Who'll be hit hardest by COVID-19 pandemic – and who'll pay for it

While you’re stuck inside lamenting your loss of freedom, spare a thought for those who’ll be hit hardest by the pandemic.

COVID-19 could be the catalyst for this generation’s Great Depression, says an Australian National University (ANU) health equality expert.

Professor Sharon Friel, Director of the Menzies Centre for Health Governance at ANU, believes the pandemic could have profound long-term health implications for the socially disadvantaged.

The coronavirus won’t discriminate when infecting people, but how Australia’s economic and social services systems respond is very socially patterned, says Prof Friel.

“Poor people, the precariously employed, those with big existing debts, the homeless, people with disabilities, the socially marginalised – these are the vulnerable people who will feel the disastrous effects of this global pandemic most,” she said.

“They will suffer for many, many years to come.”

Prof Friel is worried the equality gap will widen further as a result of the pandemic.

“COVID-19 will have significant impacts on health inequities in Australia through the economic and social fallout resulting from necessary pandemic mitigation measures compounding an already inequitable society,” wrote Prof Friel with the VicHealth CEO Dr Sandro Demaio in an article for the Medical Journal of Australia.

“The existing embedded inequities in the social determinants of health will amplify the COVID-19 response effects, exposing socially disadvantaged groups even more. Fourteen per cent of Australians already live in poverty, and income inequities have widened.”

While Prof Friel applauded the government’s increased JobSeeker payments in response to the coronavirus pandemic, she argued that the jobless should not lose this benefit afterwards.

“This extra cash in the pockets of the unemployed should be a mainstay of public policy, not just a temporary fix for the dire economic situation the country finds itself in,” she said.

Professor Friel and Dr Demaio also say the health sector has a vital role to play now and in future.

“An analysis of 266 health policies showed that while the rhetoric of the social determinants of health abounds in governments’ health policies, medical care and individualised behavioural change strategies continue to be privileged during implementation,” they wrote.

“These policies matter, of course, but they will not prevent massive health inequities. The health sector must engage in policy discussions about welfare, labour markets, housing and infrastructure, to name a few.

“COVID-19 may end up being this generation’s Great Depression. The determinants of health, and how they are distributed, should be our guiding measure of a successful Australia as we rebuild from COVID-19.”

While the poor and disadvantaged may be hardest hit by the pandemic, another ANU professor says it will be young people who’ll foot the bill for the government’s economic response to the COVID-19 crisis.

Leading economist Professor Robert Breunig, who heads up the ANU’s Tax and Transfer Policy Institute believes Australia’s tax system will mean young people bear rthe economic burden for the pandemic stimulus packages, adding that this crisis may end up increasing inter-generational inequality.

“This inequality will be exacerbated by our tax system settings,” said Prof Breunig.

“The massive government spend of at least $330 billion to counter the economic shock of COVID-19 will have to be paid for by young people. The design of Australia’ tax system has pre-determined this outcome.

“Our heavy reliance on direct taxation—activities by corporations or individuals—means that the tax burden to repay the debt will fall very heavily on the future incomes of young people, which will now be lower as a consequence of the pandemic.

“In addition, governments’ economic responses to crises like COVID-19 favour protecting people’s assets and their value. This includes the family home and shares.

“This is fine for people with assets. But in the main young people don’t have these assets and if their parents don’t have these assets, they can’t even look forward to inheriting them. And so they are the ones who will be left with the bill.”

Prof Breunig is calling for urgent policy fixes and has proposed a number of solutions to make the tax system fairer, one of which would be increasing GST.

“This has the extra benefit of taxing people’s accumulated wealth as they spend it,” he said.

“We should also switch from stamp duty to land tax to better capture the value of increased asset prices and make it easier for people to buy and sell houses.

“Another option is to include owner-occupied housing in the asset test for the age pension and introduce a government-run reverse-mortgage program to help people to spend their assets while alive.

“And we should reduce corporate and personal rates while removing many of the exemptions that allow people to avoid paying their fair share of tax.”

These policies, when implemented with others, should stimulate more economic growth and reduce house prices in Australia.

“Both of these are good things for young people,” he said.

“By tapping into accumulated wealth, these policies will also help to redistribute the financial burden of this pandemic across society more equally – this benefits everyone and especially young people.”

Are you worried the pandemic will lead to a depression? Are you in the group that will be hit hardest by this crisis? What do you think of Prof Breunig’s ideas for paying the bill for the government’s response to COVID-19?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?
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