Victorian lockdown estimated to cost businesses $2.5 billion a week

The national employer association Ai Group has estimated the Victorian 7-day lockdown will cost the state’s businesses as much as $2.5 billion per week of hard lockdown in lost or deferred consumer spending.

The $2.5 billion loss estimate is based on analysis of ABS data for Victorian household consumption in 2019 and 2020 from the ABS National Accounts.

Ai Group’s Victorian Head Tim Piper said: “At least $1 billion of the $2.5 billion is lost while the other $1.5b is deferred spending and this compounds the impact on Victorian businesses. We don’t know how long it will deferred, or how long consumer-services businesses can hold on without that spending.

“The deferred spending means businesses will not have the income to help them right now when they need it. The losses will pull the rug from under the recovery and undermine business confidence in the State.

“The $2.5 billion estimate only includes the direct costs to businesses and excludes wages lost by workers which, with no support from a JobKeeper package, will add many millions to the full cost .

“Businesses are being forced to throw product away, to refund money, forgo bookings and events and let staff go. It’s a harder hitting lockdown than we have had before.

“We call on the Government to not go ahead with the levy they added to business in the Budget and not add costs to businesses which are already hurting.

“Without support, more people will lose their jobs. Businesses are already very weak after last year and many will not have any savings left or credit to survive another long lockdown.

“We already have businesses considering how best to remove these types of risks. They will be considering spreading risk and therefore source supply to other states or shift manufacturing plants beyond Victoria. This will inevitably hurt the State.

“The State and Federal governments need to consult with industry and cooperate in designing targeted support for businesses in need that recognises the dire straits of some businesses and their employees.

“The immense cost to the State will take years to make up if at all,” Mr Piper said.

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