Australia announced on Thursday A$2bn ($1.4bn) to retrain workers impacted by the coronavirus fallout, as unemployment rose to its highest level in more than two decades. Prime Minister Scott Morrison said the new funding would create more than 300,000 places in training programmes that aimed to funnel graduates and the newly jobless into "growth" sectors.

"It is upsetting for many Australians that the industries and places where they'd been working, they will find it very difficult to find new employment in those sectors," he said. "And so we want to ensure they have the opportunity... to find employment in other sectors, potentially, so they can actually move forward with their own lives."

The unemployment rate rose from 7.1% to 7.4% in June, according to the Australian Bureau of Statistics, bringing the jobless total to almost one million in a country of 25mn. It is the country's highest unemployment rate since 1998 and comes as Australia heads into its first recession in nearly 30 years. The conservative government has spent billions on propping up the economy since a nationwide shutdown that began in March, including wage subsidies for worst-hit businesses and boosting support for welfare recipients. With those subsidies due to expire in September, yesterday's announcement was an early indication of how Morrison plans to follow them up.

Morrison said the Australian economy was "fighting back", with most of the country easing restrictions in recent weeks since curbing the virus spread. But a growing outbreak in Melbourne is casting a pall over economic recovery hopes, with a fresh lockdown imposed on Australia's second-biggest city last week expected to cost the economy A$6bn. Morrison acknowledged a record 317 cases detected in Victoria state over the previous 24 hours was "a big setback", saying he expected July's unemployment figures to be impacted as a result.

Yesterday's new cases pushed the national daily total to its highest level since late March, as the outbreak continues to frustrate Australia's early success in suppressing Covid-19. Seven coronavirus patients have died since Friday, bringing Australia's total fatalities to 113, out of nearly 11,000 infections. Health officials are now focused on restricting the virus to Victoria, which has been effectively sealed off from the rest of the country.

However, a cluster centred on a popular pub in Sydney has been traced back to a man visiting from Melbourne, raising concerns it is already spreading.