Coronavirus restrictions cost economy $4b a week: Frydenberg

Treasury expects the unemployment rate to jump from 5 per cent to 10 per cent in the June quarter, but Mr Frydenberg said it could have been much worse. Unemployment could have hit 15 per cent without the JobKeeper government wage subsidy, he will tell the National Press Club on Tuesday.

Australia had been standing on a cliff as it faced harsher lockdowns and even now the "shadow of the economic shock" would be "both profound and long-lasting".

He is speaking as the government prepares to announce the return of some activities and businesses on Friday.

He says the longer people are unemployed, the harder it is for them to get back into the workforce.

And he points to the early 1990s, when unemployment went up by 5 per cent over three years, the same figure projected for over three months to the end of June.

It took seven years to get back to its pre-crisis level.

"Unemployment went up in the elevator, and went down by the stairs," he will say.

"It underlines the importance of getting people back to work as soon as possible to avoid the long-term economic and social impacts from a high unemployment rate."

It has been speculated that the Coalition, which has now legislated a doubling of the unemployment benefit and free childcare, as well as its near-universal wage subsidy expected to support as many as six million workers, will embrace a bigger role for government post-coronavirus. But Mr Fyrdenberg will squash the idea.

The government must say true to "the values and principles that have guided Coalition reforms in the past", he will tell the press club.

He lists those principles as "encouraging personal responsibility; maximising personal choice; rewarding effort; and risk taking whilst ensuring a safety net which is underpinned by a sense of decency and fairness".

The private actor, not governments, must create jobs. And Australia must guard against a return to industry protectionism.

"There is a risk that protectionist sentiment re-emerges on the other side of the crisis, and for that we must be vigilant," he says. "While we must always safeguard our national interest, we must also recognise the great benefits that have accrued to Australia as a trading nation."

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The economy is forecast to fall $50 billion in the June quarter, with gross domestic product forecast to fall 10 per cent. But that, too, could have been worse.

If Australia had imposed a European-style eight-week hard lockdown, GDP would have taken a 24 per cent impact, equivalent to $120 billion.

"This would have seen enormous stress on our financial system as a result of increased balance sheet impairments, widespread firm closures, higher unemployment and household debt," he will say. "This was the cliff we were standing on."

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