New economic analysis conducted by EY commissioned by the Business Council of Australia suggests that, if lockdown restrictions persist as they are for longer than 100 days, the Australian economy could plummet to productivity lows recorded through the worst of last year’s recession.
Business Council chief executive Jennifer Westacott said that, while vaccination “remains our best defence”, a delayed vaccine rollout means that state and territory lockdowns are likely to continue, and the federal government should adopt a nationally consistent approach to mitigate economic fallout.
“Nationally consistent approaches and predictability about how restrictions are triggered, enforced and ultimately lifted will improve confidence in the management of outbreaks, alleviating community and business confusion, uncertainty and anxiety,” Ms Westacott said.
“We must accept there will be a cost in controlling the virus, but we can’t sit back and watch all of the hard-won economic gains of the last 12 months unravel.”
The EY analysis shows that state lockdowns in New South Wales, Victoria and South Australia are costing $2.8 billion a week and impacting some 1.6 million workers. Of that total cost, the NSW lockdown accounts for almost two-thirds, at $257 million every day.
The report suggests that restrictions imposed on the construction sector are having the most damning economic effect.
Construction in Australia is a major contributor to economic activity and employment nationwide, and the analysis shows that adopting “smarter” lockdown strategies to allow construction work to continue could curtail the economic burden of ongoing lockdowns by as much as between $250 million and $500 million each week.
BCA has called on the Morrison government to adopt a raft of measures to dampen the fallout shouldered by businesses and the economy at large as a result of lockdown restrictions.
Among them is a suggestion that lockdowns become localised to affected areas, rather than “automatically” locking down entire states, and providing lockdown stages to remove “the day-to-day guessing game” around rules and decisions.
“Lockdowns have enormous economic and social costs and should be a last resort. But where they are used, we need to move from snap to smarter lockdowns,’’ Ms Westacott said.
“We need to provide more certainty, and stop people worrying day to day where they stand.”
BCA has also called on the federal government to roll out a nationalised version of the JobSaver scheme which was made available to businesses in NSW, and ensure that impacted businesses are eligible for administrative relief and tax deferrals.
“The NSW scheme should be a template for Commonwealth state-funded financial assistance which is targeted, designed to keep people in their jobs, uncapped, has adequate integrity safeguards and only applies during the period of lockdowns,” Ms Westacott said.
“Our economy is not bulletproof. Restrictions are also taking a toll on the mental health and wellbeing of Australians. Smarter lockdowns can reduce both the financial and human costs.”
The paper suggests the federal government also moves to ensure individual support payments are made faster, and that they consider extending support to industries worst affected by the pandemic overall, like the aviation and tourism industries.
Ms Westacott doubled down on the need for a clear roadmap to reopening, which includes an outline of the role of Australian businesses in speeding up the national vaccine rollout.
“Business, government, health officials and the union movement need to work together on an exit plan out of the pandemic; otherwise, we run that risk that Australia falls behind its international competitors,” she said.
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.