Katina Curtis, AAP Senior Political Writer
(Australian Associated Press)

Economists have declared the massive wage subsidies to keep Australians in work amid the coronavirus crisis a game-changer that will nearly halve the otherwise expected job losses.

The government announced on Monday it would spend $130 billion over the next six months on $1500 fortnightly payments expected to keep some six million people in jobs.

Tens of thousands of people were thrown out of work as businesses were closed down and heavy restrictions placed on gatherings in a bid to stop the spread of the virus.

Westpac chief economist Bill Evans said without any government help, the restrictions on the economy would likely have led to unemployment spiking to 17 per cent by the end of June.

Instead, he now predicts it will top out at nine per cent.

The (JobKeeper payment) has been a game-changer for employment and the unemployment rate,” he said on Wednesday.

He estimates four in five businesses in the retail, accommodation, restaurant, arts and recreation sectors will access the payments, and two in five other businesses affected by the shutdowns and social distancing policies.

More than 400,000 businesses have registered their interest in the wage subsidy, with the figure expected to double in coming weeks.

Mr Evans predicts the economy will shrink by 8.5 per cent in the June quarter and a further 0.6 per cent in the September quarter, before rebounding by about 5.2 per cent at the end of the year.

Reserve Bank minutes from its board meeting on March 18, when it made a rare out-of-cycle cut to interest rates and boosted the ability of banks to give small business loans, show board members believe there will be a “very material contraction” in the March and June quarters.

The size of the fall in economic activity would depend on the extent of the social distancing requirements, and potential lockdowns, put in place to contain the virus,” the minutes say.

“In time, following containment of COVID-19, the economy is expected to recover, but the timing of this was uncertain.”

The minutes don’t convey how concerned the RBA is about the economic impact, CommSec economists Craig James and Ryan Felsman said.

The board indicated interest rates would be held at 0.25 per cent for quite some time but there was no appetite for cutting further and going into negative territory.

Housing data shows while nationwide home values rose 0.7 per cent in March, that growth was much weaker in the second half of the month as the virus restrictions began to bite.

In-person auctions and open house inspections have been banned and non-essential gatherings restricted to two people.

Despite the expected drop in residential property sales, the wider impact the virus will have on housing values was highly uncertain.

The government’s $320 billion spending program has pushed all talk of a budget surplus off the agenda.

But it insists tax cuts legislated shortly after the 2019 election will still go ahead.

The second stage of the $158 billion income tax plan, delivering a 19 per cent rate to everyone earning less than $45,000, is scheduled to start in July 2022.

The final and most expensive stage, which would lead to everyone earning between $45,000 and $200,000 paying just 30 per cent tax, kicks in from July 2024.

The spending that’s in the system at present is temporary spending,” Senior minister Simon Birmingham told the ABC.

“We’ll take that spending off as we recover and those tax cuts will be delivered to help Australians in the future.”