Treasurer: Balancing health and livelihood during COVID-19

The COVID-19 war is hard and how to manage our response is difficult as there are no clear, simple answers, says Treasurer Ian Ling-Stuckey.

“We still know so little about this enemy. There is great uncertainty.

“We know, based on fighting viruses in the past, that measures such as social distancing, washing hands with soap, coughing and sneezing into a cloth or elbow are vital.

“We know that lockdowns can slow the spread of the disease. But what type of lockdown? Just at international or internal borders? Complete lock-down or partial lock-down? And if a partial lock-down, what are the vital actions to protect livelihoods while also reducing health risks? Are we aiming for eradication or suppression?

“As the Treasurer, I spend every day analyzing data to strike the right balance between protecting our health and protecting our livelihoods. This is demanding, time consuming work. I have been talking to health professionals and businesses, both big and small. I have been working as part of the Marape-Steven’s leadership team, talking through the best possible actions to get the balance right between health and livelihoods and jobs.

“There is a lot of action going on to try and get the right balance. This information and analysis is being used as the basis for some major announcements in coming days.

“It is important that our people understand what is going on behind the scene to position ourselves to manage COVID-19 and the very real struggle we face as a government.

“I would like to make it clear. There will be a great cost to our nation. We cannot stop the fall in international oil prices which will slash our government revenues by over one billion Kina.

“If our economy was in better shape, if we did not inherit the largest deficits in our history with hidden debts spent on budget financing and hidden unpaid bills, then we would have more money to directly respond to the crisis. The O’Neill legacy means we are not in the same position as most other countries to respond.

“This week, some economic research commissioned on the possible economic impacts of COVID-19 came back with some very worrying results. Let me share these with you. 

“This is not intended to scare or talk down the economy in any way. But it does highlight the economic challenges.

“In the 2020 Budget, the conservative assumption was made that PNG’s economic growth rate would be 2 percent. In my Economic Statement to Parliament on 2 April, I advised our economic modelling indicated that COVID-19 was likely to drop the economic growth rate to below 0 percent and into a recession.

“The latest figures indicate that the economic impact of COVID-19 of a one month shutdown would reduce our GDP growth rate to minus 1.5 percent, a two month shutdown would reduce our GDP growth rate to minus 3.8 percent, and a three month shutdown would reduce our economic growth rate to minus 6.2 percent.

“These are very, very distressing numbers. Four out of every 10 people in PNG already live in absolute poverty, according to international measures. Poverty is a risk factor in dying early.  A major drop in GDP will lead to more poverty, and more premature deaths.

“So how do we balance the deaths that will come from more poverty with the deaths that may come from COVID-19? This is a very complex, hard public policy decision.

“What do we know about COVID-19? PNG is fortunate in not having a single death yet from this silent killer. Other countries who did not act quickly enough and shutdown their borders and parts of their economy have very different stories.

“So what are the health experts saying about the potential death rate from COVID-19 if we do nothing? This depends on the death rate for those infected, and on the infection rate.

“From the advice given to me, COVID-19 is deadly. There is uncertainty still about the death rate. The World Health Organisation (WHO) estimates the death rate could be 3-4 percent.

“Latest estimates from New York suggest a death rate of 0.5 percent - although some have questioned the testing methodology.

“The human swine flu (H1N1 flu) had a death rate of 0.02 percent. The different strains of the flu on average have a mortality rate of less than 0.1 percent. Compare this to malaria, which has a mortality rate of just under 0.2 percent (according to WHO, in 2018 there were 405,000 deaths from 228 million cases worldwide – a rate of 0.18 percent - with two in three deaths occurring in under five year olds).

“It seems that COVID-19 is somewhere between five and forty times more deadly than the usual flu, and three to twenty times more deadly than malaria. So big differences, but COVID-19 is certainly deadly. And it is deadly mainly for older people or those who are immunocompromised, which is very different than malaria and other flus. This is still a very uncertain enemy.

“The second part of the health equation is the infection rate. This is very complicated – there are large uncertainties. For example, there are models available for different scenarios covering PNG without any lockdowns and then PNG with different levels of lockdowns. For example, the Oxford University, working with the ANU and Harvard Universities, has a forecasting model for countries around the world. The one for PNG is at this link - There are several scenarios covered. The first scenario has current measures lifted entirely. This model predicts that the number of people infected in PNG would be about 6.3 million to 7.2 million people by the end of 2020. With even a 1% fatality rate, that would imply PNG deaths of between 63,000 and 72,000.  But would the death rate be higher than 1 percent in PNG with the number of people with lung and heart problems? This is complicated as PNG has a young population and most deaths occur in the elderly. If we continued with strong lockdowns in Scenario 3, the number of infections drops to a between 3,100 and 4,900 (Scenario 3). With moderate restrictions, the number of maximum infections drops from 7,200,000 down to 140,000.

“These are the tradeoffs that the Marape-Steven government is considering every day. If we drop all lockdowns, and go back to business as usual, many tens of thousands of people in PNG will likely die due to COVID-19. However, if we keep very tight lockdowns in place, then the increase in poverty will also likely mean tens of thousands of people in PNG will die due to a loss of livelihoods. What is the right balance?

“These are the decisions for war-time. The risks of death from COVID-19 or the risks of death from the damage to economic livelihoods.

“These are the issues that I am working through every day. I am working on expert advice on how we can best respond to this crisis. There are very, very difficult tradeoffs. Health balanced with livelihoods. Some social media think this is easy – they just take the health side or the livelihood side without understanding the complex tradeoffs.

“I look forward to letting our people know later this week on some support we will provide. We will not be able to meet all expectations because of the O’Neill legacy. There are also very difficult tradeoffs. We are working and praying to get the health and livelihoods balances correct.”

Press release