CANBERRA (BLOOMBERG) – In Australia’s tropical north, Kate Agrums was hopeful her river-cruise business would get an influx of tourists eager to spot crocodiles when the coronavirus lockdown began easing earlier this month.

But instead of preparing to welcome holidaymakers who typically escape to Queensland from the cooler south at this time of year, she remains fearful for the future as the state government refuses to reopen the shuttered border.

“I’ve got zero bookings going into our peak season,” said Agrums, 43, who’s been forced to lay off six of her eight staff in the tourist town of Port Douglas on the doorstep of the Great Barrier Reef.

“With the border closed, we’re not hopeful that we will get any visitors for months. There’s a lot of businesses here that won’t survive.”

With Australia closed to international visitors, domestic tourism is the only lifeline for an industry that’s been crippled by the virus.

But Queensland and other states such as Western Australia, which have largely contained the virus, maintain it’s too early to allow in visitors from New South Wales and Victoria, the two-most populous states that have been responsible for about 90% of Australia’s new infections in the past two weeks.

The engine room of the economy, the two states have kept their borders open, but are still trying to contain isolated outbreaks, such as recent clusters detected in a Sydney age-care home and a Melbourne meatworks.

The border closures have seen a war of words break out between state and territory leaders, who until recently had put aside political differences as they tackled the crisis in a National Cabinet led by Prime Minister Scott Morrison.

Federal health officials have consistently said that the border closures aren’t necessary and the prime minister himself has called for unrestricted domestic travel under a three-stage plan to reopen the economy by the end of July. Ultimately, it’s an issue for state governments to decide.

After New South Wales Premier Gladys Berejiklian urged her Queensland counterpart Annastacia Palaszczuk to remove restrictions to stop the nation from “falling off an economic cliff,” the response was curt.

“Let’s be very clear – on the border issue we won’t be lectured to by the worst performing state in Australia,” Palaszczuk said May 21.

“There are 33 times the number of active cases in New South Wales compared to Queensland. So, New South Wales needs to get its act together and get its community transmission down and we’ll all be better off.”

She’s since toughened her stance, saying Queensland won’t reopen until Australia records no new cases for at least a month.

The nation has reported just over 7,000 infections and a little over 100 deaths, and has successfully flattened the curve – but is still reporting a handful of new cases each day.

While Palaszczuk will allow people within the state to travel of up to 250km, that’s no consolation to Agrums and her Lady Douglas River Cruise business, based about 1,700km north of the state’s capital Brisbane and its most densely-populated south-east.

The border closure has the travel industry up in arms. According to Simon Westaway, executive director of the Australian Tourism Industry Council, Queensland is a vital tourism cog that’s already lost an estimated A$9 billion due to the lockdown.

“The memo was clear from the prime minister that domestic borders should reopen in July,” he said in an interview. “So there’s obviously now a disconnect between his government and the states.”

Queensland isn’t alone in dashing Morrison’s hopes.

Western Australia, which usually welcomes thousands of visitors at this time of year to destinations such as Broome, and South Australia don’t have a timetable to reopen. The Northern Territory, which is entering its dry season when tourists typically flock to world-famous national parks such as Kakadu, is currently virus free and wants to stay that way.

“I know that there are calls for us to relax our hard borders,” the territory’s Chief Minister Michael Gunner told reporters. “The danger of coronavirus is still out there and we need to keep it out there.”

The southern island state of Tasmania won’t consider reopening until at least July.

James McIntyre, economist for Australia at Bloomberg Economics, said that state border closures and intrastate travel restrictions during the looming peak season would have a devastating impact on many small businesses in the nation’s north.

But once they end, the industry will benefit from Australians seeking to holiday within the country instead of heading overseas, he said.

“The real benefit for the sector will come from re-capturing the A$66.6 billion of spending by Australians on overseas holidays,” he said, “This would more than replace the loss of tourism consumption in Australia from inbound tourists of A$47.4 billion.”

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