Yesterday I spoke with my good friend Paul McFadyen, a now-retired former Queensland Government biologist and Treasury official, about coronavirus and how governments should respond to it and crises more broadly. In our conversation, Paul recalled his experience during the SEQ water crisis in the mid-to-late 2000s while he was in Queensland Treasury. We spoke at his home in suburban Brisbane, which explains why you can hear some parrots chirping at times in the recording (below).

You can find a transcript of our conversation below. If you’re interested in the Queensland economy’s exposure to coronavirus, check out CCIQ Chief Economist Marcus Smith’s latest article The Question Is Not If, But How Much, Coronavirus Will Affect Queensland’s Economy.

Transcript of QEW on location interview with Paul McFadyen on Coronavirus, Brisbane, Thursday 5 March 2020

[00:00:08] Gene: Welcome to Queensland Economy Watch on location, I’m Gene Tunny and I’m here with Paul McFadyen, who I’m delighted to be able to say is going to chat with me today about Coronavirus and how governments should respond to it. Paul, welcome to the program.

Paul: Thank you.

[00:00:29] Gene: Excellent. Paul, I think you’re someone who is highly credible in speaking about Coronavirus. Because you understand biology, I get the sense that you understand biology. You’ve worked as a research scientist for Queensland government in the past. And you also understand how government works and how government should be responding to crises. Could you just give us an overview, please, of how your background influences your understanding of Coronavirus and your thoughts on how we should respond, please?

[00:01:11] Paul: Thanks Gene. Yes, I had 20 years working in in biology as a research scientist. I would point out I’m not an epidemiologist or a pathologist. The people who are specifically expert in that will be in in the Department of Health, in state and federal bodies. So they’ll have much more detailed information. I’ve only got general knowledge. I do perhaps have more experience than they do in central agencies, having worked in Treasury for twenty years as well and dealt with a number of issues there. And working in a central agency, you get more of a helicopter perspective of how government works. So that’s basically my background.

[00:02:04] Gene: Okay. And why I thought it would be good to speak with you is, I think, more so than anyone else that I know you were warning about the possible risks of Coronavirus pretty early on as we were learning about it.

[00:02:24] And you’ve also been sending emails and you’ve been providing really great commentary on what should be done about it. Could you just explain first why you were so worried about Coronavirus to begin with?

[00:02:43] Paul: I think it’s pretty evident just watching from the news what was happening in communist China. And it was quite extreme measures that the communist Chinese government was taking and they wouldn’t be doing that if it wasn’t something serious. One can’t necessarily rely on any data or information coming out of a communist dictatorship. You can only really rely on what they do and what they do it’s pretty extreme. And it seemed that the virus seemed to be very transmissible, have a high transmissibility rate, which of course, depending on how virulent it is, will determine how effective and how dangerous it is. So that was part of the reason for my interest and also, being a biologist, you’re interested in those sorts of things. The other issue was there wasn’t a lot of information coming out of government authorities on the issue. It’s mostly in the news reports and most of the government comments were we’ll keep it under control and don’t worry. And so I just started following it just out of out of general interest.

[00:04:11] Gene: Okay. Now, in terms of what we should be doing about Coronavirus, we’ve seen that governments have started to respond. So there have been travel restrictions, particularly if you’re coming from China. So we’ve temporarily suspended travel from China. What other measures should governments be taking?

[00:04:38] Paul: I think, Gene, as you’d know in government, there’s a lot of paddling under water that you don’t see if you’re outside of government. So, I would be extremely surprised if both state and federal governments’ medical people, the bureaucrats, wouldn’t have been doing a lot of work for some time to prepare. And they would have a checklist of things to be doing as the virus progresses so they will stage manage that, too, for the population. They will also have information that may not be available publicly and that will influence their levels of preparation.

[00:05:34] So really my comments will be from someone sitting outside who is only getting the same information everyone else gets through the media. Perhaps I might look at it more than the average person because of the biological background. But from what I can see it does look as if it’s going to become a worldwide pandemic. To what extent that has an impact? We don’t know. But from what one can infer from information that’s coming out through the media, it appears to have about a 1 percent mortality rate. More likely amongst the aged or if they have a pre-existing medical condition. All this information is publicly available, so it’s nothing new. But it does seem to have a very high transmissible rate. So, it seems to be it may well be airborne. It seems to be able to survive on hard services. So, from the virus’s point of view, it’s a very successful virus, not from people’s point of view.

[00:06:56] Gene: Yes. So last week you sent an email to a group of friends, and I was on the list of people who received the e-mail and you had some suggestions as to what governments could do, which included things like making sure we’ve got sufficient supplies of pharmaceuticals and medical equipment. And also there are a few other items. Would you be able to go through those please?

[00:07:27] Paul: Sure. I expect all of these things are being done knowing the way government works. They wouldn’t necessarily be publicized, but given that many of our pharmaceuticals are imported, I’m sure that the various government health authorities will have been ensuring that there are adequate supplies of the various medications that are available, and there are only a limited number of medications which they can use against the Coronavirus. It’s a a new virus to man. It’s not a pre-existing one. The other issue is it’s a matter of scale. Whilst there are only a few cases of the Coronavirus, the existing health infrastructure is able to cope with it, and government authorities are already moving to ensure that hospitals and facilities are structured to cope with an increase.

I guess what the sum of the points I made to you previously was that if it does become epidemic in Australia and we have hundreds of thousands of cases, then the existing hospital system could be overwhelmed. Now the importance of not overwhelming the health system is that mortality is quite low if there’s good health care available. If there isn’t good health care available, then you can’t get into the hospitals or the doctors and the nurses are sick, then the mortality rate can rise above the 1 percent or whatever level it is to higher levels. So, the important thing is to ensure that the health system is not overwhelmed. And part of the actions of quarantining people and isolating people is to slow down the rate of spread in the population so that the health system can deal with people who are sick and then recover from it. So, the health system is not overwhelmed and that will reduce the mortality rate.

[00:10:02] Gene: Okay. And you recommended that government should be looking right now at demountables, having, you know, temporary hospital facilities. That’s something they should be doing, in your view?

[00:10:14] Paul: Yes. And I expect things like that may well be going on in government and we wouldn’t know about it. Yes, but it’s just things would need, either clinics which are specifically for Coronavirus or demountable hospitals. At this stage, because we’re not in an epidemic, the planning should be done. Get a bunch of engineers together, plan how to build a temporary hospital in a very short period of time. And engineers can do that. It’s amazing what an engineer can do if you give him a deadline and enough money to do it. They can build temporary hospitals in a month, I’m sure.

[00:11:05] So at this stage, it just really needs the prep work, the planning work that needs to be done. They need to know what sort of hospitals to be built, where they’re to be built, how many beds in each one. They would need requests for tender and expressions of interest to do it so they know who would be building it. So, it’s all the administration prep work. They’re not actually building anything, but they have all the planning done. Then they’d need a team of health people, epidemiologists, to say when the infection rate has become epidemic in the population, to pull the trigger for the engineers to say go and build the demountables so that the hospital system won’t be overwhelmed. Now, government can do this and has done that in the past with a water emergency. There was a lot of background planning which never got into the newspapers or into the media. But if South East Queensland had run out of water, the planning was in place for plan B, as it were, how to deal with things like that. So, I suspect government would be doing exactly that same thing. That’s the way government operates.

[00:12:29] Gene: Yes, that’s correct. But were they thinking about this early enough? Because we’ve known, at least for the last, I’d say at least 20 years, I remember this was being talked about. Well, certainly when SARS came along and probably before that we knew that, because of the growth in international travel, we knew that we were going to have a virus of some kind that would just become pandemic and would cause massive disruption. We’ve expected this for many years. Is this something governments should have been doing more work on earlier and making it clear to the public what they should do? Because one of the points you made in one of your emails, if I remember correctly, was that governments don’t often get into that high gear they need to be in until they’re confronted with something that really is an emergency.

[00:13:23] And you mentioned an example from the water crisis. Can you recall that example, Paul, and respond to that point I’ve just made, please?

[00:13:32] Paul: Yes, I’m sure within the Health Department, epidemiologists would be well aware. I mean, that’s their bread and butter: virus outbreaks and pandemics. They would know that backwards and they would be advising on that. The extent to which that advice will have filtered further up the tree to the to the cabinet level would depend very much on the individuals in the bureaucracy and at the political level as well. And sometimes it can be difficult for information from lower technical levels to filter all the way up through the administrative levels to the political level, which has the executive ability to make decisions. And sometimes there needs to be a circuit breaker at the political level, which can make the decisions, so it gets the real information rather than a filtered view of the information.

[00:14:41] And yes, I think during the water crisis, that circuit breaker came into play and it made a big difference in terms of the focus of the government in terms of getting things done. Without going into details.

[00:15:00] Gene: Okay. We won’t go into details then, but it’s an interesting story and it shows that you really need to have that sense of crisis to get government moving, which, I mean, government can move quickly when it has to. I’ve seen that. I saw that during the financial crisis when I worked in the Commonwealth Treasury. I know that eventually we did get moving very quickly here in Queensland when we realised we had a water crisis. Arguably, we should have been doing a lot more beforehand, more planning. We should have approved the Wolffdene Dam. There was an issue there. I’m just generally concerned about the ability of governments and particularly with modern public services, which I’m concerned are not as capable or as skilled or as innovative as previous public services, as public services of past generations. I’m concerned that there’s been a de-skilling. And I’m also concerned about the quality of our political leadership.

[00:16:07] Around the world, we’ve seen governments struggle with crises. We saw this in the United States, for example, with Katrina. We’ve seen that the federal government here, with the recent bushfires, it’s had to catch up. It was not on top of the bushfires as early as it should have been, arguably. Are you generally worried about the ability of governments to manage these crises or do you think that we should be confident that they’ll be able to handle Coronavirus.

[00:16:38] Paul: Am I confident they can handle Coronavirus? I’m not sure what handling Coronavirus is. Ideally, I guess one should aim to ensure that quarantine is effective to reduce the introduction of Coronavirus into Australia and that the health systems aren’t overwhelmed.

[00:17:05] But yes, in terms of handling crises, crisis management is a different thing to ordinary day-to-day government business because you need to have major decisions made very quickly without time for long and lengthy investigations to see whether it’s the right thing to do.

[00:17:27] So if you have an area where it’s likely to be an emergency, you need to have reporting systems that don’t go through the many layers of management. You need reporting systems where the action officers can report more directly to the people with executive authority to undertake action.

[00:17:54] Now, I can give you an example where, it’s not an emergency issue, but it’s an example of having direct reporting. When the Queensland budget is prepared. It involves probably 100 people in 20 agencies and probably a couple of hundred or a few hundred people in Queensland Treasury. So, you’re dealing with, over a six month period, two or three thousand people putting together various books that are called budget papers, but they’re actually books full of numbers, words and graphs and they all have to line up. And there’s all of the government’s expenditures, its new initiatives, and things it’s doing.

[00:18:44] And it has to be tabled in parliament on a particular day. It can’t be the next day. So it’s really important that there are no roadblocks on the way. And that includes the various lines of communication in line agencies and the central agencies of Premiers and Treasury. So what Treasury does every year is they appoint a budget coordinator, which is usually a middle level Treasury official, whose job it is not to write any of the budget or do any of the numbers, but to make sure there are no roadblocks either in the line agencies or in Treasury. And if there’s any problem of any nature, then that budget coordinator has direct access to the Treasurer. And, in general, the Treasurer can resolve most problems in government, if it’s roadblocks in preparation of the budget. And that works because it’s been developed. It’s an effective system. And I think, in areas where there are particular emergencies, you need to set up your systems for fast reporting.

[00:20:07] Gene: Yes. Yes. Very good. Is this a role that you add at one stage? Because you did have that role.

Paul: Yes, yes. Yes. It’s absolutely critical.

[00:20:17] Gene: Just finally, I’d like to ask about the supply chains and the ability to provide goods and services to the public if there is a Coronavirus outbreak. We’ve already seen panic buying within Australia. For some reason, toilet paper is one thing that everyone just thinks, oh, we don’t want run out of that. And they stockpile it. I’ve seen lower stocks of tissues and bread the other day, all sorts of things, at Woolworths in the city. I think people are starting to be concerned about this. We’ve had politicians say, well, you don’t have to worry, we’ve got a supply chain in Australia that works. You don’t have to panic and stockpile goods from the supermarket. But it’s not clear to me that governments can actually give that guarantee.

[00:21:36] I’m surprised they’ve given that guarantee, because I know what happened in the floods here in Brisbane. I remember going to Indooroopilly Shoppingtown after I got out of Toowong, which was flooded. I remember the chaos in the supermarket. And you couldn’t get anything. You couldn’t get bread and I think milk at the time. And they had police officers outside Indooroopilly Woolworths, because they were concerned about people fighting in the supermarket.

[00:22:03] Can governments actually guarantee that the supermarkets won’t run out of essential products and that, therefore, everything’s fine, we shouldn’t panic, we shouldn’t stockpile? Any thoughts on that?

[00:22:20] Paul: Yes, I think given the key thing with the virus is to reduce transmission between people. And so the way you do that is to keep your distance from other people, maybe stay at home. And work from home or, if you can’t, well, don’t get too close to other people. Now if you do that and you’re not going out so often, then it’s prudent to make sure your larder is full of non-perishables, not toilet paper. But, yes, the normal tinned foods, flour and rice and the carbohydrates and some frozen vegetables or tinned vegetables, so you get cheap proteins, carbohydrates and vitamins and grains. It’s prudent to be reasonably well stocked up.

[00:23:26] The second thing is, I don’t think Australia is going to have a problem with food. We’re a major food exporter, one of the biggest food exporters in the world. So there may be some supply chain disruption as people buy stuff up in one week, but the trucks will be rolling and replenishing the shelves fairly soon. So, unlike countries which import their food, we’re not going to be in that situation.

[00:24:02] Gene: Look, I think that’s a really good point, Paul. The fact that we are a food exporter and there may be some temporary disruptions, but they will eventually be overcome. And in the worst case scenario, governments do have resources. I mean, one of the resources, sets of resources that can be deployed is the armed forces, isn’t it? I mean, worst case scenario, you could probably rely on the armed forces.

[00:24:27] Paul: Yes, but I think normal commercial arrangements will be more than [adequate]. Most of our firms, if they’ve got a buyer for something, they’ll move heaven and earth to sell their goods.

[00:24:40] Gene: Oh, exactly. I mean, as an economist, I’m a great believer in that, in the market mechanism. The problem is, if you’ve got large numbers of people who are sick and can’t get to work, and we’re seeing this affecting the Chinese economy at the moment, I don’t know if you saw that? So, yes, it’s had a big impact on their labour supply and you know, that’s a possibility here and we’ve had some very concerning modelling done by Warwick McKibbin of the potential economic impact. Particularly, if we have tens of thousands of people dying from Coronavirus, just awful.

[00:25:18] Paul: Yes. Warwick’s very good, from everything I’ve seen of what he’s done. If it’s 1 percent mortality, that’s about a quarter of a million Australians.

[00:25:30] Gene: Yes, that’s if everyone gets it.

[00:25:36] Paul: We had 15,000 deaths in five million in the Spanish flu. In terms of the economy, it’s likely to have a patchy effect. It’s more likely to affect those industries, which you could call the social industries where it’s optional whether people [consume], such as restaurants, movies, sporting events, those sorts of things. We’re talking about if it becomes epidemic, not at the current stage. But it may not have the same economic impact in other areas. I mean, I think if you had a business where most people do a lot of their work via a computer, you could probably without too much trouble have a proportion of your staff working from home, from their computer. And if you’ve got a business like that, probably many of those businesses already have an arrangement where a proportion of their staff work from home anyway. And if they don’t, it might be worthwhile, on a no regrets basis, just getting some of the systems in place so some of his staff could work from home.

[00:27:05] Gene: Yes. Yes, I think that’s a really good point, and you mentioned events and public gatherings before. I think I’ve heard that one of the things that government is considering is that they might have to put a temporary ban on public gatherings and concerts and sporting events just to prevent the spread of this.

[00:27:26] Paul: Yes, other countries have done that more. They’ve been very proactive in Singapore. Apparently the Catholic Church has just suspended all church services and other churches in Singapore have done the same. Because it’s just a matter of reducing the transmission rate and because the virus doesn’t survive indefinitely outside a person. So if you reduce the transmission rate, eventually the virus is going to go out, die out of the population, because it has to transmit from one person to another to survive. I can tell you, if you break the transmission cycle, then you can control the epidemic.

[00:28:15] Gene: Sure. But one of the really concerning things about this virus and this was a prediction I saw in the news the other day from a very distinguished professor of medicine I think it was in one of the US universities who was saying that this could become endemic. And it’s just a virus that we always have with us, like the common cold, which is a huge concern.

[00:28:39] Paul. Yep. It could well. There’s just so many unknowns. And you’d have to be a virologist to give an expert opinion on that. And I’m not. But, yes, potentially it could. But if it became part of the herd the and the herd got herd immunity, then it would just be in the background and may not cause the level of mortality which it does now because it’s new to humans.

[00:29:19] Gene: OK. Paul, that’s been really interesting and it’s made me think a little bit differently about how we’re responding. So I really appreciate the discussion we’ve just had. Do you have any final points before we wrap up?

Paul: I think that’s it.

Gene: Thanks. Paul, I’ve really appreciated it. Thanks so much.

Paul: Thank you.