Western Australia and Queensland risk missing out on reviving their tourism industries as they keep their borders closed while Australians who might have been heading to Bali on holidays now choose locally.
The warning from federal attorney general Christian Porter comes as state leaders continue to trade barbs over reopening their borders.
NSW Premier Gladys Berejiklian does not believe it makes sense to keep borders across Australia closed, given the number of new coronavirus infections has stabilised.
But her push for other states to ease border restrictions is falling on deaf ears.
"We are not going to be lectured to by a state that has the highest amount of cases in Australia," Queensland Premier Annastacia Palaszczuk said.
NSW will relax travel rules within the state from June 1, with regional travel allowed for interstate visitors and residents.
But Queensland, WA, SA and the NT are maintaining hardline approaches amid fears of a second wave of infections.
Porter, a former WA state minister, said governments had to balance economic and health implications.
"I understand that it is a balancing exercise, but I think you would have to re-examine that if not on a daily basis, with high regularity, because the situation is evolving," he told reporters.
"Australians who were going to Bali are going to be looking for somewhere else to holiday, there will be serious competition as to whether they go to Margaret River or Yanchep or the Gold Coast.
"If you are too late in opening your borders you are going to miss out."
With the WA and Queensland borders closed, tourist hubs like Margaret River and the Gold Coast will be off limits to interstate holidaymakers.
West Australian Health Minister Roger Cook said his government had firm advice from their chief health officer.
"The interstate borders will stay," he said.
WA's chief health officer Andrew Robertson said it would take at least one month to confirm community spread had been eliminated in affected jurisdictions, and until then opening interstate borders was not recommended.
However, the national health advisory committee hasn't offered any advice either way about domestic borders, and deputy chief medical officer Paul Kelly cautioned states that wanted four clear weeks might be waiting a long time.
Federal Labor MP Patrick Gorman, who represents the electorate of Perth, said his state shouldn't be in the business of stimulating the economy of NSW by opening its borders.
"We don't want to rush these things and anyone who suggests that we should has probably forgotten the lessons of the last couple of months," he told Sky News.
As restrictions ease, the government has launched a new ad campaign urging Australians to "do the three and stay COVID free" - referring to keeping 1.5m away from others, washing hands regularly and downloading the COVIDSafe contact tracing app.
"COVID-19 has not disappeared and we need to ensure all Australians know how to protect themselves and others," deputy chief medical officer Nick Coatsworth said.
"No-one wants to see a second wave of infections."
Just six new cases were reported across Australia on Thursday.
A little more than 500 people are still sick with the virus out of nearly 7100 who have caught it.
The death toll stands at 100.
Australian Associated Press