Sydney's hospitality, entertainment and travel businesses are "devastated" as the city's lockdown is extended by another week with estimates the stay-at-home restrictions on five million people is costing $1 billion a week.
But the federal government has rebuffed the NSW government's plea to revive the JobKeeper subsidy scheme for the city's lockdown-stricken businesses.
"We're not bringing back JobKeeper," federal Treasurer Josh Frydenberg told reporters on Wednesday, confirming he'd received a request from his NSW counterpart Dominic Perrottet.
The Australian reported Mr Perrottet was at loggerheads with his cabinet colleagues over the decision, arguing it was time NSW learned to live with infections in the community.
Meanwhile, ACTU Secretary Sally McManus issued a tweet urging Mr Frydenberg to relent and reinstate JobKeeper.
"The whole point of JobKeeper in 2020 was to save livelihoods during a pandemic when lockdowns occur. Exactly the same situation exists in 2021 with #SydneyLockdown. Reinstate it now - $750/week. Are we "all in this together" or not?"
NSW Labor leader Chris Minns called on the state government to extend existing support for businesses and offer payments to casual workers.
Under the extension announced on Wednesday, pubs, restaurants, gyms, nightclubs, and other venues will remain closed in Greater Sydney, including Wollongong, Shellharbour and the Central Coast, until at least July 16.
The five million plus people living in those areas have been told to stay home for a third week, unless it's necessary to leave.
The news is a "crushing blow" for business owners and their staff, says the state's business peak body, Business NSW.
"The impact on business is devastating, no support package can go the full way to support the whole impact on businesses," Business NSW chief executive Daniel Hunter told AAP.
He said each week of lockdown had an immediate cost of $1 billion to the economy and business, as well as flow-on effects on confidence after the lockdown.
Business NSW welcomed Mr Perrottet's announcement last week of grants of up to $10,000 for small businesses hit by the lockdown.
But Mr Hunter said the support package would need to be "continually" looked at as restrictions are extended.
NSW Premier Gladys Berejiklian on Wednesday refused to say whether that assistance would be ramped up in light of the longer lockdown.
She flagged that Mr Perrottet had been in contact with Mr Frydenberg over the issue and they were "considering all those options".
A Business NSW survey conducted before the extension revealed 48 per cent of its members believe the hit to revenue caused by two weeks of lockdown is equivalent to the impact two months after the first major lockdown last year.
One in five businesses told the peak body they only have enough cashflow to get them through the next month of operations.
"There's a lack of JobKeeper, there's no rental support, and it's just much further reaching than it was before," Mr Hunter said.
The one-week extension will cost affected retailers a further $1 billion in combined sales, estimates the National Retail Association.
Tourism Accommodation Australia chief executive Michael Johnson said the occupancy rates of hotels in Sydney were less than two per cent, while their owners have to continue to pay bills.
"This is another blow to an already dire situation," Mr Johnson said.
"Hotels are losing millions of dollars each week and have little support to keep paying the bills and to keep paying staff."
Meanwhile, the NSW government has been criticised for extending the lockdown beyond Sydney, despite no cases being recorded in some parts of the state.
Kiama MP Gareth Ward said there was no evidence to support the lockdown continuing in the Wollongong and Shellharbour local government areas.
Australian Hotels Association NSW chief executive John Whelan also criticised the persistent restrictions in regional NSW, where masks are mandatory and there are limits on the number of people allowed in venues.