Assignment 4 (and Assignment 3) address economic issues related to the pandemic created by COVID-19. The COVID-19 Backgrounderhereshould be read before attempting the assignment as the assignment tasks relate to issues contained in the 'backgrounder'. While not absolutely essential, you are advised to access the media items used in this 'backgrounder' for further elaboration of the issues raised. You may use these items as references in your own work along with the news items that you have independently accessed.

Complete the following essays ensuring that you apply economic principles or theory wherever possible to support your discussion. Communicate your ideas with correct grammar, spelling and writing style and support your answers with diagrams and illustrative examples as necessary.

Essay 1 (10 marks)

essay which provides an economic explanation of (a) why pharmaceutical companies had not produced a vaccine that could be used to combat COVID-19 by the start of 2020 and (b) why neither national governments nor WHO had intervened to ensure the production of a vaccine prior to the emergence of COVID-19. (c) In addition, provide an economic explanation of why not enough medical equipment was in place in Australian hospitals to fight the pandemic and indicate what would have needed to have been done to ensure that sufficient equipment was available. (d) Finally, comment on whether or not action to ensure the availability of medical equipment could have included enhanced manufacturing of such equipment in Australia encouraged by government assistance?

Essay 2 (10 mark)

essay which indicates (a) in what ways social distancing requirements were 'hitting the economy like a sledge hammer'? Explain using the model of aggregate demand and aggregate supply. (b) Identify government policies which attempted to counter these outcomes and (c) explain if these polices have been effective. (d) Finally, comment on whether or not regional Australia has fared differently (compared with metropolitan Australia) during this recessionary period.

COVID-19 BACKGROUNDER

John Hicks

Kahn (2020) reports that the World Health Organisation (WHO)had conducted a meeting in Geneva in 2015 at which attendees raised the concern that a global disaster from a disease - a novel, highly infectious coronavirus, with a high mortality rate and no existing treatment or prevention - could emerge. As one attendee explained, the problem was not that prevention was impossible, but rather that action to ensure prevention would not be taken because governments thought that it was too expensive, pharmaceutical companies 'operate for profit' and WHO, had neither the funding nor fire power to enforce appropriate action on a global scale.

Lacking a vaccine to prevent the pandemic, Australian health officials were forced to fight the disease. However, it soon became apparent that the facilities to fight the problem were in short supply. In particular, hospitals did not appear to have enough ventilators 'With an estimated 2023 intensive care beds across Australia fitted with ventilators, a doubling of capacity could fail to meet demand based on modelling estimates that up to 50,000 people hospitalised during the pandemic may need intensive care nursing with equipment to help breathing' (Norington and Robinson, 2020).

Given the fear that not enough medical equipment was available in Australia, the Government decided, successfully, to take action to flatten the curve of infections. This success meant that the demand for vital medical equipment was kept (well) within the limits of the equipment available 'Australia has seen an increase in coronavirus cases of less than 1 per cent per day for seven straight days, showing a "genuine flattening" of the infection curve, Health Minister Greg Hunt has declared'. (Baxendale, 2020).

However, the policy adopted by the Government was not without its cost 'Of course, there's a trade-off: social distancing measures are hitting the economy like a sledgehammer' (Editorial, 2020). Notwithstanding this, Judith Sloan (Sloan, 2020) argued that economists tended to overstate the economic impact and at times bordered on being offensive. However, more recently, some in the medical profession have begun to raise issues similar to that raised by economists - especially in respect to the increased economic stress generated by the public health policies resulting in an increase in suicides (Benson, 2020).

The economic consequences of COVID-19 have led some to encourage small businesses to 'Think of your family ... and sack your staff' (Brown and Commins, 2020). In order to both save jobs and maintain spending in the economy, the Government implemented JobKeeper which offered a wage subsidy to business to $1,500 per fortnight (Commins, 2020) along with other expansionary fiscal and monetary policies. However, the sad reality is that such measures are probably not going to be enough and hard decisions will need to be made (Ergas and Pincus, 2020). In the US, there are already concerns of a deeper and longer lasting depression (Hufford and Tita, 2020) and in Australia it is predicted that the nature of the recession will be such that full recovery will take two year or more (Commins and Benson, 2020). That this is the case is illustrated by the fact that even the very large businesses are qualifying for JobKeeper (Lynch, 2020).

However, some commentators believe that the pandemic is an opportunity to rebuild manufacturing in Australia (O'Conner, 2020; and Kelly 2020) and to revitalise regional Australia (Wade, 2020).

References

Baxendale, Rachel (2020) 'Coronavirus: Increase in COVID-19 cases slows to just 1pc a day as curve conquered', The Australian, 19 April, accessed 11 May 2020

Benson, Simon (2020) 'Coronavirus Australia: suicide's toll far higher than virus' The Australian, 7 May, accessed 11 May 2020,

Brown, Greg and Commins, Patrick (2020) 'Coronavirus: "Think of your family ... and sack your staff", small business told', The Australian, 17 March, accessed 11 May 2020

Commins, Patrick (2020) 'Coronavirus: One-third of Australian businesses seeking JobKeeper help' The Australian, 11 April, accessed 11 May 2020

Commins, Patrick and Benson, Simon (2020) 'Two-year coronavirus hangover as Frydenberg rules out "endless money tree"', The Australian, 12 May, accessed 12 May 2020

Editorial (2020) 'Flattening curve while not obliterating our economy' The Australian, 17 March, accessed 11 May 2020

Ergas, Henry and Pincus, Jonathan (2020) 'Coronavirus: Return to sender economists' letter is gibberish' The Australian, 23April, accessed 11 May 2020

Hufford, Austen and Tita, Bob (2020) 'Fears rise as temporary US job losses become permanent', The Australian 11 May, accessed 12 May 2020 < https://www.theaustralian.com.au/business/the-wall-street-journal/fears-rise-as-temporary-us-job-losses-become-permanent/news-story/9e5299e1277759efd817abe814a8bc6e>

Kahn, Jennifer (2020) 'Coronavirus: How WHO planned and failed the COVID-19 pandemic' The Weekend Australian Magazine, 9 May, accessed 10 May 2020

Kelly, Katrina Grace (2020) 'We have a golden opportunity to stimulate our manufacturing' The Australian, 9 May, accessed 11 May 2020

Lynch, Jarrod (2020) 'Companies join queue for JobKeeper payments' The Australian, 13 May, accessed 14 May 2020

Matt Wade (2020 'We'll all have a recession, but your postcode will make a big difference' The Sydney Morning Herald, 25 March, accessed 11 May 2020 (This article is also available through the library holdings of The Australian at https://ezproxy.csu.edu.au/login?url=https://search-proquest-com.ezproxy.csu.edu.au/docview/2382027680?accountid=10344)

Norington, Brad and Robinson, Natasha (2020) 'Coronavirus: fears of ventilator shortage if coronavirus cases surge in Australia' The Australian, 23 March, accessed 11 May 2020 (This article is also available through the library holdings of The Australian at https://ezproxy.csu.edu.au/login?url=https://search-proquest-com.ezproxy.csu.edu.au/docview/2381016142?accountid=10344)

O'Conner, Brendan (2020) 'We must manufacture a self-sufficient economy' The Australian, 6 May, accessed 11 May 2020

Sloan, Judith (2020) 'Coronavirus: This isn't an experiment for wonks lives are at stake', The Australian, 24 March, accessed 11 May 2020< https://www.theaustralian.com.au/commentary/coronavirus-this-isnt-an-experiment-for-wonks-lives-are-at-stake/news-story/c96e7fe176ea2f469cd22a8ddde1f150>