Seeking a bridge over virus-troubled water

Katina Curtis, AAP Senior Political Writer

Buckle up, we're in for a bumpy ride.

Prime Minister Scott Morrison and the Reserve Bank governor Philip Lowe have a new analogy this week for the mad scrambling to lessen the economic impact of the coronavirus: they're building a bridge.

"Without that bridge, there will be more damage, some of which will be permanent, to the economy and to people's lives," Dr Lowe said after the bank made a rare out-of-cycle cut to interest rates and started pumping cash into banks and the economy.

One suspects that journey might feel more like the movie car chase that ends with a jump off one end of an under-construction bridge, driver and passenger screaming with terror and hope.

In just a week the predictions about the depth of the economic impact have lost their sugar coating.

The unemployment rate might have ticked down in February to 5.1 per cent, but estimates for what will happen over coming months are ugly, now ranging up to seven per cent.

That's almost 240,000 extra people out of work by October, Westpac senior economist Justin Smirk says, verging on a total of a million people unemployed.

Arts and cultural events are being cancelled all over the country, people are shying away from restaurants, cafes and pubs, and air travel is all but shut down.

The borders have been ordered closed to people who aren't Australian citizens or permanent residents, further battering an already limping tourism sector.

And Australia is only at the start of social distancing measures.

The government is poised to announce a massive boost to the $17.6 billion stimulus package it designed just a week ago.

That will include some form of income support for casuals who lose hours or jobs because their industry is shuttering, and for sole traders who weren't eligible for the small business help already announced.

The Reserve Bank and the government have also made $105 billion available to banks to give low-interest loans to small businesses, and the banks have announced a six-month deferral of business loan repayments.

Morrison said earlier in the week that stopping the virus was not as simple as "just turn everything off for two weeks and then just turn it all back on again and it all goes away". Australians have to understand they're in it for the long-haul.

Life as we know it will be upset for somewhere between six and 18 months, on best guesses.

And Smirk cautions the effects will be felt for a long time afterwards.

That includes in people who aren't even looking for jobs yet - research shows people who graduate university during an economic crisis earn less over their entire lifetime than those who finish in fatter times.

The rate of graduate employment took the best part of a decade to return to pre-global financial crisis levels and Smirk expects we'll see a similar trend this time around.

Another unexpected effect will be schools and community organisations feeling the pinch of not being able to run fundraising efforts.

Even before the bans on mass gatherings, schools were cancelling fetes and other fundraising events.

While the funding debates over recent years have focused on the few very rich schools, the vast majority are not flush with cash and rely on these events to raise the money for regular school supplies.

Take one Canberra Catholic primary school, which has spent fundraising efforts over the past decade on buying school reader books (more than once), desks for Year 3 and 4 students, and iPads.

Most traditional fundraising events necessarily involve gathering quite a lot of people, and with parents and community members less likely to venture out of the home for much of this year, the reality is the money probably won't come in.

Smirk notes this is a different kind of crisis to the GFC because it's driven by a single shock, albeit one that is filtering into every part of society.

"As long as we can manage it and manage the level of defaults and bankruptcies and so on, we should be able to come out of it faster."