Economics professor Gigi Foster has drawn severe criticism for saying Australians would have been better off if the economy was never locked down, even if a "very extreme epidemic" had occurred.

Key points: Hundreds of economists have urged the Government to ignore calls to relax coronavirus restrictions in Australia

Hundreds of economists have urged the Government to ignore calls to relax coronavirus restrictions in Australia An open letter said the hit the economy has taken is "far outweighed" by the lives saved by avoiding an unmitigated contagion

An open letter said the hit the economy has taken is "far outweighed" by the lives saved by avoiding an unmitigated contagion It said a second outbreak would also be "extremely damaging to the economy"

Appearing as a panellist on Q&A on Monday night, Professor Foster claimed the lockdown had caused "much suffering and many lives lost".

The co-host of ABC RN podcast The Economists said it was frustrating to hear people talk about the 'economic costs' of the lockdown without also accounting for the impact the lockdown was having on everyone's well-being, and the long-term damage it would cause to society.

But her comments drew scathing criticism from many economists online, and came after hundreds from the profession had signed an open letter to the Morrison Government cautioning it against relaxing social distancing measures too early, saying such a move could cause unnecessary loss of life and impede Australia's economic recovery.

Economists urge Government not to relax restrictions yet

The open letter — released on Monday — has more than 250 signatures and growing, including current Reserve Bank board member Ian Harper, former RBA board member Warwick McKibbin, former Treasury and RBA officials, and prominent academic economists.

It was released as debate heats up about the wisdom or otherwise of relaxing Australia's social distancing measures as the rate of community transmission of COVID-19 falls.

Health officials have said the key to preventing Australia's health system from being overwhelmed by severe coronavirus cases is to keep community transmission of the disease low until a vaccine is discovered, providing one is successfully developed.

However, with the rate of community transmission continuing to trend downwards, there are growing calls for Australia's strict social distancing measures to be relaxed, given the mounting negative economic data.

Economists expect next month's unemployment figures will show a huge spike in job losses, with millions of Australians either having lost their jobs or experiencing reduced hours.

Fresh figures from the ABS, based on ATO payroll data, show that more than 700,000 Australians lost their jobs in the first week after tighter COVID-19 social distancing restrictions were introduced.

Business and consumer sentiment has experienced extreme declines.

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The Grattan Institute think tank has also warned, in a new report, that between 1.9 million and 3.4 million people could be out of work in coming weeks — with the unemployment rate potentially hitting 15 per cent — as a consequence of the COVID-19 shutdown.

"If our estimates are even close to accurate, Australia is facing either the worst or one of the worst economic downturns in its history," the paper warned.

"The longer the downturn goes, and the worse it gets, the less likely the labour market can spring back afterwards."

The Federal Government has signalled it will start easing some restrictions next month, depending on the health situation.

'Potentially better off not having a lockdown'

On Monday, Professor Foster said economists tried to put a value on something like 'well-being' to help them think about multi-faceted problems, such as the consequences of social distancing measures, and she did not think the lockdown was worth it.

"If you do that kind of calculus you realise very quickly that even with a very, very extreme epidemic in Australia we are still potentially better off not having an economic lockdown in the first place, because of the incredible effects that you see not just in the short run but in many, many years to come," she argued.

Her comment drew immediate criticism from ACTU secretary Sally McManus, who was also a panellist on Q&A.

"How can you say that?" Ms McManus said.

"We're avoiding what's happening in the UK, what's happening in the US.

"The idea of having our ICUs overrun and our health workers dying is the most horrible thought."

But Professor Foster defended her views.

"It's horrible either way. The coronavirus has made the world awful, there's absolutely no doubt about that.

"But in order to have a proper discussion about trade-offs, you need to think in terms of lives that you're giving up.

"I know it's invisible lives and it's difficult to imagine that when we aggregate, for example, all of the health effects, all of the mental health effects, all of the effects of people right now who have illnesses other than COVID-19."

But earlier on Monday, hundreds of economists used their open letter to the Morrison Government to caution against lifting social distancing measurers too early, saying it could undermine the good work that has already been done:

"We cannot have a functioning economy unless we first comprehensively address the public health crisis. "The measures put in place in Australia, at the border and within the states and territories, have reduced the number of new infections. "This has put Australia in an enviable position compared to other countries, and we must not squander that success. "We recognise that the measures taken to date have come at a cost to economic activity and jobs, but believe these are far outweighed by the lives saved and the avoided economic damage due to an unmitigated contagion. "We believe that strong fiscal measures are a much better way to offset these economic costs than prematurely loosening restrictions. "It is vital to keep social-distancing measures in place until the number of infections is very low, our testing capacity is expanded well beyond its already comparatively high level, and widespread contact tracing is available. "A second-wave outbreak would be extremely damaging to the economy, in addition to involving tragic and unnecessary loss of life."

Two of the authors of the open letter, former Reserve Bank economist Chris Edmond and former Treasury official Steven Hamilton, took to Twitter to criticise Professor Foster's comments.

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On Monday, New South Wales Premier Gladys Berejiklian said NSW recorded six new cases of the virus over the past 24 hours which, even though low, highlighted how important it was not to relax too much, too soon.

"We are pleased with the trends and remaining consistently low is our challenge," she said.

"Maintaining that low consistency is really important, as is making sure we reduce that community-to-community transmission because that is what can cause a flare-up.

"We have to stay vigilant because when you stop trying hard, it can spread very quickly and that's the last thing we want."

Rory Robertson, a former Reserve Bank economist, has criticised the open letter from economists, saying millions of "jobs, incomes and hopes" will be devastated until restrictions are loosened and that some of the signatories who live overseas seem unaware of key statistics in Australia.

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He said the ICU and ventilator-utilisation rate was less than 2 per cent in Australia, and there have been almost no deaths of anyone under 60 years old