As Australia was swept by panic buying and medical shortages this year, the scenes were eerily familiar for one of the country’s most senior military planners.
- The ABC has obtained a confidential report which exposes essential services’ vulnerabilities during a global crisis
- Australia’s reliance on imports for health care, water treatment, fuel and maintenance were identified as key vulnerabilities
- There are growing calls within the Federal Government for a new national security strategy to make Australia more self-sufficient
In a secret meeting only a year earlier, the Defence Department’s director of preparedness Cheryl Durrant and a group of Australian industry leaders had predicted a strikingly similar scenario.
“We predicted the unpredictable,” says Ms Durrant, who left the department in January.
“We knew the problems, we knew this might be coming, we knew that various things needed to be done.”
The ABC has obtained a confidential report prepared for Defence just a year before the COVID-19 outbreak, which provides a forecast of Australia’s vulnerabilities in a global crisis.
Ms Durrant is speaking out about the predictions after ending her 30-year Defence career because she believes it is her duty to convince Australia to prepare for an increasingly unstable world.
“I’ve looked at the global situation,” she says. “It’s no use festering in a bunker somewhere in Canberra — it’s a time of crisis.”
She says the risks to Australia are snowballing, with climate change, US-China tensions and the rise of nationalist governments among the key threats to global stability.
The report, which Ms Durrant commissioned to plan for the growing threats, lays out a timeline of how Australian essential services would collapse within just three months of a crisis worse than the COVID-19 threat, which would put a halt to global trade.
“If you think of the COVID crisis as a test run, it’s really a critical thing for us to learn from this,” she said.
“The lesson is expect the unexpected.”
Preparing for the worst
As the Defence Department’s director of preparedness and mobilisation, Ms Durrant planned for horror scenarios that would keep most Australians up at night.
Last year, she commissioned a landmark review of Defence planning — the first so-called mobilisation review since the Cold War — to prepare for what the department concluded was an increasingly likely global crisis.
“We saw three main possibilities of that happening: the increasing and escalating effects of climate change and natural disasters; a global power conflict, probably between America and China; and finally a pandemic — one with a much greater death rate than what we’re seeing with the COVID crisis,” Ms Durrant said.
“The review looked at the big issues, like if we had to go to war, do we have enough fuel? Do we have enough energy?
“Can the national supply chains and our national infrastructure support Defence in a war or other crisis?”
To answer her questions, Ms Durrant gathered 17 senior engineers from Australia’s key industries to war-game whether Australia’s supplies could sustain the nation through a prolonged crisis, where global supply chains were severely disrupted.
“We asked, if we had basically a halt on global supply — a couple of steps more demanding than we’re seeing in the current crisis — what would run out in one week, two weeks, one month or three months?” she said.
“We wanted to understand what was the thing we were most vulnerable in.”
The experts were selected by their industry peak body, Engineers Australia, from sectors including health care, electricity, fuel, water, mining and telecommunications.
“Out of this thought experiment, what the group looked at across each of their sectors was what would this mean for their particular sector,” Engineers Australia CEO Dr Bronwyn Evans said.
“They identified that because we’re part of the global supply chain, when the ability for that to continue to function [broke down], you’d start to get shortages, you’d run out of things in areas, for example, like the water supply, like telecommunications.”
The report’s forecasts
The final report by Engineers Australia, obtained by the ABC, laid out a chilling timeline of how Australia’s essential services would break down in an unspecified global crisis.
While the group didn’t look at a pandemic specifically, some of the predictions were eerily accurate.
According to the report, “the workshop delivered the overarching advice that, in the scenario provided, Australia would suffer massive upheaval within one week due to job losses, social unease and [public and industrial] hoarding.”
With at least 90 per cent of Australia’s specialist medical supplies imported, the report found specialist medicines “may be exhausted within days”, with “severe repercussions for public health”.
Within a fortnight, with a restriction of imported medical equipment, “health care would be degraded”.
For Ms Durrant, the report was evidence Australian governments could have been better prepared when the fallout from the pandemic hit the nation’s hospitals, supermarkets and Centrelink queues.
“In order to have that response that is really sharp out of the blocks, we weren’t quite there in the first couple of weeks.
“I was bemoaning the fact that even though we’d done the work and had seen what might happen, we hadn’t yet been able to get the buy-in to do the further planning and actually act on that information.”
Australia’s fragile position
Australian industries and governments are now scrambling to prepare in case more supply chains come under threat in the global economic fallout from coronavirus.
The pandemic is causing widespread disruptions to shipping and air freight, and wreaking havoc on suppliers across Europe, America and Asia.
For nearly a decade, former Air Force deputy chief John Blackburn has been sounding the alarm, warning Australia is vulnerable to global forces because of its low stocks of essential supplies.
The retired air-vice marshal is attracting a chorus of supporters from the military and Federal Parliament, who are urging Prime Minister Scott Morrison to establish a national strategy to make Australia more resilient to global shocks.
“The economic fallout from COVID is putting us into uncharted territory,” says Mr Blackburn.
“We could be talking about a failure of the trading system in areas — that is a nightmare we don’t want to go to and requires very close cooperation between governments.
He says successive Australian governments have failed to consider the risks of an overwhelming reliance on global trade, particularly given our geographic isolation.
Report says water systems could fail within a week
The Engineers Australia report predicts a disastrous domino effect for Australia if trade is severely disrupted.
According to the report, the first casualty after health care would be sanitation, creating a further risk of disease.
It says water treatment and sewage systems could start to fail within a week as crucial imported chemicals run out.
“That surprised us, that was something we hadn’t expected,” Ms Durrant said.
“We found that like our medical supplies, most of the chemicals were sourced offshore and we had only a limited supply.
“And also like our medical supplies, they’re complex chemical compounds — chemicals that require the raw product to be shipped somewhere, made into a secondary product, and then coming into Australia to be used in the water supply system.”
The risk of disruptions has been a wake-up call for the industry.
Water suppliers and treatment companies are coordinating with national authorities, as they try to trace their supply chains, identify bottlenecks, stockpile more chemicals and confront unprecedented competition for shipping.
At its factory in south-east Melbourne, water treatment company Hydrochem began hoarding chemicals not long after the outbreak in Wuhan.
“When we first got wind of what was happening in China, we were very aware of how that might play out,” Hydrochem chief executive Nick Duncan said.
The company uses chemicals from China and other countries to treat water and prevent disease in crucial sites across Australia, including hospitals, building developments, meat processing plants, shopping centres and mining facilities.
“The total percentage [of chemicals] from overseas is probably in the range of maybe 20 or 30 per cent,” he said.
“At the moment, the delays in shipping have meant that what would normally come in two months is taking four months. We’re basically doubling the advanced stock that we’re ordering from those countries.
“Most of the time, if something’s unavailable, then we can find something else that will do. But it might be more expensive. It might not be as efficient.”
A month ago, the industry’s peak body wrote to the National COVID-19 Coordination Commission to warn that potential shortages and other “high-risk” supply chain issues could require government assistance.
“It’s right at the top of the watching brief for all the water utilities, just to make sure that the chemicals are there,” says Adam Lovell, the executive director of the Water Services Association of Australia.
“When you get down to some of the more critical or nuanced chemicals that are used in treatment, many water utilities will be making sure they’ve got contingency plans.
Fuel for thought
There’s no clearer sign of how seriously the Federal Government is taking the risks to Australia than its decision last week to relent to years of pressure and invest in a stockpile of fuel.
According to Energy Minister Angus Taylor, the pandemic is shifting the Government’s thinking on market intervention.
“COVID-19 has heightened our sense of awareness of what is an essential good or service,” Mr Taylor said.
“There are critical items where we need to ensure we’ve got strong control over the supply chain.”
The Federal Government has been warned since 2011 that Australia’s fuel reserves are insufficient to sustain the country through a crisis.
According to the Defence-commissioned report, Australia only has enough liquid fuel to last just over two months if global supplies are cut off.
A shortage of fuel would have a devastating impact on all Australian industries, including trucking — and with no way to move them, Australia’s plentiful food supplies would begin to run out in the first month of the crisis.
It is a sobering thought for Gavin Stevenson, whose Sydney delivery business Fruitman Sam is busier than ever because of the coronavirus lockdown.
Driving across the city to hand-deliver boxes of seasonal fruit and vegetables from the markets, he’s also reaping the benefits of low demand for diesel fuel, which is considerably cheaper.
“You probably take it for granted that you can just go to a bowser and fill up, like it’s your lifeline,” he said.
“I can’t walk these boxes to places.”
The Federal Government will take advantage of the record low prices, spending $94 million on a US stockpile of fuel in an attempt to keep food suppliers like Fruitman Sam moving in a crisis — but it has nowhere in Australia to store it.
“We do want to make sure we have enough fuel in the event of an extreme disruption,” Mr Taylor said.
“The great challenge at the moment is the world is close to running out of storage for fuel because of the demand drops due to COVID-19.
“Right now in Australia, our storages are full or close to full, but over time we want to make sure there is [more] storage closer to home.
“This is hugely important whether you’re a farmer, manufacturer, a commuter, a tradie.
The Defence-commissioned report warned that Australia’s problems would go far beyond fuel.
It predicted that within three months, the nation as we know it would cease to function. Australia would be racked by social unrest and widespread unemployment.
Essential services including electricity and telecommunications would be falling apart because the industries rely on imported spare parts.
Within the Liberal Party, there are hopes among some that the Government’s new focus on supply chains and sovereignty will translate to broader government policy.
Before the pandemic, Mr Morrison was already facing a push from two former military men on his backbench, retired army Major-General Jim Molan and former Special Air Services soldier Andrew Hastie, for a new national security strategy to make Australia more self-sufficient.
“Right now, a lot of our supply chain is hyper-concentrated in China itself,” chair of the parliamentary security and intelligence committee Andrew Hastie said.
“We do not want to be strategically or economically coerced.”
To be prepared for any threat, Ms Durrant is urging the nation to invest in resilience, starting with a series of steps: a comprehensive tally of Australia’s essential supplies, detailed models of our supply chains, and decisions on which capabilities need to be established domestically.
“It’s critical Australia doesn’t only respond to the COVID crisis but prepares for the unexpected,” says Ms Durrant, who has joined John Blackburn’s think-tank, the Institute for Integrated Economic Research.
“We need to understand the supply chain vulnerabilities, we need to make choices about what is critical for the functioning of Australian society and economy and business, and we need to invest in the processes and skillsets and the data systems that enable you to do that.
“Australia is at an interesting fork in the road where it goes on from here. If we take the attitude, ‘She’ll be right, go back to business as usual, bounce back’, I think we’re going to find ourselves not as well prepared for what happens next.”