Where did the equipment come from?
In January, a previously unremarkable global market for personal protective equipment was already moving rapidly into the shadows. Later that month, test kits, masks, surgical gowns, gloves and face shields had become a lucrative commodity. Tonnes would be flown from Australia to China to stock up depleted hospitals in Wuhan.
Chinese criminal syndicates were reselling melt-blown fabrics, the raw material required for masks, prosecutions started this week by Beijing’s Ministry of Public Security show. Their profits climbed as the virus left Wuhan and travelled across the world.
The desperation for medical equipment became so intense that Britain decided to accept a risky “take-it-or-leave-it” offer from two Chinese companies for 2 million home test kits for at least $20 million, which were later found to be faulty. China’s diplomatic efforts largely backfired in Europe after faulty testing kits were also sent to Spain, Turkey and the Netherlands.
By March, when the United States had begun its surge to the highest number of coronavirus cases in the world, a cheque worth $5.6 million for 1.5 million masks from a Chinese middleman was reportedly handed over in a McDonald’s carpark in Illinois. In Canberra, whispers grew of foreign intelligence agents handing over suitcases full of cash to Chinese factories.
Within a month, 4500 Australian frontline medical workers had signed an open letter warning of a “terrifying” shortage of personal protective equipment, forcing them to buy N95 ventilator masks from eBay and $2 raincoats to protect themselves.
The battle for personal protective equipment has cost lives and paralysed medical systems around the world.
“I have colleagues overseas who have either fallen ill or lost their lives to COVID-19,” says the head of the Australian Medical Association, Tony Bartone. “These fears are real fears. We’ve had a massive competitive pressure put on dwindling amounts of production around the world.”
Deputy Chief Medical Officer Nick Coatsworth says flattening the curve of coronavirus infections was critical. “We have kept a demand on personal protective equipment low because cases have been low,” he says. “Even though those supply chains are an issue we are getting enough into the stockpile at the moment.”
Emergency doctors, general practitioners and other frontline workers maintain there is still a shortage, but Australia has largely avoided the scenes of chaos in overrun hospital wards seen overseas.
“We foresaw a great global rush for test kits and locked in our supply lines early,” says Hunt.
In February, two teams were set up within the departments of health and industry to coordinate the national response to procuring supplies. They were charged with negotiating with major producers overseas and ramping up local production.
Hunt says the decision on February 1 to close the border with China bought Australia time and therefore negotiating power in an intensely competitive global environment. “Very early on, Brendan [Murphy], the PM and myself identified what the threats were to Australia and the actions we needed to take. It was a policy of containment and capacity.”
The government rebuffed unsolicited advances from private operators, including one from a major Australian supplier. The company had paid for masks in a 90-tonne cargo flight from Wuhan once the crisis had largely passed there in April, then tried to offload them to the Australian government for a profit.
In all but one case, the government secured agreements with importers who had experience in sourcing the medical equipment. In some cases, Hunt personally involved himself in negotiations to weed out dodgy operators. “While early on there were attempts to sell masks at inflated prices they were rejected,” he says. “What we offered and were able to secure was longer-term contracts for volume and time, not one-off inflated purchases.”
In other instances, high-level diplomacy was needed behind the scenes on deals that, on the surface, looked like commercial agreements. In April, Australia reached a deal with Taiwan to send 1 million litres of alcohol to make sanitiser and vaccines in exchange for three tonnes of material to make face masks.
China, which claims sovereignty over its southern-island neighbour, accused Taiwan of engaging in mask diplomacy in order to seek independence under the pretext of a pandemic.
The deal was one of many that will allow Australia to resume up to 25 per cent of elective surgery from Monday, weeks before any of the government’s top health advisers expected.
“This would not be possible if we were unable to secure additional [personal protective equipment] nor would it be possible if we were not able to have confidence about the level of cases that had been identified in Australia and the slowing the rate of growth down to a minimal level,” Morrison said this week.
‘There are a lot of sharks’
In the private sector, the combination of travel bans and sky-rocketing demand sent prices for masks through the roof. In some pharmacies across NSW and Victoria, the cost of a single N95 mask jumped from $1.30 to $38.50 — a 1500 per cent increase that has been referred to the Australian Competition and Consumer Commission.
“I can see where other people can get into trouble out there,” says Mario Tascone, the chief operating officer of Australia’s largest pharmacy chain, Chemist Warehouse. “There are a lot of sharks. There are third and fourth resellers. It gets clipped six times before it’s bought.”
Tascone says the biggest hold up has been air cargo. Travel bans have paralysed the transport the industry depends on – the baggage hold under passenger aeroplanes. “Air cargo at the moment is like buying a first-class ticket every time,” he says.
Cut-price operators have also taken advantage of unprecedented demand to flood the market, raising concerns over quality control. Masks that are not approved by the Therapeutic Goods Administration are as effective as a tissue at stopping COVID-19.
“The biggest challenge with [personal protective equipment] now is don’t get ripped off,” says Tascone.
‘There is [face mask] stock coming through but it’s like toilet paper, don’t buy more than you need.’
Mario Tascone, Chemist Warehouse
The N95 mask filters 95 per cent of airborne particles. It costs about 70 cents to produce. Tascone says customers should not be paying more than $2 for them.
At Chemist Warehouse stores and other Australian pharmacies that have managed to negotiate the passage of products from China, Europe and South America, mask supplies are now starting to move back onto shelves. “There has been a lot of air cargo coming in for the last few weeks,” he says. “There is stock coming through but it’s like toilet paper, don’t buy more than you need.”
However holes in Australia’s inventory remain. Companies that have shifted their production to hand sanitiser wrote to MPs last week warning of “critically low stock” of imported bioethanol, the central ingredient in the disinfectant used across hospitals and workplaces. Production of hand sanitiser has surged by 300 per cent, only to be outstripped by a demand increase of 500 per cent.
“If anything, this crisis has shone a light on the need for Australia to be self-sufficient, and a strong manufacturing sector in Australia is critical to Australia’s self reliance,” says Labor’s industry spokesman Brendan O’Connor.
ResMed, an Australian sleep apnoea device company with offices in Sydney’s Bella Vista, as well as California and Singapore, is proof of the potential a local high-tech manufacturing sector can have. At the request of US President Donald Trump it is now producing ventilators for a country that has more than 850,000 cases of COVID-19, compared to Australia’s 6661. New York State needs 30,000 ventilators alone.
In Canberra, medical procurement, like Australia’s 5G telecommunications network, has been brought up to cabinet’s top table. Medical supplies have become a national security concern.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra
Anthony is foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.