Delayed vaccination rollout will cost Australia ‘tens of billions’, say economists
Senior economists are warning Australia’s disrupted COVID-19 vaccination rollout is likely to take at least six months longer than some comparable countries and cost the economy tens of billions of dollars in lost output.
The Morrison government’s recommendation that people aged under 50 should not have the AstraZeneca vaccine is likely to slow the rate at which key sectors of the economy recover from the pandemic-induced recession.
University of NSW Professor of economics Richard Holden said if Australia had a vaccination rollout similar to the US, UK or Israel, it might have been able to inoculate the population “nine to 12 months” earlier than is now likely.
He estimates the economic cost of Australia’s more drawn-out program is “a number in the tens of billions of dollars range”.
Chief economist of the Blueprint Institute think tank, Steven Hamilton, said if the government had ordered 50 million doses of the Pfizer vaccine last year “as they should have done” the rollout could have been completed at least six months earlier than is now likely.
“The economic cost of a six-month delay in our vaccine rollout is very significant,” he said.
Dr Hamilton also puts that cost in the “tens of billions” of dollars but said estimating a more exact price tag is very difficult.
He said the slower vaccination rollout increases the risk of further outbreaks, sapping business and consumer confidence. It will also delay the opening of borders hurting the international education sector – Australia’s third biggest export – as well as tourism. The arrival of fewer overseas workers will also take a toll.
“People point to the strong economic recovery, that’s fine, but it would be even stronger if we were fully vaccinated,” Dr Hamilton said. “We shouldn’t be naive about that.”
The 2020-21 federal budget assumed a nationwide COVID-19 vaccination program would be “fully in place by late 2021″. But the government has since been forced to review its strategy and has abandoned setting targets.
Last week the federal Treasurer, Josh Frydenberg, acknowledged the economic impact of changes to the rollout would be “not insignificant”. When The Sydney Morning Herald asked Mr Frydenberg what the specific economic cost of the delay would be, a spokesman for him said updated economic forecasts would be made available in next month’s federal budget.
Deloitte Economics economist Chris Richardson said Australia would “miss some upside” to the recovery because of the slower vaccine rollout, but added it is genuinely hard to put a specific number on the cost.
“It’s not the end of the world, but the size of the cost comes down mostly to confidence – so it’s hard to know,” he said.
Professor Holden said there could be lasting consequences for key industry sectors including international education and tourism as some comparable advanced countries achieve population-wide vaccination coverage “considerably earlier”.
“When people are starting to think about going places it won’t be Australia,” he said. “There will be a real psychological impact both within Australia and in other parts of the world … how persistent that mindset will be remains to be seen but it’s not good.”
Richard Dennis, chief economist of the Australia Institute, a progressive think tank, said the uncertainty created by the government’s reluctance to provide a new timeframe for the program would have economic consequences.
“One thing that the business community has told us for decades is that it needs certainty,” he said. “But the minute the Prime Minister said he was not giving a hint of when the vaccine rollout would be implemented he created great uncertainty.
“It’s going to take the Morrison government longer to roll the vaccine out than it took the world’s scientists to invent it … and there’s a real cost due to the uncertainty.”
Research published on Monday by the McKell Institute, a progressive research organisation found even if Australia can emulate the pace of the UK’s vaccination rollout, the likelihood of further outbreaks and snap lockdowns could cost the economy $1.4 billion.
Catch all the day’s headlines
At the end of each day, we’ll send you the most important breaking news headlines, evening entertainment ideas and a long read to enjoy. Sign up to The Sydney Morning Herald’s newsletter here, The Age’s here, Brisbane Times’ here, and WAtoday’s here.
Most Viewed in Business
From our partners
Source: Read Full Article