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Australia's vaccine hesitancy

Good morning! Australia's vaccine-hesitancy rate was reportedly 36% in mid-March, suggesting health authorities have their work cut out for them. That, combined with the government's relatively slow vaccine rollout, makes it difficult to see international borders reopening this year unless something changes.

On the positive side, New Zealand agreed to a quarantine-free travel bubble with Australia commencing on 19 April.

Market Wrap

No JobKeeper, no worries

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Rates on hold: The RBA left the cash rate at 0.10%. Governor Philip Lowe said "wage and price pressures are subdued and are expected to remain so for some years... [but] CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions. Looking through this, underlying inflation is expected to remain below 2 per cent over the next few years".

Jobs bonanza: ANZ reported that job listings rose 7.4% in March to their highest level since late 2008 (following the global financial crisis). Listings are now 23% higher than before the pandemic. It's good news for those worrying about the end of JobKeeper, which wound up on 28 March.

Growth forecasts: The IMF expects the global economy to grow 6.0% in 2021 and 4.4% in 2022. The 2021 forecast was revised up 0.5 percentage points, reflecting "additional fiscal support in aa few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and aa continued adaptation of economic activity to subdued mobility". It expects Australia to grow by 4.5% this year before slowing to 2.8% in 2022.

Corona Wrap

The problem with AstraZeneca

Warren Brown/Herald Sun
Warren Brown/Herald Sun

Australia's heavy reliance on the AstraZeneca vaccine is no doubt a key reason for the country's large ratio of COVID-19 vaccine hesitancy, made worse following confirmation that blood clots developed by a 44-year-old man last week were linked to the AstraZeneca vaccine.

The big picture: The AstraZeneca vaccine's reputation had already been tarnished around the world by political flip-flopping, particularly in Europe, where authorities weighted the small risk of blood clots (around 1 in a million) above the risk of COVID-19 itself (around 1.5 per 100). Given the lack of COVID-19 in the Australian community, the calculus is slightly different – the blood clot trade-off is instead with repeated but short lockdowns and closed international borders.

The blame game: ScoMo has blamed the states for the poor rollout but more recently Europe was his scapegoat, claiming 3.1 million of Australia's doses of AstraZeneca had been blocked from importation. However, the European Commission denied ScoMo's claim, telling a press conference last night that the only block had been the single shipment of 250,000 doses from Italy last month.

The fix: ScoMo needs to own his government's mistakes and speed up the process of having vaccination sites at pharmacies, which apparently won't be in play until at least June for some unknown reason. Australia should also either acquire additional doses of Pfizer (yes we'll be at the back of the queue but it's the vaccine gold standard) or hurry up and approve alternative vaccines, such as Novavax (for which Australia already has a large order) or the single-dose Johnson & Johnson vaccine.

Elsewhere: The Brazilian Association of Intensive Care Medicine said that a new coronavirus variant, the P. 1 – which is a branch of the Brazilian B.1.1.28 strain – has likely increased the number of 18 to 45-year-olds requiring intensive care and coronavirus-related deaths in that age group. P. 1 is more infectious, transmissible, capable of evading prior immunogenicity (i.e. reinfecting people) and is spreading rapidly in Canada.

Econ Wrap

A global minimum tax rate?

Yellen wants to flatten this chart.
Yellen wants to flatten this chart. OBR UK

US Treasury Secretary Janet Yellen called for the adoption of a minimum global corporate income tax. "It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods."

By necessity: President Biden is considering raising the US corporate tax rate to 28% from 21% to help pay for some of his multi-trillion dollar stimuli. However, having a tax rate and paying a tax are two very different things – many US companies can use foreign subsidiaries and tax havens to minimise corporate tax. Companies do not have to pay taxes on income earned abroad until that income is repatriated from abroad. Yellen wants to disincentivise this practice.

Some context: The average top corporate tax rate among OECD members is 23.5%. However, in some countries such as Ireland it's as low as 12.5%. There's a reason Google has a 4,400sqm headquarters in Dublin – other than the cold, wet climate that keeps energy costs down, of course.

If the OECD sets a minimum global corporate income tax rate more in-line with that of the United States it would effectively punish countries such as Ireland, which has done well capitalising on a kind of global Tiebout model, attracting corporations with its relatively low tax rate. Australia's 30% corporate tax rates puts it above all but 3 of the 37 OECD members, meaning it would probably benefit from Yellen's proposal on some margin.

Random Wrap

Baseball's back in Texas

A sold out game between the Texas Rangers and the Toronto Blue Jays.
A sold out game between the Texas Rangers and the Toronto Blue Jays. CNN
  • The Texas Rangers hosted at least 38,000 fans for the team's home opener against the Toronto Blue Jays. Texas reported 2,906 new coronavirus cases yesterday.
  • Naval Ravikant explains non-fungible tokens (NFTs).
  • North Korea has pulled out of the Tokyo Olympics, citing the risk of COVID-19.
  • Airlines in the US are facing pilot shortages following a surge in travel demand. Delta said Monday that it recalled all of its idled pilots on 1 April.
  • Mark Zuckerberg uses Signal, the open source encrypted messaging alternative to Facebook's WhatsApp.
  • Former Prime Minister Malcolm Turnbull was dumped as the Chair of the NSW Clean Energy Board less than a week after his appointment because he became "a distraction".