Scott Morrison reveals shocking cost of Victoria’s new lockdown

The PM has revealed a shock new forecast for Australia’s economy as a result of Victoria’s lockdown that’s much higher than initially predicted.

Scott Morrison has revealed a shock new forecast for Australia’s economy in with the official unemployment rate now expected to hit 10 per cent and up to 400,000 people set to lose their jobs as a result of the Victorian lockdown.

The Prime Minister confirmed this morning that the new restrictions are now expected to blow a $9 billion hole in the national economy and the combined impact of the stage three and four lockdowns will be up to $12 billion.

That figure is triple the size of the original stage three lockdown that was forecast cost the national economy $3 billion.

Mr Morrison said Treasury had updated the forecasts with the additional restrictions announced by the Victorian Government tighter than assumed in the earlier estimates that were provided.

“The additional restrictions in Victoria in August and September is estimated to reduce the size of the real economy, real GDP in the September quarter by between $7 billion and $9 billion,’’ he warned during a press conference in Canberra.

“This is a heavy blow, a heavy blow:80 per cent of this economic cost is expected to be in the affected areas of Victoria, of around $6 billion to $7 billion in that state.

“The combined effect of GDP - on GDP of the stage 3 and 4 Victorian restrictions through the September quarter is expected to be in the order of $10 billion to $12 billion detracting some 2.5 per cent from quarterly real GDP growth.”

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About 400,000 people are set to lose their jobs as a result of Victoria’s latest lockdown. Picture: William West / AFP

The Prime Minister said unemployment is now expected to rise higher than the government’s previous forecasts.

“National unemployment rate is now expected to seed the forecast peak of 9.25 per cent and may instead peak closer to 10 per cent,’’ he said.

“But of greater concern, as I have said to you before, the effective unemployment rate. We know the measured headline of unemployment rate does not tell the full story of what’s happening with people’s jobs and I have been very candid with people about that.

“And it is estimated the increase in effective unemployment to be between 250,000 and 400,000. Now, that isn’t necessarily people who have lost their employment but it also includes those whose employment has been reduced to zero hours.”

Mr Morrison said the “real” unemployment rate would likely be much worse.

“But as I said, the effective unemployment rate is the one we’re watching. This should see we estimate, it is estimated, that we would see this effective rate of unemployment which had fallen in the most recent numbers down to just over 11 per cent head north again back to where it had come down from which is in the high 13s,’’ he said.

“So, that is very concerning. That is very troubling but it is not unexpected. In the circumstances these measures will have a very significant cost, and it will impact the recovery path, but the task doesn’t change.

“I know this news is upsetting and disappointing. But, Australians, we have to keep our heads up. Let’s keep our heads up together.”

Prime Minister Scott Morrison made the announcement during a press conference in Canberra today. Picture: NCA NewsWire /Gary Ramage

During the press conference, the Prime Minister raised concerns over the devastating mental health impact of the crisis on all Victorians but particularly the newly unemployed, young mums and parents of disabled children.

“This morning I’m announcing a further $5 million to support Headspace, $2 million to support kids helpline, $2.5 million to support lifeline, and $2.5 million to support beyond. -- Beyond Blue,’’ he said.

“Specifically in Headspace, that is to increase outreach services to young people in the community who are in severe distress. This will particularly focus on Year 11 and Year 12 students, young people who have lost their jobs and tertiary students, the funding will be used to recruit and train additional outreach

workers

Mr Morrison, whose own wife Jenny has spoken with her own struggles with depression as a young mother said the lockdown would be tough for many mothers of young children.

“If you’re aware of someone who may need help, talk to them about that,’’ he said.

“Australians, we’ve got to talk about these issues openly in the middle of this pandemic crisis, and I encourage all Australians to have those open conversations. Be clear, if you’re feeling vulnerable. Let people know. We’re all there to help.”