Economists predict SA’s seven-day lockdown will cost local economy $200 million

Economists say SA’s lockdown will deal a savage blow to business and the state’s bottom line. But the Treasurer says his budget plans will hold.

South Australia’s seven-day lockdown has cost the state up to $200m, economists predict, as industry leaders call for more financial help to keep businesses afloat.

Treasurer Rob Lucas did not rule out providing further support to businesses, as some level of restrictions are likely to remain in place even after the lockdown is due to end on Tuesday night.

South Australian Treasurer Rob Lucas remains hopeful of the success of his budget. Picture: David Mariuz

He remained confident the lockdown wouldn’t spoil his plans to return the budget to surplus in 2022-23.

Deloitte’s chief economist in SA Aaron Hill predicted the hit to the state’s gross state product to be $200m.

“This estimate is particularly sensitive to the construction industry shutdown, so the early restart of work on some infrastructure projects will reduce the impact,” Mr Hill said.

Mr Hill said a “short and sharp” lockdown to control the virus was better economically.

Bank SA chief economist Besa Deda’s estimate was up to $150m: “Because the lockdown is so short, the severity on the economy is quite limited”.

Australian Hotels Association state chief executive Ian Horne said November’s three-day lockdown cost the hospitality industry more than $100m – including $11m in wasted food.

With hotels currently operating between 0-20 per cent occupancy, Mr Horne said the likely hit to the sector is at least $250m.

Mr Horne called for greater support from the government, particularly with regional SA pubs closed.

Deloitte Access Economics partner Aaron Hill (left) with managing partner Andrew Culley. Picture: Mike Burton

“The country is paying for the sins of the city,” he said.

Mr Hill’s estimate, which is for gross state product, factors in that much of the lost economic activity will be made up when restrictions ease.

“If a tradie were booked during the lockdown week but is able to be re-booked this Thursday or Friday, their activity will just be shifted and not be lost to the economy overall,” Mr Hill said.

The construction industry generates $230m worth of work per week.

“I expect building and construction will resume from Wednesday with some restrictions,” Mr Frogley said.

“Short-term productivity will be affected by the restrictions and the need to re-co-ordinate trades and supplies, but slow construction is much better than no construction.”

Supplied Editorial Master Builders SA chief executive Will Frogley

Tourism Industry Council SA chief executive Shaun de Bruyn said there had been “significant pain” across his industry.

“The government is looking after our safety … but there is a severe economic impact for tourism businesses,” he said.

“It’s not just that lockdown period, it lasts for several months afterwards.”

Grants of up to $3000 are available to small to medium-sized businesses affected by the lockdown.

Mr Lucas said further help would be considered.

“We will continue to monitor the situation and then make a decision further down the track,” he said.

The Treasurer, who will retire from politics next year, also reaffirmed the state government’s commitment to return the budget to surplus in 2022-23.

“If we’re in and out in a week, most of the impact will be felt in this particular financial year,” he said.

“Where the impacts might be felt in the budget would be if there were a prolonged lockdown in NSW. What that does impact is national GST collection.”