Capital lockdowns to deliver $2.5b hit as business takes another blow

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The lockdowns of Sydney, Perth and Brisbane are likely to cost the economy $2.5 billion with businesses demanding the federal government dramatically ramp up vaccine deliveries or face the demise of countless mum-and-dad operations across the country.

Business Council of Australia chief executive officer Jennifer Westacott said the cumulative impact of ongoing shutdowns or border closures was being particularly felt by smaller operations.

Sydney CBD in lockdown … economists estimate the lockdowns across Sydney, Perth and Brisbane will cost the economy $2.5 billion.Credit:Peter Rae

Sydney went into a 14-day lockdown last week while Perth is one day into a four-day lockdown. The Queensland government on Tuesday ordered a snap three-day lockdown that will cover the state’s south-east, Townsville and Magnetic Island.

Ms Westacott said businesses needed certainty when it came to employing staff, setting opening hours and even buying stock and equipment. The continuing use of lockdowns was delivering a cumulative blow to the small businesses that would force many to close.

“The idea you can keep going like this for another two years is very difficult for business to get their mind around,” she said.

Ms Westacott said the federal government should fast-track the vaccine rollout, using businesses that in many cases deliver flu vaccines to their staff already.

There also had to be a reason for Australians to get vaccinated, such as being able to travel overseas or across borders.

“There’s got to be a reward for being vaccinated, there’s got to be a benefit for being vaccinated,” she said.

The Australian Retailers Association said the different approaches by states to lockdowns was an increasing problem, especially for those firms which operated across jurisdictions.

Association chief executive officer Paul Zahra said it was time for nationally consistent lockdown rules.

“Currently, confusion reigns whenever restrictions are announced. This adds time and further cost for retailers and food operators on top of the heavy impact they already wear on lost retail trade. A year and a half into the pandemic, there’s no excuse for this confusion,” he said.

Australian Retailers Association CEO Paul Zahra says nationally consistent lockdown rules are now required.Credit:Alex Ellinghausen

AMP Capital chief economist Shane Oliver said the cumulative cost of the current lockdowns would be at least $2.5 billion.

He said once the lockdowns were over, the economy would rebound.

“While we estimate a hit to economic activity from the Sydney lockdown alone of about $2 billion if it’s contained to two weeks, much of that will likely be recouped upon reopening,” he said.

“Of course, the risk is greater now that we are dealing with the more virulent Delta variant, but so too was Victoria in late May.”

Research from ANZ economists suggests there will be a sharp recovery once the lockdowns conclude.

They found Melbourne spending has more than bounced back from its May 28 to June 10 lockdown.

Economists Adelaide Timbrell and Felicity Emmett said they estimated the Sydney lockdown would trigger a fall of between 30 and 40 per cent in spending, but it was unlikely to have a long-term impact.

“Melbourne residents seem to have made up for lost time at the shops, with very strong non-food retail spending in Melbourne in the two weeks after lockdown,” they said.

“This signals that physical movement restrictions – and not economic caution – were behind the fall in spending during lockdowns.”

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