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While the Australian economy has shown positive signs of recovery, challenges still remain, says the Grattan Institute.
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Vaccine rollout key to Australia’s economic recovery
26 April 2021
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9 minute read
In the wake of concerns related to blood clotting caused by the AstraZeneca vaccine, the federal government could do more to restore confidence in its federal vaccine rollout to bolster Australia’s economic recovery, said Grattan Institute CEO Danielle Wood.
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Speaking at The Tax Institute’s Financial Services Conference on Thursday, Ms Wood said low confidence and a stuttered rollout of the vaccine could have negative implications for Australia’s recovery.
“While we don’t have herd immunity, there is a chance it gets out and we face another wave,” Ms Wood said. “That would obviously be incredibly devastating for confidence, for the economy, in a world where a lot of those government safety nets have now come off.”
The Australian Technical Advisory Group on Immunisation (ATAGI) earlier this month recommended that the AstraZeneca vaccine should not be given to people under 50 after it was found to cause blood clotting in a small number of cases.
Further delays to the vaccine’s rollout in Australia sparked calls for the Morrison government to reintroduce JobKeeper.
According to Ms Wood, the government is no longer in a position where it can apply monetary policy for broad macroeconomic stabilisation. She went on to criticise the government’s unemployment targets of below 6 per cent.
New employment data released by the Australian Bureau of Statistics (ABS) for March showed Australia’s unemployment rate fell from 5.8 per cent to 5.6 per cent, as 71,000 jobs were added to the economy.
“Of those new jobs, around 80 per cent went to women and around half went to young people,” Treasurer Josh Frydenberg said. “Australia’s jobs market, Australia’s labour market, is recovering 4.5 times faster than the experience of the labour market during the 1990s recession.”
But Ms Wood said that she doesn’t “think that is ambitious enough”.
“Here’s why: it is almost certainly well above the rate of full employment,” she said. “When we talk about full employment, what we talk about is the rate that if you dropped unemployment below that, you’d start to see some serious wages growth.
“I think that’s where we should be aiming to get to. We want to see wages growing again. The risks of doing too little is a return to the secular stagnation world.
“This is not a world that we want to return to.”
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