Melbourne’s six-week lockdown will do significant damage to Australia, draining an estimated $6billion from the national economy and hurting an already fragile employment market.
Banking giant Westpac now fears unemployment will surge unless the federal government doubles the nation’s debt levels and spends another $24billion to extend the JobKeeper wage subsidies until June 2021.
Victoria recorded 134 new cases of COVID-19 overnight – Australia’s second highest local transmission rate since the coronavirus pandemic began.
Labor Premier Daniel Andrews on Tuesday announced that from tomorrow, more than five million residents in greater Melbourne and the Mitchell shire to its north will be be placed under another lockdown for six weeks.
Melbourne-based federal Labor MP Peter Khalil said the measure would be devastating.
”The small business owners that I’ve spoken to are really obviously quite anxious, frustrated,’ he told Sky News.
‘They were all getting ready – the pubs, the restaurants, the cafes – to open up again to larger numbers, now they’ve got to contract again to just takeaway. Some of them will really struggle to survive.’
IMF chief economist Alex Joiner estimated the Melbourne lockdowns would cost the Victorian economy more than $1billion a week, further delaying the national economic recovery.
‘It’s small businesses, who employ so many people, that will need ongoing support most as Victoria locks down and it will be incumbent on the federal government to support those that become dislocated from the labour market,’ he tweeted on Wednesday.
Melbourne makes up more than 20 per cent of the Australian economy, by population alone.
Victoria recorded 134 new cases of COVID-19 overnight – Australia’s second highest local transmission rate since the coronavirus pandemic began. Picture are police speaking to drivers in Melbourne on July 7, 2020
The whole of Melbourne and the Mitchell Shire north of the city will be placed back into lock down for six weeks from 11.59pm on Wednesday after Victoria recorded 191 new cases of coronavirus – its worst figure yet, followed by 134 overnight on Wednesday. Pictured: A map showing the suburbs in lockdown
Westpac chief economist Bill Evans said the Melbourne lockdowns would affect other parts of the Australian economy by hampering interstate travel and hitting regional towns in New South Wales and Victoria.
Local cases of community transmission have soared in the within Melbourne
‘We’re back in the garden today in Melbourne, Victoria and of course the situation isn’t looking particularly encouraging for Melbourne at the moment,’ he said.
Mr Evans is now predicting the federal government will have to spend another $24billion extending JobKeeper wage subsidies until June 2021.
‘Those industries that are going to be affected by the extension of social distancing, by the extension of foreign travel restrictions will get an extension in JobKeeper,’ he said.
The $70billion JobKeeper program was due to end on September 27, ending the access of 3.3million workers to $1,500 a fortnight until shuttered businesses can reopen.
Mr Evans said one million of those workers would need to continue receiving JobKeeper benefits until Christmas.
IFM chief economist Alex Joiner estimated the Melbourne lockdowns would cost the Victorian economy more than $1billion a week, further delaying the national economic recovery. Pictured is an empty bench at Broadmeadows, one of more than 40 Melbourne suburbs locked down last week
In the New Year, 500,000 of them would need to stay on JobKeeper for another six months, including 315,000 in hospitality, 125,000 in the arts and 50,000 in aviation.
Westpac is now forecasting a budget deficit of $240billion for 2020-21, as the government brought forward $15billion worth of tax cuts planned for July 2022.
Australia’s net debt will climb to 37 per cent of gross domestic product, up from 19 per cent of GDP in June 2019.
‘We are not unique in the way we are dealing with this problem – our numbers are broadly comparable with the rest of the world but nevertheless extraordinarily eye-popping numbers indeed,’ Mr Evans said.
Westpac also called for the JobSeeker unemployment benefit – the standard ‘dole’ – to be permanently raised when the $550 coronavirus supplement, on top of the usual $565.70 fortnightly payment, ends on September 24.
The bank is advocating a $284.30 a fortnight increase that would take JobSeeker to $850, marking the first rise in the dole beyond inflation since 1994.
This would cost $11billion a year to the budget.