Australian businesses have warned the national economy could take a $400 billion hit if coronavirus restrictions are kept in place for six months.
Modelling by the Business Council of Australia shows the economy could shrink by more than 20 per cent this year.
But if a rapid “V-shaped” approach to recovery is taken, the economy could contract by as little as $197.3 billion.
The business lobby group is campaigning for an early easing of trading restrictions to get the economy going again.
It’s also pushing for changes to company taxes and industrial relations laws.
“The 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 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.”
Australia’s auditor-general has agreed to examine the Morrison government’s economic response to coronavirus.
More than $340 billion in stimulus measures have been announced since the outbreak began.
Labor wrote to the audit office last month, asking that it measure the rollout and ongoing performance of the financial measures.
The opposition raised issues around the unprecedented levels of fast-tracked funding and the extraordinary powers handed to the welfare minister to unilaterally change Centrelink payments.
Auditor-General Grant Hehir said he intended to develop and publish an audit of the government’s response to COVID-19.
“The audit program will focus on providing parliament with transparency and assurance on management of the response,” he wrote in response to the opposition.
Westpac chief economist Bill Evans expects the Australian economy will slowly get back to normal in the second half of 2021 but warns the labour market will take a long time to heal.
Mr Evans forecasts the unemployment rate will hover around six per cent until 2023.
He also expects wages growth to slow to an annual pace of 1.5 per cent by mid-2021, well below the disappointing rate of 2.5 per cent experienced before the crisis.
Mr Evans is urging the Morrison government to pursue pro-growth polices, even if they threaten the country’s AAA credit rating.
He wants personal tax cuts scheduled for 2022 to be brought forward.