Treasurer warns of hit to economy if state borders stay closed

It would be “ludicrous” if vaccinated NSW residents were able to travel to Bali or Canada but banned from Queensland or Western Australia, federal treasurer Josh Frydenberg has said.

It would be “ludicrous” and the economy will suffer if states keep domestic borders closed after vaccine targets are reached, Federal Treasurer Josh Frydenberg has said.

The warning from Mr Frydenberg followed threats by Queensland and West Australian premiers they may not open to states like NSW even when 80 per cent of the population is fully vaccinated if Covid-19 case numbers remain high.

“Wouldn’t it be ludicrous if the Queensland borders were closed to visitors from NSW and Victoria who would help drive jobs in Queensland’s tourism industry,” he said.

“How ridiculous would it be that you could travel to Canada before you could go to Cairns, and if you could go to Fiji or Bali or Singapore before Perth?”

Mr Frydenberg said tourism businesses were “chomping at the bit” to get visitors back from southern states, and many more companies were suffering from labour shortages due to border closures.

Treasurer Josh Frydenberg announced Australia’s economy grew by just 0.7 per cent in June quarter. Picture: NCA NewsWire / Gary Ramage

Australia has narrowly avoided heading toward a second recession in two years however ongoing Covid-19 lockdowns leave the country exposed to economic disaster in the future.

The economy grew by a modest 0.7 per cent in the three months to June 2021, according to the latest national accounts figures released by the Australian Bureau of Statistics on Wednesday.

With NSW, Victoria and the ACT in lockdown for all or part of the past two months, economists widely expect GDP growth will plummet in the September quarter.

Two negative quarters of economic growth in a row would be classed as a recession, meaning the positive June result has reduced the risk for Australia.

However if the lockdowns continue late into the year, the hit to the economy in the December quarter could mean Australia ends up in a recession by the end of 2021.

Mr Frydenberg said there were “challenging days ahead” for the Australian economy.

“Today’s national account numbers do not change the fact that our economy has some very difficult days ahead,” he said.

“But, today’s national account numbers underline the fact that our economy remains resilient, that its fundamentals remain sound, that our economy remains strong.”

Mr Frydenberg said treasury officials estimated Australia’s economy would retract by at least two per cent in the September quarter.

Sydney was not in lockdown for the first two months of the June quarter, meaning the NSW economy actually grew by 2.2 per cent.
Household consumption, including spending at hotels, cafes, recreation and culture increased by 2.1 per cent alone, which the ABS partially credited the state government’s Dine & Discover voucher scheme for.

There was also a 1.6 per cent increase in government spending, led by a rise in front line worker expenses.

Private business consumption also grew, with a 7.3 per cent increase in machinery and equipment investment.

Victoria’s economy grew by 1.4 per cent, Queensland by 2 per cent, Western Australia increased by 1.2 per cent and South Australia by 1.8 per cent.

The Northern Territory had the highest growth in the country with 5.3 per cent.

Nationally the household saving to income ratio fell slightly but remained elevated at 9.7 per cent, as household spending rose and household income fell.

Originally published as Treasurer warns of hit to economy if state borders stay closed