Frydenberg puts fiscal squeeze on lockdown states

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The federal government’s temporary COVID-19 Disaster Payment will be phased out when the states and territories have achieved the vaccination rates that were agreed upon in the national plan to reopen the economy. The income support payments will be completely withdrawn two weeks after 80% of the eligible population of a given jurisdiction has been fully vaccinated.

States and territories that opt to set higher vaccination targets than the national plan will be required to implement their own income support programs.

Treasurer Josh Frydenberg says the coronavirus cannot be eliminated, so Australia must learn to live with it.

From The Australian:

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“We can’t eliminate the virus. We need to learn to live with it in a Covid-safe way.

“This means we must ease ­restrictions as vaccination rates hit 70-80 per cent in accordance with the plan agreed at national cabinet”…

“Today’s announcement about the winding down of the Covid disaster payment will provide businesses and households with the certainty they need to plan for the future.”

Special commonwealth support for businesses during the Delta lockdowns will also end after vaccination rates reach 80 per cent.

This is a good sensible move by the federal government. The rest of the world is opening up at high vaccination rates. So too will NSW and Victoria.

If the other states want to remain closed until 90% vaccination, that’s fine. But the state governments should provide the support payments.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.