Victoria lockdown to push Australia unemployment to 10% and cost national economy up to $12bn
The lockdown in Victoria will likely push unemployment in Australia to 10% by the end of the year, and will cost the national economy between $10bn and $12bn, according to new Treasury forecasts.
Scott Morrison revealed the new estimates at a press conference on Thursday and flagged the government was continuing to look at the jobkeeper wages subsidy in the light of the deteriorating outlook.
Treasury had previously estimated the stage three lockdown in Victoria would see real gross domestic product contract by 0.75% in the September quarter. But the additional shutdown in response to the sustained second wave of Covid-19 infections will reduce real GDP by between $7bn and $9bn, shaving 1.75 percentage points off growth in the quarter.
So the combined effect of the initial stage three, plus the new restrictions, is estimated to cost the national economy between $10bn and $12bn, which represents a 2.5% contraction in real GDP in the quarter.
Treasury says the Victorian shutdown will render between 250,000 and 400,000 additional people jobless, so unemployment will peak at close to 10% rather than the 9.25% envisaged in the government’s recent economic statement.
As the Victorian government on Thursday reported 471 new coronavirus infections and another eight deaths, Morrison updated the national economic outlook while unveiling additional support for a range of mental health services in Victoria.
The imposition of public health restrictions on business in Victoria at midnight on Wednesday caused chaos, with major businesses saying they were unable to get clarity from the state government about which workplaces would be affected.
Major companies complained about a lack of access to key decision-makers in the Andrews government, and flagged potential problems with the state regulations affecting supermarkets, warehousing, logistics, construction, tech and finance.
Concessions were made late on Wednesday night to make the regime more workable, which has addressed some of the criticism, but there are concerns about local food shortages, and disruptions to national supply chains as a consequence of the health regulations.
Given the conditions, Morrison said the government was considering “further issues” around the jobseeker wage subsidy. The prime minister characterised the situation in Victoria as “devastating” both for the state economy and the national outlook. “The supply chain impact, the confidence impacts, these things are obviously impacting over states and territories.”
Asked whether it was still possible to reopen the national economy in a Covidsafe way, Morrison said the containment efforts in other states gave him confidence that the economy would rebound in time. He said most of the country had managed to avoid a second wave thus far. “Let’s remember, seven out of eight states and territories are in a fantastic position, a tremendous position.”
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He said people in Victoria who were feeling anxious needed to connect with services to help manage wellbeing. Morrison encouraged people to have open conversations “if you’re feeling vulnerable”.
The prime minister said that in addition to mental health support, families would be able to use their National Disability Insurance Scheme plans “flexibly to support access workers in their homes, particularly in instances where children with a disability can no longer attend education or other day programs”.
