JobKeeper on agenda ‘if lockdowns persist’

Economist Chris Richardson says the commonwealth will be forced to reinstate the program if the Delta strain persists in the community.

Construction in Sydney has been halted due to the lockdown. Picture: Getty Images

Economist Chris Richardson says the commonwealth will be forced to reinstate the JobKeeper program if a failure to contain the Delta strain of the Covid-19 virus triggers “rolling lockdowns” across the nation.

Sydney is roughly halfway through a five-week lockdown of increasing intensity, while Vic­torians are in the midst of a snap five-day shutdown due to expire on Tuesday night. Given this, the race to vaccinate the bulk of the population by the end of the year has gained more urgency.

AMP chief economist Shane Oliver has estimated that the economic toll running from a spate of lockdowns since May could run as high as $10bn, and he said widening lockdowns could erase the impressive gains made over the past year

“We are one of the few countries that have GDP ahead of where we were before the pandemic, and there is a risk we give up those gains,” Dr Oliver said.

Mr Richardson, a partner at Deloitte Access Economics, said the good news was that the country had experience dealing with the pandemic.

“Delta may be a hyped-up version of the original but we know that lockdowns can bring it under control, and we know that requires support from taxpayers and the Reserve Bank,” he said.

Mr Richardson said “the only question is how long this goes on” – and whether authorities would need to dial up their support.

“If we are a handful of weeks away from NSW being back out of restrictions, and if Victoria succeeds with its short and sharp lockdown, then what we have in terms of commonwealth support is fine,” he said. “But if we do end up in rolling lockdowns, then JobKeeper – modified as necessary – should come back into the frame.”

KPMG chief economist Brendan Rynne disagreed about the need to reinstate JobKeeper, saying there wasn’t the same “huge uncertainty” that existed in the initial phase of the pandemic and justified the national wage subsidy scheme. “We’ve got a vaccine now, we just have supply issues,” Dr Rynne said. “Many parts of the economy have returned back to normal. The circumstances under which JobKeeper was introduced are very different from the circumstances we face today, and the more targeted approach makes sense now.”

Construction workers in NSW will be forced to stay at home following widely reported cases of tradies spreading the virus to work sites in the regions.

Business Council of Australia chief executive Jennifer Westacott said shutting down the big-employing construction sector “will have a massive economic impact because this is a sector with a long tail through the economy”.

“Big projects aren’t a tap that can simply be turned on or off, so we need to start planning now to reopen,” Ms Westacott said.

In response to the health situation in the country’s two most populous states, ANZ head of Australian economics David Plank said the RBA could announce at its next meeting in Aug­ust that it may have to delay the scaling back of its $5bn weekly bond buying program.

High iron ore prices and the pace of job market gains since the May budget – unemployment dropped to 4.9 per cent in June, a year ahead of Treasury forecasts – has meant the commonwealth’s financial position was not in danger of coming in below the conservative official budget estimates made roughly three months ago, Mr Richardson said.