The Morrison government and business have reacted angrily to Daniel Andrews’ “cautious pause” on announcing the easing of COVID restrictions in Melbourne, saying it showed the state government lacked faith in its contact tracing.

The delay of the announcement – which Andrews said would only be for a day or two – follows an outbreak in the northern suburbs of Melbourne. Andrews insisted the pause would not stop things opening on or before November 1, as scheduled.

After talking up expectations of a major announcement, the premier hosed them down on Saturday before declaring on Sunday a hold until at least 1,000 test results from the northern metropolitan outbreak were processed.

The federal government said the pause was “a profound disappointment.”

“At some point, you have to move forward and put your public health systems to work in a bid to reclaim the jobs that have been lost, and rescue the livelihoods and peace of mind of so many Victorians who have been affected by the inability to contain the outbreak that led to the second Victorian wave,” Prime Minister Scott Morrison, Treasurer Josh Frydenberg, and Health Minister Greg Hunt said in a statement.

“Victoria’s public health systems are either up to the task of dealing with future outbreaks or they are not. The decision to keep businesses closed suggests that there is still not sufficient confidence within the government that their systems can support reopening.”

Andrews’ delay brought a sharp reaction from his former health minister Jenny Mikakos, who tweeted:

“The set reopening is gradual & safe so any delay is unnecessary. It’s paralysis in decision-making.”

The Australian Industry Group said the state government’s failure to set out guidelines for Melbourne’s reopening was “yet another hammer blow to business confidence”.

“The decision reflects a clear lack of confidence by the government in its own testing and tracing systems,” Ai Group chief executive, Innes Willox, said.

The Business Council of Australia also pointed the finger at Victoria’s health system. “There can only be one explanation for the delays – Victorian authorities do not have confidence in their procedures to manage local outbreaks and we urge them to collaborate with NSW and adopt the NSW system,” BCA chief executive, Jennifer Westacott, said.

The Victorian pause is especially frustrating for the federal government because on Friday all jurisdictions except Western Australia agreed in principle to a new “Framework for National Reopening Australia by Christmas”.

Morrison and his ministers said in their statement that while the federal government “welcomes Victoria’s commitment to the national framework agreed at national cabinet to have Australia open by Christmas, for many Victorian businesses and their workers today’s announcement will mean they will simply not be able to make it”.

The Victorian government delay comes as there were seven new cases reported in the state, six of them linked to cases associated with the northern metropolitan outbreak.

Andrews insisted at his daily press conference the delay in making an announcement was “not a setback”.

“This is not anything other than a cautious pause, to wait to get that important information, to get the results of those tests.”

Andrews said that even if an announcement on easing Melbourne restrictions had been made on Sunday businesses would not have opened before Tuesday night or Wednesday.

The premier did announce some further easing of restrictions for regional Victoria.