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There will also be no international flights into Melbourne for the next fortnight to help curb the state’s high infection rate.
Victoria recorded 64 new cases of Covid-19 on Tuesday, capping a fortnight of consecutive double-digit increases.
The majority of cases have been from community transmission, prompting Premier Daniel Andrews to order a lockdown of hotspot postcodes from 11.59pm on Wednesday until at least July 29.
Those postcodes are: 3038, 3064, 3047, 3060, 3012, 3032, 3055, 3042, 3021, 3046.
They include the suburbs of Ascot Vale, Broadmeadows, Craigieburn and Fawkner.
Much like earlier stage three restrictions, people in these postcodes will only be able to leave their homes for four reasons: for care or caregiving, to exercise, to purchase food and other essential items, or to go to work or school.
“We are all in this together and this is going to be deeply disruptive for those 10 postcodes. It will be deeply painful and damaging for those businesses involved,” Mr Andrews said on Tuesday.
“This is the public health advice. This is what we must do now. If we do not do this now, then I won’t be locking down 10 postcodes, I will be locking down all postcodes.”
He said police would be actively enforcing the suburban lockdown.
“They will be patrolling throughout these communities and if people are out of their home, then they will be politely asked ‘why are you out of your home’, and if you are out of your home for anything other than a permitted reason, then financial penalties apply,” he said.
He added main transport corridors “in and out of these suburbs will be the subject of booze bus-type checks”.
The businesses and facilities in these areas that have been able to recently reopen, including beauty parlours, gyms, libraries and swimming pools, will again be closed.
Cafes and restaurants will only be open for takeaway and delivery.
All affected businesses will be given a $5000 grant or a payroll tax refund.
Mr Andrews said almost 17,500 tests were performed in the hot spot areas on Monday, bringing the total number of tests in the past three days to more than 93,000.
The suburbs with the highest number of new cases in the state are Broadmeadows, Fawkner and Auburn Vale.
International flights into Victoria will also be diverted to other states and an inquiry will be held into the hotel quarantine process.
Mr Andrews said the flight diversion would last for a fortnight.
“I will have conversations with other state leaders to explain that and to thank them in advance of the extra load that they will carry,” Mr Andrews said.