By Colin Packham
SYDNEY (Reuters) - Australian state and territory leaders bickered on Thursday over whether to reopen internal borders, a major step to rejuvenating the country's A$80 billion ($50 billion) domestic tourism industry, as part of measures to ease coronavirus restrictions.
Australian Prime Minister Scott Morrison has said he wants the bulk of all social distancing restrictions removed by July under a three-step plan, as the country continues to report low daily numbers of new COVID-19 infections.
But the implementation of the federal plan is down to the leaders of individual state and territories, who come from opposing political parties and disagree on how safe it is to allow unrestricted movement throughout the country.
New South Wales (NSW) state, the country's most populous, has called for all borders to be opened as a critical step to giving the ailing economy a much needed boost.
"For Australia to really move forward as a nation during this very difficult economic time as well as difficult health time, we do need our borders down," NSW Premier Gladys Berejiklian told Australian Broadcasting Corp. television.
Domestic tourists spent a record A$80.7 billion last year, according to official government data, almost half of all tourism spending.
Deputy Chief Medical Officer Paul Kelly said on Wednesday there was no medical reason to keep borders closed, but many smaller states, which have reported very low numbers of infections and few to no deaths, remain reluctant.
"It's odd, New South Wales is saying don't catch public transport in Sydney ... yet they're saying 'why can't New South Wales people fly to Western Australia," said Western Australia state Premier Mark McGowan.
South Australia Premier Steven Marshall said maintaining the strict border measures meant easing restrictions on local businesses quicker.
"I promise you we can create thousands more jobs in South Australia by keeping our borders closed at the moment," said Marshall.
Queensland state Chief Medical Officer Jeannette Young supported calls to keep borders closed, saying "one case can cause an enormous setback to our plan to open up our communities."
Australia's tourism sector was one of the country's hardest hit by social distancing restrictions, including the closure of its international borders to non-residents and a ban of non-essential domestic travel.
Nearly 600,000 people were in April forced out of work by the coronavirus restrictions. Australia's unemployment rate effectively rose to 9.6%.
In an effort to cushion the "unprecedented" blow to the economy, the Reserve Bank of Australia (RBA) slashed interest rates to 0.25% in an emergency meeting in March and launched an unlimited quantitative easing programme.
The government is also splashing out cash, including a A$130 billion wage subsidy scheme, and still the head of the central bank said he could offer no guarantees.
"Despite all these efforts, the future remains unusually uncertain," RBA Governor Philip Lowe said during opening remarks in an online panel discussion.
"We might get a vaccine, we might get some anti-viral medication, but it's also possible that we don't. So we have an incredible lot riding on the work of the scientists."
Secretary to the Australian Treasury Steven Kennedy on Thursday said unemployment will likely rise through the next few months, with a sharp economic rebound now unlikely.
“I’m not predicting a V-shape recovery. But given the nature of the shock – if the government responds well with its fiscal levers, we needn’t have an L-shaped recovery, which is what people would think when it comes to a depression," Kennedy told Australian lawmakers in Canberra.
Australia has reported just over 7,000 COVID-19 infections, including 100 deaths, well below figures reported by other developed countries.
(Reporting by Colin Packham; editing by Jane Wardell, Michael Perry and Lincoln Feast.)