Economics Report

Topics: Economics, Australia, Externality Pages: 5 (920 words) Published: December 7, 2014
In relation to lower vaccination rates in Australia, it is crucial to Australian governments to increase the national immunisation rates. This report will focus on this issue through Australian immunisation rates, assessment on any possible government failure, supporting by economic theory.

FIigure1: any delayed immunisation rates, 2004 and 2009

Figure 2: more than 6 months delayed immunisation rates, 2004 and 2009

In Australia, the timely receipt of 2nd dose of MMR vaccination decreased rapidly (Department of Health, 2013). As can be seen from Figure 1, there was a considerable increase of any delayed immunisation rates from 65% in 2004 to 80% in 2009. Especially, the more than 6 months delayed immunisation rate increased sharply from almost 24% to 35%, as shown in Figure 2.

Figure 3: immunisation rates in Australia, Rwanda, Eritrea and Bangladesh

Figure 4: MMR immunisation rates of children 24-27 months of age

Figure 5: MMR immunisation rates of children 60-63 months of age

Figure 3 shows that Immunisation coverage in Australia as a developed country is 94 per cent, which is lower than those of many developing countries such as Rwanda, Eritrea and Bangladesh (Browne, 2013, May 30). However, there are some regions of Australia where the rates are well below the Australian national average rates. Australia’s MMR immunisation rate of children 24-27 months of age is 93.8%, which is higher than those in both NSW and WA, while Australia’s MMR immunisation rate of children 60-63 months of age is 92.5%, over those rates in SA, WA and NT as well, as shown in Figure 4 and Figure 5 respectively (Medicare, 2013).

Figure 6: the effect of immunisation on economic efficiency. Adapted from “ Essentials of economics” by Hubbard, R. G., 2012

According to Hubbard (2012), in economic view, the immunisation rate is a positive externality that leads to a divergence between private benefits of consumption and social benefits. As can be seen in figure 6, the market equilibrium occurs at the price P1 quantity Q1, without government intervention, there is a lack consumption that results in the deadweight loss, leading to economic inefficiency. In order to fix the market failure, government could provide some subsidies which are equal to the external benefit. This policy can shift the demand curve up to the right, increasing quantity of immunisation and bringing market equilibrium to the higher price of P2, so that the external benefit has been internalized. D2 represents benefit that is equal to external benefit plus private cost which is D1, achieving economic efficiency. Facing the lower immunisation rate and interpreting the economic theory, Australia government has issued reforms to Australia’s childhood immunisation arrangements which include immunisation allowance of $726 per child Family Tax Benefit, aiming to increase the immunisation rates of Australian children over time (Australia Government, n.d.). However, the efforts of Australian government could fail to correct adequately for market failure or lead to a more inefficient outcome than the market, which is defined as government failure (Hubbard, 2012). However, when the suggested theory implement into real situation, the issue would be more complicated because of some factors impacting government intervention. The first one is the subjects of the policy. $726 per child Family Tax Benefit (Australia Government, n.d.) cannot be incentive to all families, according to Elliott (2013, October), “lower income areas of Australia have a vaccination rate of about 90 per cent, whereas in areas with the highest average family income levels, this drops to 87 per cent”. Under this policy, new requirements will replace the Maternity Immunisation Allowance, which provided $129 when a child was immunised between 18 months and 24 months of age and between four and five years of age (Australia Government, n.d.), which will probably lead to decrease of...
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