Economists predict vaccine delays could cost up to $1.4 billion, after Morrison government ditches targets

Prime Minister Scott Morrison has announced the government has no plans to set new targets for completing the first round of COVID-19 vaccines, raising concerns about the cost on the economy of a delayed vaccine rollout and more lockdowns.

A major hitch in the Morrison government’s vaccine strategy emerged over the weekend, after health authorities advised Australians under 50 years of age to get the Pfizer vaccine instead of the AstraZeneca vaccine, due to concerns of potential blood clotting as a side effect.

The government is updating information on the rollout of the vaccine daily, which had seen 1.16 million doses administered as of Sunday, Morrison said in a Facebook post.

“The government has also not set, nor has any plans to set any new targets for completing first doses,” Morrison said.

“While we would like to see these doses completed before the end of the year, it is not possible to set such targets given the many uncertainties involved.”

The cost of a four-month delay to herd immunity  

New modelling by the McKell Institute estimates the cost of a delay to the coronavirus vaccine rollout could exceed $1.4 billion — even in the most optimistic of scenarios.

According to the report, the government’s first vaccine roadmap had the potential to reach herd immunity — the equivalent to 65% of the population being vaccinated — by August 2021. However, delays have now blown this date out, increasing the likelihood of more lockdowns and restrictions.

If Australia carries out its vaccine rollout at the same speed as the UK, which is currently the second best performer in the world, it would delay heard immunity by 116 days or just under four months.

On this projection, the McKell Institute predicts a further 11.1 days of lockdown, costing the economy $1.368 billion.

Aviation, hospitality and education to suffer most

Grattan Institute economist Danielle Wood told the ABC that the aviation, hospitality, higher education, arts and recreation sectors will continue to suffer the most as a result of vaccine rollout delays.

Wood said those sectors have already lost 136,000 jobs since the pandemic began in March last year.

What’s more, she estimates those four sectors will collectively lose $400 million for each month that international borders remain shut.

Not all gloomy predictions

Alan Oster, chief economist at NAB, says it is almost impossible to put a figure on how much a few month’s delay to the vaccine rollout would cost the economy.

“It’s very difficult to tell at the macro level,” Oster tells SmartCompany.

The main advantage of getting the population vaccinated faster is that Australia could open up to the rest of the world quicker, helping international tourism businesses and the education sector, Oster says.

On the other hand, Oster says, international border closures have pushed spending away from overseas travel to interstate travel, local tourism and even to different retail goods.

“It clearly would be negative to international travel and for education, but there are offsetting effects elsewhere,” he says.

There are also the indirect potential effects of any obstacles in the vaccine rollout on business confidence.

“But that’s hard to tell at this stage, and at present business confidence is pretty strong,” he says.