Melbourne Retail, Manufacturing Shut to Contain Virus

(Bloomberg) -- Australia's Victoria state will shut down large parts of its retail and manufacturing sectors for six weeks across the city of Melbourne after a lockdown failed to contain a spike in coronavirus cases.

Premier Daniel Andrews on Monday also announced that construction firms must radically reduce the number of workers on site across the city, while production at meatworks statewide will be cut by a third. Essential services such as banks, supermarkets, pharmacies and petrol stations will remain open, he said.

“This will have a very significant impact” on the economy, Andrews said. “But until we fix the health problem, until we get these case numbers down to a much, much lower level, we simply cannot open the economy up again. So there is significant damage that needs to be done.”

The outbreak in Australia's second-most populous state shows no signs of abating, three weeks after Melbourne's 5 million residents were ordered to stay home except for work, medical care, provisions or exercise. On Sunday, the government said the lockdown would be widened to cover the whole state, while Melbourne was placed under a six-week curfew between 8 p.m. and 5 a.m.

Andrews told reporters Monday the state recorded 429 new cases and 13 more deaths in the past 24 hours.

The tighter restrictions threaten to exacerbate Australia's first recession in almost 30 years. Victoria contributes about one-quarter of gross domestic product, but is now isolated from the rest of the country as other states shutter their borders against the worrying spike in community transmission.

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Australia's Treasurer Josh Frydenberg said earlier Monday the economy faces another significant hit from the extended lockdown and restrictions on workplaces.

“This is a massive kick in the guts to Victorian businesses,” Frydenberg told Sky News. Treasury had previously estimated a six-week Melbourne lockdown would cost the economy A$3.3 billion ($2.4 billion) in the September quarter.

Consumer discretionary stocks extended losses following the announcement.

Prime Minister Scott Morrison said the restrictions were a “devastating blow” to Victorians and announced a new disaster payment of A$1,500 for people who have run out of sick leave and have to self-isolate for 14 days.

Addressing the media in Melbourne, Andrews said grocery and liquor stores, news agencies and post offices would also remain open and urged against panic buying. Retailers that have an on-line, click and collect facility could continue to operate, he said.

People working in administration in the city must also stay home under the restrictions. Warehousing and distribution centers in Melbourne will be limited to no more than two-thirds of the normal workforce.

Large scale public construction projects have already halved their workforce and commercial sites for buildings above three storeys must cap the number of employees at 25%. Only 5 people will be allowed at any one time on residential construction sites. The new measures mean an additional 250,000 workers will be forced to stay home.

Andrews said further announcements would be made in the next few days as consultation with industry groups continues.

Separately, New South Wales -- the nation's most populous state -- recorded another 13 cases Monday. Premier Gladys Berejiklian said she was “strongly encouraging” residents to wear masks in certain situations, such as supermarkets and places of worship.

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“I want to stress it's not compulsory, but it is a strong recommendation,” Berejiklian told reporters. “I can't stress enough how critical the next few weeks are,” adding she was taking extra measures due to the state's geographical proximity to Victoria.

Australia's first lockdown that lasted roughly from March to May was one of the most successful in the world, bringing down cases to just a handful a day nationwide. But security failures at quarantine hotels for returning travelers and poor communication of critical information to migrant communities allowed the virus to roar back in Victoria.

With those unable to work from home not willing to sacrifice wages, and people losing patience with physical isolation, many no longer seem willing to fully follow the rules as the economic and social costs mount.

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