NSW faced $2.1bn a week coronavirus lockdown loss

Economic modelling showed that a lockdown would cost NSW $2.1bn for every week it was imposed.

NSW Treasurer Dominic Perrottet. Picture: Bianca De Marchi

Health advice flagging the prospect of tighter economic restrictions across Sydney as COVID-19 cases rose last month so alarmed Dominic Perrottet that he commissioned emergency economic modelling showing that a lockdown would cost the state $2.1bn for every week they were imposed.

The NSW Treasurer ordered the modelling from his department in mid-July as discussions gathered pace around restricting business activities in response to rising rates of infection.

The rush to prepare this data sheds light on the often tense dynamic within the Berejiklian government’s “war cabinet”, a leadership team that adjudicates on the state’s COVID-19 policy settings.

The modelling was based upon an assumption of Melbourne-style stage-four restrictions being implemented in Sydney and stage-three restrictions being put in place across rural and regional areas of the state, The Australian has confirmed. At the time, transmissions in Sydney were rising daily, reaching upwards of 20 cases a day because of infections originating from the Crossroads Hotel in southwestern Casula and others in towns near Victoria.

Asked on Wednesday about the modelling he commissioned, Mr Perrottet made his position on restrictions clear: a further tightening could prove catastrophic to businesses.

“Further restrictions on NSW would be a big blow to business; it would have the potential to wipe billions from our bottom line, and that is why we are doing everything we can to contain COVID-19,” he said.

The war cabinet consists of Gladys Berejiklian, Deputy Premier John Barilaro, Mr Perrottet, Health Minister Brad Hazzard and Customer Service Minister Victor Dominello.

Mr Perrottet and Mr Barilaro have established themselves as strong advocates for lesser restrictions, consistently pushing back against recommendations made by NSW Health officials and the state’s Chief Health Officer, Kerry Chant.

The NSW Premier is known to adhere closely to the advice provided by health officials, even though she is cognisant of the economic consequences. Some observers say this has given Dr Chant great influence over the state’s lockdown settings, putting her advice at odds with Treasury advice on its impacts.

Discussions are routinely held around which restrictions could be eased across several vital ­economic sectors; these have previously been described by Mr Perrottet as genuinely constructive.

“That’s the Premier’s predisposition,” said one official familiar with the dynamic surrounding the war cabinet’s discussions.

“She certainly does have a big focus on health, the health consequences of a wrong decision.”

Numerous officials have described disagreements in the room as a product of split opinions over whether to undo existing economic restrictions or maintain them to try extinguish the virus.

The need to maintain business confidence and continuity is centred upon preserving the livelihoods of employers and their employees, although the impact of jobs losses on the state’s financial health is paramount.

Mr Perrottet is preparing to hand down the state’s budget in November, which is expected to forecast revenue loss of up to $20bn and significant budget deficits for the next four years.

As a consequence, funding decisions are already being tightened because of the priorities of the COVID-19 response, which has seen $15bn diverted for support measures.