The Australian economy could take a $400 billion hit if restrictions adopted to fight the spread of COVID-19 continue for six months, modelling by the Business Council of Australia shows.
The data released on Monday shows the gross domestic product impact on the economy would be $402.6 billion, or 20.7 per cent, in the calendar year of 2020 if a longer-term “U-shaped” recovery option was implemented.
This compared to a $197.3 billion loss with a one month “V-shaped” recovery plan, or a $278.3 billion loss if a three-month “V-shaped” recovery was implemented, the BCA modelling found.
The federal government has already flagged the restrictions and measures set up around the virus could remain for six months.
The business lobby group, which is campaigning for an early easing of restrictions to get the economy going again, also said Australia must consider whether changes to industrial relations and taxation laws adopted during the crisis should continue.
“Workplace relations system must be simpler and our enterprise bargaining system must work better for employers and employees,” Business Council chief executive Jennifer Westacott said on Monday.
“Regulations which have been suspended during the COVID-19 crisis should be properly considered before they are reinstated.
“We now need to ensure we also have the advantage of an efficient and competitive tax system that actually attracts investment to our shores.”
The lobby group has called on governments to “act on the quick reforms that will get new investment flowing and get started on the bigger, more long term growth plan”.
The modelling shows that the way the economic recovery is managed will be critical to ensuring people who have already lost their jobs do not fall into the trap of long-term unemployment, the BCA said.
Older Australians, and those with “high school or below education” would be worse off.
The BCA research found that before government assistance, 40 per cent of workers who would have lost their jobs were already at the highest risk of falling into long term unemployment.
“These are the same group of people who never found work again after the recession of the 1990s,” Ms Westacott said.
“So, it’s important we do everything we can to make sure they are not left behind.”
Workers in the accommodation, food, retail, construction and manufacturing sectors have been hardest hit by the crisis.