King's Birthday holiday needs flexibility

States and territories should be able to choose the date of the King's Birthday public holiday to avoid unnecessary disruption, a key business group says.

States and territories were able to select the date of the Queen's Birthday public holiday, with most choosing to celebrate the late monarch's birthday on a Monday.

Head of the Victorian branch of the Ai Group, Tim Piper, said the business community hoped the date of the King's Birthday holiday would remain flexible.

"If it was to be a preset date, it will be disruptive to have it during the week," Mr Piper told AAP.

He said the national day of mourning to commemorate the Queen, confirmed for Thursday, September 22, would be "very busy and very expensive" for business.

The Victorian public holiday for the AFL grand final is the following Friday (September 23), which means four consecutive days of penalty rates for hospitality businesses and sectors that trade on holidays and weekends.

West Australian businesses are in a similar position, with the Queen's Birthday public holiday on Monday, September 26.

Mr Piper said the one-off holiday to mourn the Queen was appropriate given her 70-year reign but would undoubtedly put businesses under pressure.

Asked about the snap holiday's impact on businesses, Prime Minister Anthony Albanese said it was an appropriate response to an historic occasion.

He said essential services remain open on public holidays and penalty rates apply.

Mr Albanese said medical procedures would go ahead on the public holiday.

"The idea that operations don't occur during public holidays, is of course, not correct," he said.

"Medical procedures are always a priority."

Impact Economics and Policy's Angela Jackson said there were "swings and roundabouts" when it came to the cost of public holidays on the economy, with some sectors benefiting and others hit with extra costs.

"International research indicates there can be small positives due to increased spending as people are not at work and production loss is generally made up," Dr Jackson told AAP.