Budget to plunge up to $15 billion into red

ANZ economist Cherelle Murphy said the package would at best prevent severe job losses but whether recession could be avoided was still an open question.

The spend was bigger than the first tranche of global financial crisis stimulus but smaller as a share of GDP. And given household indebtedness and the weak economy, the impact might not be as large.

Unemployment rose 2 points in the first 10 months of the global financial crisis, and would not need to rise as far this time to have serious implications for living standards and risks to financial stability, she said.

The use of existing channels to get cash quickly into the economy was sensible, and "if seamless ... should avoid the hold-ups we saw with bushfire related recovery and the poor execution of post-GFC measures such as roof insulation", she said.

The ANZ predicts the $5 billion cash surplus in this year's budget would become a deficit of $10 to 15 billion.

Deloitte Access Economics economist Chris Richardson predicted a budget deficit of $14 billion.

"We're going from zero to minus 14 in a matter of months, that's big but it's also entirely appropriate," he said.

The US stimulus package was only one-third the size of Australia's, relative to the size of the two economies, but Australia's budget was healthy enough to absorb it.

"We know how big the bazooka is which is being fired at the problem. What we don't know is how big the problem is and we won't for a while," he said. "What's truly not clear is whether the virus takes the path it took in Taiwan or Italy .There's benign and there's severe."

Commonwealth Bank senior economist Gareth Aird said the size of Mr Morrison's announcement would have "a material positive impact on the Australian economy, particularly in the near term, but it will not entirely prevent the inevitable economic slowdown due to coronavirus".

He predicted the Reserve Bank would cut rates again in April to 0.25 per cent, and take other measures.

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The stimulus spend would cost the budget $10.9 billion directly this financial year.

"The budget is back in the red and borrowing will lift. But that is ok," he said. "It is a short term budgetary cost to support the economy through a difficult period."

The Electrical Trades Union described the apprentice wages subsidy as a hand-out to businesses, and said the money should go instead to the apprentices, who earned as little as $12 an hour.

But Steve Wyborn, chief operating officer for Serena Russo Apprenticeships which administers all apprenticeships in the ACT, said while detailed guidelines were still be drawn up, the payment would be made in arrears and evidence would be required to show the apprentice had been employed.

"I think it's really smart policy," he said. "It's keeping those apprentices employed, and we're going to need them both for an economic recovery and a bushfire recovery, and it's very heavily targeted at youth employment.

"We've seen a few of these and this one's definitely one of the best."

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