RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

With Victoria one week into its second shutdown, and NSW on high alert for Covid outbreaks, there are new fears about what a second wave could mean for Australia’s recovery.

Today, The Saturday Paper’s chief political Correspondent, Karen Middleton, on the consequences of shutdown mark two.

---

RUBY:

Karen, last Friday, the national cabinet met up to discuss Australia's COVID response. Can you tell me about what was decided?

KAREN:

Yes. National Cabinet agreed to do what Scott Morrison, the prime minister, had foreshadowed...

Archival tape -- Scott Morrison:

“Good afternoon everyone today, I’m joined by…”

KAREN:

...which is to restrict the international arrivals, people coming back to Australia who are Australians who've been overseas.

Archival tape -- Scott Morrison:

“The decision that we took to reduce the number of return travelers to Australia at this time was to ensure that we could put our focus…”

KAREN:

They’ve effectively halved the number of people that they are living back into the country in the wake of the changes in Victoria and the increase in infections.

Archival tape -- Scott Morrison:

“It is a reduction of over 4000 people coming each week and that's spread across those ports of entry...”

KAREN:

They've also set up a new national review into the way quarantine is managed because there's been a lot of criticism of Victoria's handling of quarantine.

Archival tape -- Scott Morrison:

“We also agreed today that there would be a nationwide review of hotel quarantine...”

KAREN:

The fact that they used private security companies rather than police and army and other government employees. They discussed the Victorian situation...

Archival tape -- Scott Morrison:

“The news from Victoria remains very concerning…”

KAREN:

...and they all agreed that each other state and territory jurisdiction would do what it can to help Victoria...

Archival tape -- Scott Morrison:

“They have called for help. They're getting help. But the key here is that all states and territories again reaffirm their support for Victoria in providing whatever resources they needed to deal with the outbreak in Victoria.”

KAREN:

Obviously, there's a national interest in making sure that this doesn't spread.

RUBY:

And you've written before about the dynamic of the national cabinet. What's it like?

KAREN:

Well, obviously I haven't got to sit inside the national cabinet. But having talked to some people about it, I think it was very much a cohesive body all pulling together in the first part of the pandemic. I think we started to see some fraying of the edges of it when easing of restrictions began in some jurisdictions because we saw some states had closed their borders to other states. And there was a bit of frustration between, for example, New South Wales and Queensland that the border was still closed.

And New South Wales Premier, Gladys Berejiklian, was constantly criticizing her Queensland counterpart, Annastacia Palaszczuk, for not opening the border. But once the Victorian situation blew up and the infection rates started to rise in Victoria then had to lock itself down again. You've seen a pulling together with the national cabinet. So we're not seeing the sort of leakage out of there of the political sniping. And I'm told the sniping itself has really died down, that all the other states and territories are taking much more of a ‘there but for the grace of God go I’ attitude to it all and trying to get in to help Victoria rather than allocating blame or seeking to criticize. Maybe that will emerge again later on. But at this point, I think they're seeing themselves as back in crisis mode.

RUBY:

And what is the state of border restrictions, particularly for Victoria?

KAREN:

Instead of the easing of border restrictions. We've seen an increase in border restrictions between New South Wales and Victoria. That border has not been closed for 100 years since the last pandemic, the Spanish flu. And now we're seeing Victorians not allowed to travel into New South Wales and people from New South Wales who've been in Victoria having to go into 14 days of quarantine when they return. All the other states and territories, even if they have been easing their restrictions on entries from other states like Queensland has, are now saying Victorians can't come in.

RUBY:

And how worried is New South Wales about experiencing something similar to what's happening in Victoria right now?

KAREN:

Extremely worried. I mean, those are the two most populous states in the country with the two biggest cities. We're seeing a rapid deterioration in Victoria, and that is worrying the New South Wales premier a lot.

Archival tape -- Gladys Berejiklian:

“What's occurred in Victoria is a wake up call for all of us about how contagious the viruses, how it doesn't take very long for things to escalate quickly…”

KAREN:

We are already seeing outbreaks in New South Wales. We've seen a pub in Casula. We're seeing nursing home outbreaks and other little clusters. And that's a concern, because the minute we start to see widespread community transmission, that's when the virus can easily get it out of control.

Archival tape -- Gladys Berejiklian:

“We should all be more conscious of the fact that there could be elements of community transmission, especially in those border communities that haven't been picked up. And that's why we need to be extremely careful. No matter where we are…”

KAREN:

And in a circumstance where we've started to relax our behavior - in fact, probably too much in terms of the physical distancing rules and just keeping apart from each other and not socialising too much - the virus can spread very easily among people who aren't aware that they're carrying it.

RUBY:

Karen, what have we heard about the economic cost of jurisdictions in Australia shutting down again?

KAREN:

Well, it's massive. Interestingly, a couple of months back when the Treasurer Josh Frydenberg gave an update to the parliament about the economic cost, he warned about the risks of a second wave.

Archival tape -- Josh Frydenberg:

“These improvements in the economy depend on us continuing to follow the health advice.”

KAREN:

And he actually did put some numbers on that.

Archival tape -- Josh Frydenberg:

“Failing to do so could see restrictions reimposed at a loss of more than four billion dollars a week to the economy. For Victoria, the cost would be around a billion dollars per week.”

KAREN:

Now, the whole state hasn't locked down. But the most populous areas of it have. And so we can assume that the best part of a billion dollars a week will be the cost for Victoria. And that is a massive cost to the economy.

Archival tape -- Josh Frydenberg:

“There will be more coronavirus cases and it is vital we remain vigilant. The economic benefits from lifting restrictions will only be realized if we, Australians, continue to follow the health advice and download the CovidSafe app...”

KAREN:

So it's a massively expensive exercise going back into lockdown. And it's a direct threat to a lot of Australian businesses that might have managed to limp through the first lockdown, but are still really on life support. And that's what the government payments are offering at this point. Jobkeeper, Jobseeker and other direct payments and concessions for business. They're keeping businesses afloat. But if they have to lock down again, many of them won't survive.

RUBY:

We'll be back in a moment.

[ADVERTISEMENT]

RUBY:

Karen, we're talking about the impact of a second shutdown. What will the effect be - in other states - of Victoria's lockdown?

KAREN:

Well, the government, having quantified this as likely to cost about six billion dollars for the six week duration of this shutdown for Victoria is also warning that it will have a knock on effect for other states and territories.

Archival tape -- Josh Frydenberg:

“This is a serious impediment to to the recovery, to the speed and the trajectory of the nation's economic recovery, not just Victoria…”

KAREN:

but just anything that is dragging on an economy the size of Victoria's is going to affect the rest of the country. And certainly that's what the treasurer is warning.

Archival tape -- Josh Frydenberg:

“This needs to be a full court press, not just from the Commonwealth government and the Victorian government, but indeed from all governments to support efforts in Victoria…”

KAREN:

There was a study by Deloitte Access Economics that looked at the state of the economy and warned that Victoria's was the worst performing state nationwide already because it had some of the most draconian and strongest lockdown procedures when everybody was in lockdown through the peak of the first wave of this pandemic. And so that hit the economy very hard and now it's deteriorated and is going into lockdown again. So we're seeing playing out in Victoria, what could well happen in the rest of the country if we don't get a handle on the spread of this infection really fast.

RUBY:

And has Josh Frydenberg updated us on what was happening in the economy before this latest shutdown?

KAREN:

Well, the federal treasurer was pointing to the fact that the economy had started to show signs of coming back to life, things like retail sales, consumer confidence, business confidence had started to edge up again, but unemployment was still very low. It's what they call a lagging indicator. It's one of the last things to turn around. It's the most one of the most stubborn things to turn around in an economy. But we had seen signs that things were improving through May and the beginning of June. And now the treasurer is extremely worried that we're going to see that go backwards and maybe even further backwards and maybe even further backwards.

Archival tape -- Josh Frydenberg:

“What happens in Victoria will really make a difference to what happens across the country. And Victoria's success in stemming the tide of new cases will be Australia's success. This is not a time for State of Origin. This is a time for us all to work together.”

KAREN:

And he's also warning that the unemployment rate that we're looking at of, on the face of it, about six to seven percent now is actually a lot worse when you count the number of people who've given up looking for work. Then it's up at around 13 or even 15 percent.

RUBY:

And tell me about the federal government's response. Is it going to provide more stimulus?

KAREN:

Well, yes, the government is saying that it will be extending some of those supports that it has in place already when they are due to expire in September. Particularly Jobkeeper and the Jobseeker payment. But it's not saying exactly how it will do that at this stage. It looks like the job keeper payment won't be geographically focused. They're ruling that out. So it's not likely that they will just say, well, we'll only give it to Victorians, who are struggling. It's more likely that they will go sector by sector and look at those parts of the economy that are improving and those that are still struggling very badly under the pandemic and the ones that are struggling are most likely to get the ongoing income support.

Now, whether it's at exactly the same level as it is now, of the fifteen hundred dollars a fortnight that the Jobkeeper payment is, is questionable, it looks like it might well be a scaled down version, but we don't know how long that support is going to last. And there are still a lot of imponderables. And of course, the government's got three major economic statements, two to draft, the nearest one being in in less than a couple of weeks. And all the figures are shifting around so dramatically because we really can't quantify the infection rates and the impact on the economy yet. So it's a difficult task the government faces in trying to design this ongoing not only economic support, but stimulus for the economy to try and get the economy moving again at a time when they're also telling people not to move around as much.

RUBY:

And what about tax cuts? There's some talk of bringing those forward.

KAREN:

Yes. So we're due to get another round of tax cuts that have already been legislated in 2022. There's now talk that they might be brought forward for that reason, that the government needs to get money circulating in the economy to keep the economy chugging along. You have to have money moving around. People haven't got much money at the moment. There are people who've lost their jobs. There are businesses that have had to shut down and people are nervous. So they're not spending as much and they're also just not going out as much. So there's talk that if you brought those income tax cuts forward and put more money in people's pockets, they might be inclined to spend more and that stimulates the economy. The opposition has said that they're prepared to look at that and talk to the government and be constructive about that process, in support of it.

RUBY:

How worried do you think the prime minister is about all of this? Everything was looking good or at least looking like it was going to get better. And now this.

KAREN:

I think he would be extremely concerned, as would all the premiers and chief ministers looking at the situation. You know, we'd all been congratulating ourselves from the leaders down to you and I that the country had done so well when we look at the rates of infection and illness, hospitalization and even death in Australia, terrible as as they are, when we compare them with other countries, they are very small. You know, we're looking at upwards of 100,000 deaths in the United States and we've had just upwards of 100 here in Australia. Nevertheless, we don't want it to get away from us. And I think those leaders would feel a great sense of responsibility about keeping the economy afloat and keeping people healthy. And we are still seeing those two things inextricably linked.

Once the dire phase of the pandemic is gone. It'll be possible for governments to focus more wholly on the economy. But at the moment, they have to focus on both things. And the sad thing is that one acts against the other, taking steps to protect our health, which involves keeping us apart, keeping us at home, shutting down businesses where we are likely to gather is the thing that undermines and damages the economy at exactly the time when they need to be doing something else. So it's a tough set of decisions the governments face both at the federal level and in the states and territories.

RUBY:

Karen. Thank you so much for your time today.

KAREN:

Thanks, Ruby.

[ADVERTISEMENT]

RUBY:

Also in the news...

There were 270 new cases of coronavirus detected in Victoria yesterday - the state’s third-highest daily increase since the start of the pandemic.

There are now more than 1,800 active cases in the state, with hospitals preparing to care for at least a "couple of hundred" patients.

And the newly released 'Palace letters' have revealed that former governor-general Sir John Kerr sacked the Whitlam government without giving advance notice to the Queen, because "it was better for Her Majesty not to know".

The 211 letters exchanged between Sir John and the palace at the time of the dismissal were released yesterday, after a high court decision.

I’m Ruby Jones, this is 7am, see you tomorrow.