Scott Morrison backs an economy bounce back from heavy Covid-19 blow

Scott Morrison has assured Australians that the economy will bounce back from the ‘heavy blow’ dealt by the latest round of restrictions.

Scott Morrison says ‘the economy will come back to life very, very quickly’ once restrictions are lifted. Picture: Getty Images

Scott Morrison has assured Australians that the economy will bounce back from the “heavy blow” dealt by the latest round of restrictions, as he again fended off suggestions the government should reinstate JobKeeper.

John Edwards, a former Reserve Bank board member and now senior fellow at the Lowy Institute, told The Australian he also believed the economy would recover swiftly once restrictions were lifted.

“We had more difficult conditions last year and they proved no impediment to economic recovery,” he said.

“You only need to look at results from last year to conclude that we’ll continue the upswing when we’ve paid the temporary price of a necessary lockdown.”

Mr Edwards said if lockdowns extended for long enough, then bringing back JobKeeper would be “absolutely correct”, although it was too early to make that call.

“It’s not entirely clear whether people are being laid off,” he said.

“We need to be at this a little longer before a program of that size and universality becomes necessary.”

More than half of the population is now under lockdown, with stay-at-home health orders in effect in Greater Sydney and across Victoria and South Australia as authorities race to contain the highly infectious Delta variant of the Covid-19 virus.

“The economic impact of this, of course, will be a heavy blow,” the Prime Minister said.

“But it’s not a blow we can’t recover from, and how do I know that? Because last year when we faced the same heavy blow, we turned it around and got a million people back into work.”

Mr Morrison said he had met with Reserve Bank governor Phil­ip Lowe earlier in the week, and he had expressed confidence that the pattern of sharp recoveries when restrictions were lifted would be repeated.

“The economy will come back to life very, very quickly,” Mr Morrison said.

“You will see, as we’ve already seen in the past, businesses come back and come back strongly and hopefully pick up some lost ground.”

Following a worse than anticipated $575m plunge in retail trade in June, the Australian Retailers Association on Wednesday became the latest group to call for a return to the national wage subsidy scheme, which ended in March. At a cost of $89bn, it was the most expensive fiscal measure in the country’s history.

Tourism industry groups have also called for JobKeeper to be reintroduced, echoing a consistent demand made by the opposition and national trade union.

Mr Morrison rebuffed those demands, saying the commonwealth’s Covid disaster payment for workers who had lost hours as a result of restrictions was “JobKeeper by another distribution method”.

He said the circumstances today were very different from those at the start of the pandemic, and the Department of Social Services-administered disaster payment scheme provided direct support to affected workers, more quickly. “I’m not trying to solve last year’s problem; that’s what JobKeeper solved,” he said.

“I’m trying to solve the issues and provide the economic support directly to individuals, fast.”

Mr Morrison foreshadowed the potential for more support should the economic toll from restrictions build.

“We will continue to tailor our economic support to meet the challenges we have now,” he said.

NAB chief economist Alan Oster said he anticipated a “pretty significant kickback if and when the lockdowns finish, more in the December quarter than the September quarter”.

He also said bringing back JobKeeper would be “reasonable” if lockdowns continued for an extended period, but said it would be administratively difficult to apply a national wage subsidy scheme to individual states.

Opposition Treasury spokesman Jim Chalmers said the decision to end JobKeeper in March was “looking dumber and dumber by the day”.