BSB113 Economics Assignment Covid Vaccine PDF

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BSB113 Economics Assignment Covid Vaccine
BSB113 Economics Assignment Covid Vaccine
BSB113 Economics Assignment Covid Vaccine
BSB113 Economics Assignment Covid Vaccine...

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THE COVID-19 VACCINE ROLL OUT ELLA RICHARDSON (N9854908) WORD COUNT:1367

BSB113 ECONOMICS

1.0 EXECUTIVE SUMMARY The announcement of a public health emergency during the first quarter of 2020 saw Australia thrown into a state of volatile economic uncertainty, sparking mass unemployment and pushing Australia into a recession (Australian Bureau of Statistics, 2021). Extending past the monetary ramifications of Covid-19, the pandemic took a huge toll on the nation’s social wellbeing, prohibiting travel and implementing nation-wide lockdown measures. By applying an economic lens, this report will investigate the Australian Government’s strategic position in the roll out of a country-wide free vaccination program - discerning whether government intervention was necessary to correct market failure and ensure Australia was on the road to economic recovery.

2.0 CONTEXTUAL OVERVIEW Pressure from the pandemic saw a unique response from the government in an effort to align the population’s wellbeing and capacity of the healthcare system with a positive economic trajectory (Higginson et al, 2020, p.488–502). The pandemic incurred has a huge cost to Australian economy – above the monetary component of treatment on the healthcare system – such as a decline in worker productivity, loss of wages due to unemployment and a drop in consumption expenditure because of preventative lockdowns (Johns Hopkins Coronavirus Resource Center, 2021). According to the ABS (2020), Australia experienced a 7% downturn in quarterly GDP, recording the largest fall in history. The social impacts extend beyond the financial cost-of-illness metrics, showing a frightening spike in domestic violence incidences, degeneration of individual mental health and ultimately the . The mitigation response to Covid-19 included cost of dying (Gaela et al, 2020, p. 817–818) establishing a National Cabinet to coordinate a free of charge vaccine rollout - aimed at creating herd immunity against Covid-19. As stated by Randolph and Barreiro (2020), “When a sufficiently large proportion of immune individuals exist in a population, those who cannot be vaccinated, including the very young and immunocompromised, are still protected against disease.” To achieve the herd immunity necessary to place Australia on the road to

social and economic prosperity, 95% of the population would need to be vaccinated (Department of Health, 2021).

FIGURE 1: COSTS OF COVID-19

3.0 ECONOMIC THEORY By initiating a free program, the Government is strategically intervening in an attempt increase uptake of the vaccination, creating the herd immunity essential to facilitating economic recovery. Without regulatory government action, as shown in Figure 2, the market demand is at D1 and the supply is at the market quantity. If left to the market, not everyone would get vaccinated because there would be a potion of people unable to afford it. Comparably, in Figure 3, government intervention (offering the vaccine for free) will push the demand up to D2 – as the general population are more likely to take advantage of a nocost-to-consumer initiative. Through the government purchasing a vaccine supply, the demand curve will shift upwards - meaning private pharmaceutical companies, will no longer be the only entity to benefit from the vaccine. The creation of this social benefit, such as population health and wellbeing, is positive externality in consumption. This difference between private demand and social demand creates a positive impact for a 3rd party people who aren’t able to be vaccinated and rely on herd immunity. However, while the social benefit increases, it creates a cost of which is borne by the government. The market equilibrium shows the price consumers are willing to pay, in conjunction with the quantity of vaccine product supplied by pharmaceutical companies. Intervention in the market by the government (as displayed in Figure 3) indicates where market failure is occurring. With the

provision of a free vaccine, a greater portion of the population, who would otherwise not have received the jab, will become immuniesed – with the increased demand realigning the market equilibrium to a more efficient standard. Relating this to supply side economics, it is clear the vaccine is a scarce resource – with the cost and limited production of the medication making it difficult to obtain. Australia has engaged four private pharmaceutical companies to assist in supplying the vaccine, costing $123.2 million and enabling 50% of the population to receive 2 doses (Department of Health, 2020). When there is a limited number of suppliers the quantity of vaccines available to the public is low, when there is higher number of suppliers the market equilibrium moves to efficient equilibrium. The government’s current strategy demonstrates a gap between the supply of vaccines purchased and the associated demand which would achieve herd immunity (95% of the population immunised). When contrast to the vaccination rationale employed by other first world nations, Australia is lacklustre in meeting vaccination targets, indicating other overarching economic powers are at work (Honderich & Papat, 2021).

FIGURE 1: VACCINE MARKET WITH NO GOVERNMENT INTERVENTION

FIGURE 3: VACCINE MARKET WITH GOVERNMENT INTERVENTION

4.0 CRITICAL ANALYSIS 4.1

CORRECTING M ARKET FAILURE

While government intervention is a divisive economic argument, it is clear the government’s rationale behind providing a free of charge vaccination program was a justified step in placing Australia on a positive economic trajectory. If the market was left to determine the uptake of immunisations, there would only be the amount of people at Q1 vaccinated when there is potential for more people to receive treatment (Q2) - highlighting a critical loss to society. Market failure can be amounted to the theory of externalities; most people are only concerned with private demand - which is a failure in itself because it neglects the other people who will benefit from the vaccination. By providing a service at no cost to the consumer, the government is correcting market failure by ensuring the greatest number of people are immunised - thus protecting a 3rd party who are young or immunocompromised. Without a comprehensively vaccinated population - assuming that people remain sick and industry keeps declining - Australia would continue tracking in the same economic spiral which instigated the largest quarterly downfall in GDP on record during June 2020 (ABS, 2021).

4.2

CHALLENGES AND IMPLICATIONS

Some of the issues associated with implementing a nation-wide immunisation program stem from the type of landscape to occur following the program. Vaccine ‘passports’ have become a central focus in other countries which would act as standardised proof of inoculation to enter certain premises – like schools or airplanes (Higginson, 2020, p.488–502). As highlighted by Gosten et al (2021), a digital health pass would, “Encourage people to be vaccinated... allowing a gradual reopening of the economy in key sectors and offer a less restrictive means to relax COVID-19 preventive measures such as quarantines, business closures, and stay-at-home orders.” However, this segregation can pose a threat to freedom of choice, being met with resistance by many who cite it as an infringement of freedom (Honderich & Popat 2021).

4.3

A G LOBAL CONTRAST

Drawing a comparison between Australia and other first world nations, it is apparent our government are having issues with delivering vaccines at the rate initially proposed. During March Australia fell 85% short of immunisation target blaming supply shortages and delivery problems for the delays (BBC, 2020). While this shows demand is high, it indicates the government could be more proactive in acquiring the vaccine for distribution. Also committing to assisting neighbouring countries with the implementation of a similar vaccine rational, there must be additional steps and expenditure to ensure targets are met. As stated by the Department of Health (2021), “Supporting our regional neighbours to access vaccines will progress health results and help open up travel for people and goods.” To track for economic recovery and return to trade in the Pacific and South East Asia, the greater interventive action can be recommended.

5.0 CONCLUDING STATEMENTS It is a certainty that the vaccine rollout represents a huge cost to the government, however, it is clear the social and economic implications of an unvaccinated population will greatly outweigh that cost. When applying economic theory, it can be determined that the shift

from private benefit to social benefit because of government intervention is necessary to increase the uptake of vaccinations and protect the portion of society who are unable to be immunised. While there are some costs and challenges associated with implementing a strategic rollout of this scale, ultimately Australia will be closer to resuming pre-Covid-19 economic and social normality.

6.0 REFERENCES Australian Bureau of Statistics. (2021.) Economic activity fell 7.0 per cent in June quarter. [online] Available at: https://www.abs.gov.au/media-centre/mediareleases/economic-activity-fell-70-cent-june-quarter [Accessed 14 May 2021] BC. (2021, April 21). Retrieved from What's gone wrong with Australia's vaccine rollout?: https://www.bbc.com/news/world-australia-56825920 Department of Health. (2021.) Australia’s vaccine agreements. [online] Available at: https://www.health.gov.au/node/18777/australias-vaccine-agreements [Accessed 7 April 2021] Foster, L. What happens if I don’t get the Covid vaccine? Video in Honderich, H. & Papat, S. (2021.) How US history explains vaccine passport scepticism. BBC News. Washington: BBC. Available at: https://www.bbc.com/news/world-us-canada-56680309 Galea S, Merchant RM, Lurie N. The Mental Health Consequences of COVID-19 and Physical Distancing: The Need for Prevention and Early Intervention. JAMA Intern Med. 2020;180(6):817–818. doi:10.1001/jamainternmed.2020.1562 Gostin, L., Cohen, I., & Shaw, J. (2021). Digital Health Passes in the Age of COVID-19: Are “Vaccine Passports” Lawful and Ethical? JAMA : the Journal of the American Medical Association. https://doi.org/10.1001/jama.2021.5283 Hanly, M. J. (2021). Vaccinating Australia: How long will it take?. medRxiv. Pearson Higher Education AU.. International Monetary Fund. (2021.) World Economic Outlook Update, January 2021: Policy Support and Vaccines Expected to Lift Activity. [online] Available at: https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021world-economic-outlook-update [Accessed 5 May 2021] Higginson, S., Milovanovic, K., Gillespie, J., Matthews, A., Williams, C., Wall, L., Moy, N., Hinwood, M., Melia, A., & Paolucci, F. (2020). COVID-19: The need for an Australian economic pandemic response plan. Health Policy and Technology, 9(4), 488–502. https://doi.org/10.1016/j.hlpt.2020.08.017

Johns Hopkins Coronavirus Resource Center. (2021.) Economics of COVID-19 Vaccines - Johns Hopkins Coronavirus Resource Center. [online] Available at: https://coronavirus.jhu.edu/vaccines/report/economics-of-covid-19-vaccines [Accessed 29 April 2021 Randolph, H., & Barreiro, L. (2020). Herd Immunity: Understanding COVID-19. Immunity (Cambridge, Mass.), 52(5), 737–741. https://doi.org/10.1016/j.immuni.2020.04.012...