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Tough stage four lockdowns cost the Australian economy $3.2 billion a week, or around $19.1 million an hour, but failure to lockdown early triggers even greater costs, Treasurer Josh Frydenberg has said.
Speaking to mark the release of new vaccination modelling by the Doherty Institute and Treasury, Frydenberg said the high costs of lockdown highlight the importance of Australians getting vaccinated against COVID-19.
“It is the way out of this crisis and it is the way to avoid, in the future, longer, more severe lockdowns,” Frydenberg said.
“The second key finding or outcome from the economic analysis is that the economic cost comes down significantly if governments work quickly to get on top of the virus. This is the Prime Minister's point. Early interventions, short, sharp lockdowns, are the most cost effective way to handle the virus.”
Treasury analysis found that even with 50 per cent of the population vaccinated, failure to lock down in a timely manner still costs five times as much, due to protracted lockdown times.
His words come as Greater Sydney endures its sixth week of lockdown with authorities battling to bring the rampant Delta strain under control.
Once vaccination rates increase, however, the costs of managing an outbreak decrease.
At 50 per cent of the population vaccinated, the costs of managing COVID-19 are $570 million. This decreases to $430 million at 60 per cent vaccination, $200 million at 70 per cent vaccinated and $140 million at 80 per cent vaccinated.
“Until we get to 70 above vaccination rates, the economic imperative is that governments need to move fast to get on top of those cases. If they don't, we see lengthier and more severe lockdowns which have a much more significant economic cost.”
Frydenberg’s words come as Australia confronts a potential second recession in the space of two years. A recession is considered to have occurred when there are two consecutive quarters of negative economic growth.
Australian gross domestic product (GDP) is expected to slide for the July-September quarter due to the Greater Sydney, Victoria and now Queensland lockdowns.
Economists are concerned the December quarter may be dented, while others fear Victoria’s brief lockdown in May could also have damaged the June quarter.