82% of experts say vaccine passports are an economic necessity
Vaccine passports will be an essential tool for economic recovery, according to experts in a new poll from Finder.
In this month's Finder RBA Cash Rate Survey™, 40 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.
While all panellists expect a cash rate hold in September, 1 in 4 (25%, 10/40) expect a rate rise in 2022.
With the nation's two most populated cities still under harsh lockdowns, 4 out of 5 experts who weighed in (82%, 23/28) agree that vaccine passports are a necessity.
Graham Cooke, head of consumer research at Finder, said if the verdict on vaccines becomes canon, public life may have a new normal.
"We've all got used to signing in at venues. Not only is that process likely here to stay, I'd expect it to get more complicated.
"Some hackers have developed software to get around the current check-in process, so a more robust system may be required to verify vaccination.
"Even if it means longer lines at bars, restaurants and music venues, many of us will be willing to bear it if it means we can get out and enjoy life again," Cooke said.
Travel off the cards for the rest of the year
Australians hoping to visit other states this year will likely be left disappointed, according to experts.
Only a few (11%, 3/27) economists think that interstate travel will return by the end of the year.
The majority (70%, 19/27) say it will be back in the first half of 2022.
When it comes to international travel, most experts (84%, 21/25) agree with opening international borders to fully vaccinated tourists in 2022 without having to undergo hotel quarantine.
Jakob B. Madsen from the University of Western Australia noted travel should be conditional on vaccination passports and on a high vaccination rate among Australians.
Peter Boehm of CSA Premium said we can't stop living because we're afraid of dying.
"If tourists are fully vaccinated, and we open up the economy once we reach the planned vaccination rates, then the risk of death is materially reduced and life should, and must, go on as normal as possible."
Those opposed to opening the borders without hotel quarantine cited fear of the spread of new and known variants from other countries even if travellers are vaccinated.
$300 for vaccination?
While many Aussies companies have already offered a slew of rewards from flights to Bitcoin, more than half (56%, 14/25) of economists think a proposed plan to offer $300 for vaccinated Australians would be good for the economy.
Peter Boehm of CSA Premium was one of a few experts who said protecting yourself, your loved ones and the broader community should be incentive enough to get vaccinated.
Christine Williams of Smarter Property Investing said so much fear and misinformation has been spread around vaccinations that $300 is too little too late.
Matthew Peter of the Queensland Investment Corporation (QIC) disagreed.
"Our economic outlook now depends on getting as many people as possible vaccinated. If incentives are required, it will be money well spent," Peter said.
Mala Raghavan from the University of Tasmania said funds should be directed toward communication to combat misinformation.
"We need a clear national advertising campaign coupled with some targeted approaches, such as a vaccine ambassador and community influencer, who can promote and spread the benefits of vaccinating as opposed to not vaccinating," Raghavan said.
Graham Cooke says that a cash incentive may be money well spent.
"Protecting yourself and your community should be sufficient incentive for vaccination, but it's clear from the hundreds of thousands of eligible Australians holding out that an incentive might be required.
"While the JobKeeper program cost taxpayers $90 billion, a $300 vaccine incentive for every adult would cost a mere $6 billion – a small price to pay to get to 90% vaccination."
"Further, that $300 would likely be spent in the various bars and restaurants around Australia as we open up, providing a much-needed boost to economic recovery," Cooke said.
Nicholas Frappell, ABC Bullion: "The RBA is likely to maintain bond purchasing given the current lock-downs. A possible decline in labour force participation may set the scene for rising real wages and scope for tightening by 2022."
Shane Oliver, AMP Capital: "The lockdown, and its hit to economic activity, has further delayed the time when the effective RBA conditions – full employment and 3% or more wages growth to sustain 2-3% inflation – will be met to justify a rate hike."
David Robertson, Bendigo Bank: "RBA rate hikes remain well down the path, around early to mid-2023. The NSW, ACT and Victorian lockdowns highlight the need for more government support measures to help households and businesses through to year-end when an 80% adult vaccination rate will allow mobility and the economy to run near full capacity. "
Sean Langcake, BIS Oxford Economics: "The current lockdowns will stall progress toward a tighter labour market and faster wage growth – the key triggers for an RBA rate rise."
Ben Udy, Capital Economics: "Wage growth remains subdued and the current lockdowns will probably increase labour market slack in the near term. Even so, we still expect wage growth to rise faster than the RBA anticipates in 2022. So we expect the RBA will decide to lift rates in early 2023, rather than 2024 as the Bank currently expects."
Stephen Halmarick, Commonwealth Bank: "Current lockdowns will reduce growth and wages/inflation and delay rate hike into 2023."
Saul Eslake, Corinna Economic Advisory: "I take the RBA at its word when it says it won't begin tightening monetary policy until the labour market is sufficiently tight to generate wage inflation that's sufficiently strong to push 'underlying' consumer price inflation sustainably into the 2-3% target range – and while I think that may well be sooner than the RBA's 'central case' of 2024, I don't think it will be any earlier than mid-2023."
Peter Boehm, CSA Premium: "The prolonged lockdowns in Sydney and Melbourne will likely show the Australian economy has entered into a double-dip recession. We'll know more once the June and September quarter GDP figures are published, but economists are tipping a June quarter contraction, and there is no reason to believe September will be any different. Combine this with the posturing of some Labor premiers about keeping borders shut, regardless of whether the 70% to 80% vaccination targets are met, and we have a recipe for economic uncertainty, at least in the short term. For these reasons, the RBA has no option but to keep rates on hold for now."
Tony Makin, Griffith University: "As the evidence mounts that the inflation spike in the US is not temporary, the US Federal Reserve will continue to tighten US monetary policy. This will raise world interest rates and depreciate the Australian dollar, other things the same, which will compound the inflationary pressures building here. Sooner or later, the cash rate will have to rise. Meanwhile, ongoing COVID-related federal and state budget deficits will exert further upward pressure on bond yields."
Mark Brimble, Griffith University: "The evolution of the COVID virus and mismanagement of the response to it is likely to lead to longer-term impacts and thus a longer recovery period in which supportive settings will be needed for some time yet."
Tim Nelson, Griffith University: "Given COVID-related financial impacts, fiscal policy will continue to do the heavy lifting. Rates will eventually need to rise post-COVID. It's important that regulators manage the emerging risks of asset price bubbles (equities and property)."
Tom Devitt, Housing Industry Association: "It will take a while to get the sustained wage and inflation pressure that will justify a cash rate increase."
Alex Joiner, IFM Investors: "The economic weakness characterising the second half of 2021 has set back the recovery in the labour market and this will delay efforts by the Bank to return the economy to full employment and inflation to target."
Michael Witts, ING Bank: "The timing of a move by the RBA will be a function of progress on the delta strain and the re-opening of the economy, these factors together with moves by the Federal Reserve and other central banks will also come into play."
Leanne Pilkington, Laing+Simmons: "Prolonged lockdowns have left the economy delicately poised. The RBA has previously stated its unwillingness to drop rates further, neither is a timeframe clear for an increase to rates to be considered again. The hold pattern remains necessary."
Mathew Tiller, LJ Hooker: "The economic impact of the extended lockdowns and restrictions will see the RBA hold the cash rate steady over the medium term."
Jeffrey Sheen, Macquarie University: "Sustained inflation of wages and prices is only expected to require higher cash rates from 2023."
Michael Yardney, Metropole Property Strategists: "The Coronavirus Cocoon many Australians are finding themselves in will slow down our economic growth and stall wages growth and inflation. Changes in interest rates are a long way off."
Susan Mitchell, Mortgage Choice: "I don't expect a change to the cash rate in September but I'm eager to see what RBA Board members decide around the bond purchase program. The economic setback caused by the ongoing lockdowns and climbing case numbers in New South Wales could push the RBA to send a strong signal at its September meeting. Unsurprisingly, the uncertainty driven by the Delta strain is encouraging borrowers to seek better home loan deals with Mortgage Choice data revealing a surge in refinancing activity and an increasing preference towards fixed rates."
Dr Andrew Wilson, My Housing Market: "No change in fundamental economic weakness confirmed again with low wages growth despite robust labour market. As usual – absolutely no plausible case on current data for higher rates over the foreseeable future – and then there is Covid."
Rich Harvey, Propertybuyer: "The RBA said rates on hold till 2023, extended lockdowns hampering economic recovery."
Matthew Peter, QIC: "The advent of the delta strain means that RBA rate hikes are off the table until 2024. The real question facing the RBA is what to do with its QE program. They must reverse out the proposed tapering and delay the start of tapering until next year."
Jason Azzopardi, Resimac: "Prolonged economic uncertainty driven by large inconsistencies in state policies."
Christine Williams, Smarter Property Investing: "Global conditions will dictate RBA decisions."
Brian Parker, Sunsuper: "Wage and price inflation not likely to be high enough to force a rate hike from the RBA before 2023 at the earliest."
Mala Raghavan, University Of Tasmania: "As long as inflation and wage rates are subdued, cash rate will not rise. The chances of these two variables rising in the near future are very slim, mainly due to the spread of Delta strain of the coronavirus in the two major cities, slowing economic growth, sluggish household consumption, declining business investments, especially in the non-mining sector, and underutilisation of labour force."
Jakob B. Madsen, University of Western Australia: "The RBA has committed itself to unaltered cash rate unless inflation picks up."
Jonathan Chancellor, Urban.com.au: "The prospect of a trickier recession than the last one throws up an interesting challenge for the RBA. It still sees things with a glass half-filled perspective when so many businesses and landlords are sadly enduring or set for stressful times"
Dale Gillham, Wealth Within: "With around half of Australia in lockdown, the economy is really in a state of uncertainty as to what the future will bring. Given this, consumers and businesses are being conservative right now and I believe we will not see any strong growth for at least the six months to one year."
Brodie Haupt, WLTH: "With continued lockdowns and rising pressure on the economy, I don't think there will be a change to the cash rate until 2023."
Other participants: Peter J Tulip, CIS; Craig Emerson, Emerson Economics; Angela Jackson, Equity Economics; Nicholas Gruen, Lateral Economics; Geoffrey Harold Kingston, Macquarie University; Mark Crosby, Monash University; Julia Newbould, Money Magazine; Malcolm Wood, Ord Minnett; Noel Whittaker, QUT; Bill Evans, Westpac.