Casual and self-employed workers in locked-down Victorian businesses will be stood down without the backstop of JobKeeper, as economists said the Morrison government would find it difficult, if not “impossible”, to not restart emergency financial support should the restrictions be extended further.
Directly affected businesses – including restaurants, cafes retail shops, gyms, pubs and cinemas – stand to lose the bulk if not all of their income, equivalent to about $300 million in forgone revenue over the seven days, according to initial IBISWorld estimates that do not even capture the wider economic impacts.
Economists do not believe that a week of restrictions would be enough to spark widespread job losses, but unlike in previous shutdowns, many workers can no longer rely on federal subsidies to replace their lost wages.
ANZ economist Adelaide Timbrell said “JobKeeper was central to the jump in spending at the end of Victoria’s long lockdown, by supporting household incomes during lockdown and allowing businesses to restart with sufficient staff”.
“Its absence during the current lockdown means the economic impact could be much greater.”
Analysis of ABS payroll figures shows wages paid to all Victorian employees dropped by about 8 per cent in a week in early July last year when restrictions were being ramped up again in Melbourne during the second Covid-19 wave.
On Thursday, Commonwealth Bank estimated the hit to national GDP from the latest “circuit breaker” round of restrictions could be as much as $1.3 billion.
Federal finance Minister Simon Birmingham on Friday told Sky News the government would “monitor closely” the progress of the state lockdown.
“There are very significant economic supports still available for Australian businesses in terms of the extended loss carry-back provisions we put in place, the highly discounted small business loans that are available, the targeted support in areas of tourism, of aviation, of entertainment sectors,” Senator Birmingham said.
“But, as always through this pandemic, we have reacted to changed circumstances and we will monitor these ones closely.”
Goldman Sachs chief economist Andrew Boak said were Victoria be forced into something like a repeat of the 100-day lockdown of last year, then it would be “impossible for Canberra not to step in and provide support”.
“The good news is that there is plenty of fiscal room to do that because the federal balance sheet remains strong,” he said.
Mr Boak also noted that the $89 billion cost of the JobKeeper scheme came in well below Treasury’s initial costing, suggesting there is a capacity to spend more should the health situation deteriorate substantially.
He also noted that households and businesses had hundreds of billions of dollars of excess savings, which he described as essentially “unspent stimulus”.
“We’d like to think that businesses would be able to draw on these savings,” he said.