Smarter, targeted lockdown would help save economy

Reluctant as treasurers are to canvass the possibility of recessions, Josh Frydenberg was refreshingly frank when Troy Bramston asked him about the nation’s economic growth outlook in an exclusive interview. “Given the lockdowns across our two biggest state economies, NSW and Victoria, it won’t be surprising if the September quarter is negative,” the Treasurer said. “As for the December quarter, it’s too early to tell.” The economy rebounded strongly from previous lockdowns, Mr Frydenberg said. And he has “good reason to expect that it will do so again”. But with lockdowns in three states costing $2.8bn a week – with two-thirds of that amount being lost in NSW and about 1.6 million workers losing their jobs or some of their hours – nothing is certain. “Covid has taught us we never know what’s around the corner,” Mr Frydenberg said. After negative growth in the March and June quarters last year, Australia slipped into recession for the first time since 1990-91. Since then the economy has rebounded strongly, with unemployment falling to an 11-year low of 4.9 per cent.

Economic modelling commissioned by NSW Treasurer Dominic Perrottet has forecast significant job losses if restrictions remain in place into August and September, Yoni Bashan reports. The government requested the modelling for a lockdown of Greater Sydney because of the severity of the current Covid outbreak and an expectation that business and jobs will need further support to survive.

In light of that situation, the Business Council of Australia’s new plan for a “smarter approach to lockdowns” is timely. Modelling by Ernst & Young, commissioned by the BCA, has found that partially reopening construction in Greater Sydney would inject $500m a week back into the NSW economy. As BCA chief executive Jennifer Westacott says, lockdowns carry “enormous economic and social costs and should be a last resort”. But where they are used, she argues, “we need to move from snap to smarter lockdowns” and provide more certainty to stop people worrying day to day about where they stand. However disgraceful, the attendance of some protesters at Saturday’s risky anti-lockdown rally was driven by fears of how to survive and provide for their families.

Mr Perrottet wrote to Mr Frydenberg on Monday seeking restoration of the federal JobSeeker program that helped millions of Australian businesses and workers through the worst of the pandemic last year. On that request, Mr Perrottet is on a unity ticket with ACTU secretary Sally McManus. The federal and state budget bottom lines are deeply in the red. But economists are expecting fresh support measures that will help save jobs to be forthcoming this week.

According to the BCA, NSW’s JobSaver support for businesses, co-funded by the federal government, should be upgraded and applied nationally to work in tandem with federal Covid disaster relief payments for affected workers. The JobSaver weekly payment cap of $10,000 to eligible businesses should be removed, the BCA says, and replaced with more than 40 per cent of a company’s payroll. It also should be expanded to companies of all sizes, with similar turnover tests to JobKeeper.

Apart from calling for financial assistance, the BCA has proposed changes to lockdowns that would minimise their economic impacts. Lockdowns should be confined to localised affected areas rather than automatically locking down entire states, the business lobby argues. And public health orders should reflect increasing vaccination rates and a reduction in the Covid risk, the BCA plan says. A little more than 38 per cent of Australian adults have had one jab, including more than three in four people over 70. And 16.2 per cent of adults are fully vaccinated. As Mr Frydenberg says: “The only pathway to a sustained recovery is through vaccination.”