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The federal government on Saturday announced it would contribute $A5 million ($NZ5.17 million) to researchers at the Walter and Eliza Hall Institute of Medical Research in Melbourne to find a new antibody treatment to fight the virus.
Antibody-based therapies - which are widely used to treat infectious diseases, autoimmune diseases and cancer - block the entry of the virus into cells and stop infection.
Two Covid-19 treatments - Remdesivir and Sotrovimab - have already been approved in Australia and are being used to treat patients across the country, but more are needed, Health Minister Greg Hunt said.
"The considerable expertise of Australia's world-class health and medical researchers is critical for ensuring preparedness and the safety of all Australians and the global community.
"We are backing our best and brightest researchers to drive innovation and contribute to global efforts to control the COVID-19 outbreak."
1599 new community cases in NSW
It comes as number of infections across the country climb to record levels.
Friday marked the a record increase of cases in Australia - more than 1900 - driven largely by 1542 new infections across New South Wales.
On Saturday that number grew, with NSW reporting 1599 new cases and at least eight deaths. They included three men in their 30s, 40s, and 50s, two people in their 70s and two in their 80s. All were unvaccinated and had underlying health conditions.
Some 114,546 vaccination jabs were administered on Thursday, including 26,254 in regional areas. NSW has now exceeded eight million vaccine doses.
Cases are expected to peak in the next week, putting significant strain on hospitals and ambulances.
Meanwhile, thousands of NSW residents in a handful of Covid -free regional areas are enjoying their first day of freedom in four weeks.
Stay-at-home restrictions have lifted for much of the state's northeast and southwest, including the regional centres of Coffs Harbour, Wagga Wagga and Albury.
Masks are mandatory at indoor public venues, but hospitality venues, shops, sporting facilities and beauty services have all been cleared to reopen with restrictions. Up to to five people will be allowed in a home and up to 20 can gather outdoors.
Victoria reports surge
Some 450 new locally acquired cases were reported in Victoria on Saturday - an outbreak high - and five new cases among members of one family in Queensland, where a lockdown could be looming.
"There is no lockdown today," said Premier Annastacia Palaszczuk. But the government may have to take "very quick, fast action" if they see seeding outside the family in the next 24 to 48 hours, she warned.
Despite Sydney's crisis driving hospitalisations higher and leading to another nine deaths, the NSW government is pursuing its freshly revealed reopening strategy.
All fully vaccinated people will be offered a suite of freedoms when double-dose coverage hits 70%.
That's put heat on the Victorian government to follow suit with a road map out of Melbourne's lockdown linked to vaccination rates.
There is a national agreement to reduce the chances of lockdowns at 70% and only use highly targeted restrictions at 80% - a plan some premiers from virus-free states have since distanced themselves from.
Prime Minister Scott Morrison said border restrictions would increasingly amount to "lockouts" when other states opened.
"Lockdowns and lockouts once you get above that 80 percent vaccination rate, they do more harm than good," he told 2GB radio on Friday.
But he ruled out withholding infrastructure or GST funding from Western Australia or other hardline states because it would punish people.
Australia has fully vaccinated 41.1% of its population aged 16 and above, while 66.1% have received a first dose.
Queensland warns of possible lockdown
Australia's third most populous state said on Saturday it may order a snap lockdown after a cluster of Covid-19 cases, as the country posted a record one-day rise in daily infections.
Queensland, home to more than 5 million people, said it had detected five new infections in the past 24 hours after a family tested positive for Covid. The next few days would be critical to see if a lockdown was warranted, authorities said.
"If we start seeing any seeding, then we may have to take very quick, fast action. But at the moment, it’s contained to the family," state Premier Annastacia Palaszczuk said.
The family lives in Brisbane, the state's capital. It was not clear whether a lockdown would be limited to some parts of the state like previous orders.
New South Wales, home to Sydney, is currently under lockdown as are the cities of Melbourne and Canberra, and a lockdown for Queensland would be another blow to Australia's $A2 trillion economy which could slip into a second recession in as many years.
Australia has now recorded nearly 73,000 Covid-19 cases and a death toll of 1084.
- AAP and Reuters