From Australia’s Pandemic Exceptionalism (Steven Hamilton & Richard Holden, 2024) pp87-8
The cost of Australia’s vaccine debacle
It would turn out that the months between when mRNA vaccines were available (and countries that had made sound purchasing decisions were vaccinating their populations) and when Australia finally had enough doses of those vaccines to cover the Australian population were crucial months. To get a sense of the economic impact of our dismal vaccine rollout, consider what might have happened were we as competent as Israel in having procured vaccines.
Israel’s last lockdowns ended in February 2021, so it is reasonable to think that had our vaccine procurement been comparable to Israel’s then we, too, could have avoided lockdowns from this point on. What did that cost in a pure, but rather narrow, economic sense? More than $30 billion.
To see why, start with this. The Australian Treasury has estimated that the economic cost of nationwide lockdowns was $3.2 billion per week.?’ It’s important to remember that this is the cost of lockdowns relative to a counterfactual scenario where there was no lockdown and no pandemic. It is emphatically not the cost of lockdowns compared to just letting it rip’ in the middle of a pandemic. This is also – and Treasury duly acknowledges this – an underestimate. It focuses only on direct economic effects, and doesn’t factor in indirect effects like drops in consumer confidence (which reduce economic activity by making consumers reticent to spend), supply chain disruptions (which reduce economic activity by making it harder for consumers to spend even if they want to), and it ignores the economic cost of government support programs.
The lockdowns that took place between March and December 2021, which could have been avoided had our vaccination strategy and rollout been up to scratch, were the equivalent of a 68-day nationwide lockdown. ” Ar a direct economic cost of $3.2 billion a week this shakes out to $31 billion.
Not only does this lower-bound estimate exclude the important indirect economic effects mentioned above, it also excludes the social impact of the vaccine-avoidable lockdowns. While it is hard to quantify exactly how large these were, there were some very tangible effects. Perhaps the most obvious was the school closures that resulted from the lockdowns. Not only did this damage the human capital of al school students, it also reduced the productivity of parents who were attempting to work from home while simultaneously acting as de facto teachers. There is some reason to believe that many students managed to recover the learning loss from this period, but parental productivity, by its very nature, was permanently lost.
Taking together the direct economic effects, the indirect economic effects, and the school-closure effects of the lockdowns that our substandard vaccine strategy caused, the cost to the Australian economy was almost surely north of $50 billion. Perhaps well north of that. As such, it was easily the single largest public policy mistake in Australian history. Indeed, at around 10% of GDP, the vaccine debacle was more than half as large as the 17% drop in GDP during the Great Depression of 1929-1933 So, as an economic matter, that makes Australia’s great vaccine debacle almost surely the single most costly economic event in Australian history. And unlike the Great Depression, or the World Wars, or the financial crisis of 2008, it was completely self-inflicted. An unforced error of the gravest kind.
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