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Health Minister Greg Hunt has urged authorities to throw the book at hotel quarantine rule-breakers after allegations security guards slept with guests.
Claims of widespread rorting and misconduct have rocked the security firms responsible for patrolling Melbourne's hotel quarantine regime.
Companies charged taxpayers for shifts never worked, leading to less security workers on duty and higher risk of infections, The Herald Sun reports.
The publication also revealed sources have informed them guards slept with guests while personnel had inadequate personal protective equipment and training.
"If those claims are correct then that is completely and utterly unacceptable," Mr Hunt told Sky News on Thursday.
"We would encourage the Victorian authorities to throw the book - either individuals or if there's any systemic inappropriate action - at those who are responsible for it."
The Victorian government has launched a judicial inquiry into hotel quarantine after Melbourne's infection spike was linked to guards sharing cigarette lighters.
“This inquiry is comprehensive, it is wide-ranging, it focuses on actions of Government, on hotels, on contractors, security, on food suppliers,” Police Minister Lisa Neville told reporters on Thursday.
“It will look at the decisions that have been made or look at the contracts that were in place, the training that was this place, communication arrangements that were in place.”
She revealed the model of hotel quarantine has now changed with the Sheriff running the program while Corrections Victoria supervisors will be assigned to each hotel.
Mr Hunt said there was an unacceptable set of breaches in hotel quarantine.
"Many Victorians are going into lockdown today," he said.
"The hotel quarantine system has been a contributing element to that."
Federal government backs Melbourne lockdowns
More than 300,000 people in hotspot suburbs have been sent back into lockdown until at least July 29 after a 15th consecutive day of double-digit case increases.
People in 10 postcodes will only be allowed to leave home for work, study, essential shopping, exercise or to receive or give care.
Treasurer Josh Frydenberg encouraged the rest of Australia to continue easing restrictions in a bid to get 850,000 people back to work.
He backed Victoria's aggressive measures to stop the virus.
"We need to ensure that where there are these outbreaks, where there are these hotspots, we contain them with tracing, with testing and with effective quarantine," he told Sky News.
NSW has announced Victorians from the 10 postcodes could face six months in jail or fines of up to $11,000 if they try to cross the border.
Queensland is banning all Victorians from entering the state but welcoming other visitors from July 10.
South Australia has shelved plans to reopen its Victorian border but is weighing up a travel deal with NSW and the ACT.
There were 87 new cases across the country on Wednesday, with 73 in Victoria.
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