lockdown, saying it was an “unreasonable” over-reaction that “won’t solve the problem”.
Very true. It’s one of the worst decisions from the state government in a long time. The decision was made by Queensland’s (unelected) Chief Health Officer Dr Jeanette Young whose advice is always followed by our Premier, based on what she has said in various press conferences. The Queensland Parliament is currently considering whether to extend the CHO’s extraordinary emergency powers out to 30 September. It will, of course, and there’s little point in making a submission to the Parliamentary Inquiry, but I would suggest we urgently need to improve our COVID decision making process in Queensland. Greater use should be made of external experts such as Professor Collignon and others. With the Grand Chancellor cleaner’s partner also infected with COVID, there is the definite possibility the Queensland Government could tighten restrictions if infections increase, and we want to make sure any decisions are well made and subject to rigorous scrutiny.
The Premier (and Cabinet) must be the ultimate decision-maker. Jeanette Young’s objective is too narrow, so there’s no balance to the decision. The 3-day lockdown has been a total farce – why not request voluntary mask carrying in crowded places, with no lockdown? Silliness.
Absolutely. Thanks to Joe for letting me reproduce his reply.
Finally, I should note that, overall, the Queensland Government and other governments across Australia have largely done a good job in managing COVID, except for the hotel quarantine fiasco in Victoria and some harsh interstate border restrictions. Australia is clearly in a better position than most other countries. But we can still do better. Improving the decision making process in Queensland would hopefully prevent bad decisions such as the three-day Greater Brisbane lockdown in the future.
Ten years ago today, a swelling Brisbane River flooded the city, and made us question whether we really needed that $9 billion of climate-resilient water infrastructure the state government had commissioned in the middle of the drought, when there were fears rainfall would be permanently lower due to climate change.* The Queensland floods, which caused tragic loss of life and billions of dollars of property damage, were Premier Anna Bligh’s finest moment, as she rallied Queenslanders in that challenging time, and we saw thousands of Queenslanders help out in the clean up, the so-called Mud Army.
Ten years ago today, I posted the following images on QEW, which I snapped around Toowong and Auchenflower on Tuesday afternoon, 11 January 2011.
One company that has done very well out of COVID is Amazon (see share price chart below). The wealth of its founder Jeff Bezos soared, and he has seemed untouchable as the richest man in the world, although he has just lost that title to Elon Musk, possibly only temporarily. Bezos is obviously an exceptional entrepreneur, but I never realised just how exceptional until I read Brian Dumaine’s Bezonomics, which I finished reading today, during the Greater Brisbane Lockdown. As other reviewers have suggested, Bezonomics is hagiographic about Bezos, but it clearly shows how he’s always had a long-term vision of global domination of multiple markets, and how he’s been extraordinarily successful in achieving his objectives so far.
Amazon takes advantage of what Dumaine calls the “AI flywheel” (borrowing from Jim Collins), whereby Amazon gets to know its customers better as it gathers more data on them and is then able to offer them better targeted products they are more likely to buy, meaning larger sales volumes and economies of scale, driving down prices, and encouraging further purchases. In the context of the development of Alexa in 2011, Dumaine explains the basics of the AI flywheel on p. 226:
…start with the customer first, find ways to drive down costs, which frees capital to invest in more features, which attracts more customers, which allows for economies of scale to drive down costs, and so on…
Bezonomics explains how Amazon pushes its customers into Prime membership and how Prime has forced Amazon to become super-efficient in warehousing and distribution, so it is now a threat to traditional logistics giants such as FedEx. The book also highlights Amazon’s large market share in cloud services through Amazon Web Services (AWS), which NYU Marketing Professor Scott Galloway has predicted Amazon will spin off this year as a way of appeasing US regulators who may be contemplating antitrust action against Amazon (check out this WebProNews story).
Dumaine argues Amazon is moving into new industries such as healthcare and its AI flywheel will help it quickly gain large market share. Bezonomics speculates Amazon won’t just be in the pharmaceuticals sales business, but in telemedicine as well, via its Alexa devices. On p. 230, Dumaine writes about the potential for a Prime Health service:
Feeling down in the dumps? Alexa might suggest that the [Prime Health] member contact their doctor. (Amazon has filed a patent for Alexa to pick up the sound of sniffles or a cough, and Alexa already offers simple first-aid advice.) When the member asks Alexa to set up an appointment with an Amazon-recommended doctor (five stars!), a time and day is downloaded to his or her calendar. At the appointed time, a doctor pops up on the screen and conducts the exam.
You can see where this is going. The consultation could result in pharmaceutical products being purchased via Amazon. Genius, and all part of Bezos’s plan for global whole-of-economy domination.
In the end, Dumaine does not see a need for antitrust action against Amazon (e.g. forcing a breakup of Amazon into different businesses, and at least separating the selling platform from Amazon’s own retail business, as Senator Elizabeth Warren has suggested). This is even though Bezonomics does highlight some pretty sketchy practices of Amazon, including aggressively competing against independent sellers on the platform with its own line of products. Dumaine accepts Amazon’s assurance it is not using confidential data on independent sellers, and he rejects antitrust action against Amazon, as he sees Amazon ultimately as a force for good for consumers, providing a wider range of products at lower prices than otherwise.
Here I should note that the European Commission has a different view on Amazon’s use of independent sellers’ data, as announced on 10 November last year, in a press release:
The European Commission has informed Amazon of its preliminary view that it has breached EU antitrust rules by distorting competition in online retail markets. The Commission takes issue with Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third party sellers.
The Commission also opened a second formal antitrust investigation into the possible preferential treatment of Amazon’s own retail offers and those of marketplace sellers that use Amazon’s logistics and delivery services.
Let’s see what happens in the US under the Biden administration, as I wouldn’t be surprised if we see some aggressive action there, although Bezos’s ownership of the Washington Post may provide some protection.
Bezonomics may be too uncritical of Amazon and Bezos, but it’s very worthwhile reading nonetheless. It opened my eyes to the scope and scale of Bezos’s ambition, and the chance that he may well realise it.
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