MATHIAS CORMANN, FINANCE MINISTER: We thought there would be a significant negative effect on the economy early on, but that it would be comparatively manageable. But as the situation evolved rapidly it became very clear that this was going to be quite devastating and that we needed to seriously ramp up our response.

PHILIP LOWE, GOVERNOR, RESERVE BANK OF AUSTRALIA: I thought this was going to be perhaps a once in a lifetime event and it required a truly extraordinary response.

DAVID SPEERS: Three months since the arrival of Covid 19 in Australia, this virus has delivered an extraordinary economic shock.

SALLY MCMANUS, SECRETARY AUSTRALIAN COUNCIL OF TRADE UNIONS: That was a really, really shocking time for all Australians to see those lines outside Centrelink and I think probably up to a million workers were let go within 72 hours

DANIEL ANDREWS, PREMIER OF VICTORIA: Well we had a pretty frank discussion about the fact that a big step needed to be taken, and that's heartbreaking given the number of people that would be out of work. But if we didn't take that step, people would die.

DAVID SPEERS: Hundreds of billions of dollars are now being spent to keep the economy on life support.

JOSH FRYDENBERG, TREASURER: The initial number was $125 billion. When they told me that number, I sort of took a deep breath and I thought that's enormous.



DAVID SPEERS: The Coronavirus is testing Australia's economy and political system like never before. Our governments are trying to save lives while at the same time preventing a complete financial collapse. The critical question - can they do both? Tonight on Four Corners we take you inside the high stakes high stress and highly contentious process as our leaders confront a challenge like no other.

TITLE: THE COST OF CORONAVIRUS

DAVID SPEERS: Covid 19 officially arrived in Australia in late January. At first it was seen as a health crisis but the economic impact soon became clear.

PHILIP LOWE, GOVERNOR, RESERVE BANK OF AUSTRALIA: It'd been late February when I came back from the G20 meeting, and I also went to Europe for an FSB meeting. I came back and I thought this was going to be perhaps a once in a lifetime event, and it required a truly extraordinary response. We were still unsure about how it was going to unfold, but given the virus was occurring in many economies by that point, it was like this was going to be a global event with very significant consequences.

DAVID SPEERS: A travel ban on China devastated the tourism and the university sectors. Qantas and Virgin Airlines began cutting flights and laying off staff.

GLADYS BEREJIKLIAN, PREMIER OF NSW: At that stage the economic impact was not considered because we knew other nations were going through this and the economy was unfortunately collateral damage for what was primarily a health issue. So, that didn't concern me at the time at all. I was just relieved it happened and then increasingly relieved as more of the borders were closed because we knew at least then we were containing to an extent the spread of the virus.

CHRIS RICHARDSON, DELOITTE ACCESS ECONOMICS: Given that the health challenge is coming so fast, the economy has to take second place and to some extent there's an immediate tension there. The things that will hurt our economy are some of the things that will help our defence of our health. That's the way it is. And health has to come first.

MATHAIS CORMANN, FINANCE MINISTER: Well, as this situation evolved and it was clearly evolving rapidly, the economic impact obviously became more and more devastating. And initially the view was that we needed to provide stimulus to support the economy in the March and June quarters.

DAVID SPEERS: BY the second week of March, the government was treating the virus as a pandemic.

The damage to the economy was spreading. The government knew it would only get worse - and unveiled its first stimulus package.

SCOTT MORRISON, PRIME MINISTER: (at news conference) Well good morning everyone. Jobs. Australian's in jobs. This is something our Government has had and continues to have, a vibrant passion for.

DAVID SPEERS: The aim in this first package was to avoid an economic collapse - by putting money in the pockets of pensioners and social security recipients. Employers would be subsidised to keep apprentices on the books.

SCOTT MORRISON (news conference ctd): This package over the course of the Budget and forward estimates will inject some $17.629 billion into the Australian economy in a series of measures which are designed to support cashflow, boost investment and provide immediate demand stimulus to the Australian economy.

DAVID SPEERS: The Coalition had won an election on the promise of a budget surplus - in this moment it was gone .

DAVID SPEERS: (at news conference) Prime Minister, you said you believe this will do the job. Is the job to avoid a recession? And is the advice of Treasury that this is enough to avoid a recession?

SCOTT MORRISON: The job is what I outlined and that is to ensure that we keep Australians in jobs, that we keep businesses in business, and that we ensure the Australian economy is in a position to bounce back strongly on the other side.

DAVID SPEERS: There was still hope the down-turn would be short-lived, that this crisis wouldn't drag the entire economy under.

DAVID SPEERS: (question to the Treasurer) So It's a lot of money going out the door, it means the surplus has gone in this financial year, I mean was that a hard decision for you to make?

JOSH FRYDENBERG, TREASURER: Well it's not a hard decision because we know that the economy needs this support and we sat down with treasury and worked through what were the best options to boost the cash flow, to boost the investment, to support households. This is it.

DAVID SPEERS: ACTU leader Sally McManus was worried the stimulus package wasn't enough to save workers.

SALLY MCMANUS, SECRETARY ACTU: Well, our concerns were in the beginning that first package was that all the measures were targeted at employers mainly, from our perspective, trying to keep workers in jobs. And we worried that that approach, which is a traditional approach of the Liberal Party of the LNP, more of the trickle down approach, if we look after businesses, they therefore would look after their workers. And we were concerned at that point that no money was given directly to workers to encourage jobs being kept, or for that matter, those people who were likely to lose their jobs. So at that point that was our major concern.

DAVID SPEERS: It didn't take long for the government to realise far more support was needed.

MATHIAS CORMANN, FINANCE MINISTER: With the way things have played out since, the level of uncertainty and the hit that the economy has taken, what we thought in our first package might help underpin the economy in the June quarter became comparatively meaningless.

PHILIP LOWE, GOVERNOR RESERVE BANK OF AUSTRALIA: When the first program was announced, the consensus was, well, this would be a serious event, but it would be over fairly soon. We just needed to provide a bit of support for the economy. At the time, it's understandable they didn't go for a bigger package because we didn't appreciate just how big a risk this was to the economy.

ABC Studio Producer: Watching DEL one for the PM, stand by two. Seven, six, five, four, three, two one, rolling

DAVID SPEERS: (tv broadcast) Good evening I'm David Spears in Canberra, in a few minutes the Prime Minister will deliver an address to the nation.

SCOTT MORRISON: Good evening Australia, tonight I want to talk to you about the global coronavirus.

DAVID SPEERS: Scott Morrison was eager to reassure a worried nation.

SCOTT MORRISON (tv broadcast): Now I know many Australians are anxious about this and we do still have a long way to go. But be assured we are taking action and we have a clear plan

DAVID SPEERS: It didn't stop anxieties growing. The number of Covid 19 cases went from 142 to more than double that in just two days.

CHRIS RICHARDSON, DELOITTE ACCESS ECONOMICS: The question was how fast would the virus spread in Australia? And at the time of the initial response as the virus was still travelling relatively slowly here, it looked like a sensible thing. Within days though, as the numbers have exploded and reached the point where those with the virus, those numbers growing by a factor of four every week, we have been absolutely in catch up on health, on the economy and on people's confidence.

DAVID SPEERS: On Friday March 13 the prime minister and premiers gathered in western Sydney for a regular COAG meeting. Coordinating their efforts against the virus dominated the agenda.

GLADYS BEREJIKLIAN, PREMIER OF NSW: Certainly, I think it was a day when all of us as leaders of the nation and leaders of the State realised we had a national crisis on our hands. I think that was fairly apparent and we had to act and we had to act quickly, and different states were at different stages. I guess New South Wales was at a state because we had so many cases already, we were quite concerned and I was quite anxious about what we would do next.

DANIEL ANDREWS, PREMIER OF VICTORIA: That COAG meeting produced the national cabinet, a cabinet of unity, and a cabinet that's absolutely unique, all Australian governments and first ministers working as one government, if you like, uh, it marks it out as one of the best COAG meetings, albeit in some of the worst circumstances that I've ever been part of.

DAVID SPEERS: The formation of the national cabinet was a unifying moment - which brought state and federal Labor and Liberal leaders together - to tackle the crisis. The leaders of the two biggest states - NSW and Victoria - were already moving towards a more extensive shutdown.

DANIEL ANDREWS: Well certainly as we went to COAG on that Friday, I think we're all focused on the fact that we would have to take some big steps and soon because if we left bars and restaurants and pubs open, if we just continued to live life as if the virus wasn't real, then all we would be doing is spreading the virus, and you've only got to look at Europe, look at parts of the United States, if it gets away from you, it's not hundreds that die, it's thousands, perhaps even more than that.

DAVID SPEERS: The prime minister wasn't prepared to go that far.

SCOTT MORRISON, PRIME MINISTER: It has been recommended to us that we move to a position by Monday where we will be advising against organised non essential gatherings of persons of 500 people or greater from Monday

GLADYS BEREJIKLIAN, PREMIER OF NSW: I think in the early days there's always a sentiment of you want to carry on and act as normal, but at the same time, you know there's a serious crisis and I don't think at that time we appreciated exactly what was happening in other parts of the world so quickly.

DANIEL ANDREWS, PREMIER OF VICTORIA: I knew, and I've known all the way along, that whatever decisions we take, on any given day, we're going to finish up adding to that, uh, and that's exactly what's happened. We took the first step, we've taken a second, a third step, that's the nature of this virus. It's so fast moving, uh, you've got to be prepared to revise, you've got to be prepared to add to whatever framework you put in place, and that's what the Prime Minister's led, and, and, full credit to, to him.

DAVID SPEERS: The cancellation of mass gatherings had an immediate and devastating effect.

BRON BATTEN, PERFORMER : On Friday the 13th, every time I picked up my phone, uh, it was a different, um, gig being cancelled. I lost, um, several thousand dollars that day in one go. Everybody that I know had work in festivals, and up to six months of paid employment cancelled on that one day. So, it was, it was pretty awful.

DAVID SPEERS: Bron Batten is a performer and was among the first wave of workers impacted by the new restrictions.

CENTRELINK CONSULTANT (voice on the phone): If you're unable to log in I guess patience is a virtue at the moment because we are inundated.

BRON BATTEN: It, it didn't really feel real. Uh, it took a couple of days for it to, to set in and for us to understand what it means and that, that it was really happening and that all of these arts institutions and festivals and events and, um, galleries, theatres were just gonna shut down and stop operating. It was, it was very hard to understand.

DAVID SPEERS: Friday 13th was a tough day for Tom Dickson too.

TOM DICKSON, SAME DAY PRINTING: Fridays we normally tend to come in to around 20 or 30 inquiries in the morning, at minimum. Um, we came in to five. You know, Friday morning. And so that's when it really started to drive home for me. Friday was, you know, you can hear it now. Where you can hear nothing.

DAVID SPEERS: Tom and his wife Ally own a same day printing company in Melbourne's west.

TOM DICKSON, SAME DAY PRINTING: So you asked the question of when did we really start to feel it. I'll never forget it. Sorry.

DAVID SPEERS: Tom's client base included the hospitality and events industry and most of them had cancelled their orders. it meant he had to lay off long term loyal workers.

DAVID SPEERS: (to Tom) I mean, how difficult was that to-to tell those staff, this is it?

TOM DICKSON: Well, look at me, David. I'm six foot four. I'm tipping the scales at about 120 kilos. I'm, have been in the police force and everything that. I cried. And I'm, I'm fi-... I'm fighting it back now.

DAVID SPEERS: From mass outdoor gatherings to indoor events - the restrictions were steadily tightened. By now two thirds of the Qantas workforce had been stood down and foreigners were told to stay away from Australia.

SCOTT MORRISON, PRIME MINISTER: (March 19 press conference) After further consultation with the National Security Committee this afternoon, tonight we will be resolving to move to a position where a travel ban will be placed on all non-residents, not Australian citizens, coming to Australia. And that will be in place from 9:00 pm tomorrow evening.

MATHIAS CORMANN, FINANCE MINISTER: As it became obvious that we have to take more and more drastic measures at our borders and more and more drastic measures, I guess, to self-inflict harm on the economy in order to protect the health of Australians, that's when we knew this was going to get much worse before it got better.

DAVID SPEERS: The battle to contain the virus and protect workers was quickly re-writing political norms.

SALLY MCMANUS, SECRETARY ACTU: When the prime minister called, I said the trade union movement is prepared to step up and work together with the government of the day to save lives and save jobs. The other thing is that they actually depend on unionised labour at the moment. You think about it, all the nurses, all the hospitals, all the teachers, all the child care workers, all the supply lines, all the media workers, they're all people that have higher unionisation rates. So there's a point now where there's an appreciation that you need to work with the trade union movement of the country if you want to get through this crisis.

DAVID SPEERS: Reserve Bank Governor Philip Lowe convened an emergency meeting on march 18 to decide what action the bank would take.

PHILIP LOWE, GOVERNOR, RESERVE BANK OF AUSTRALIA: Normally when we make our monetary policy decisions, the government doesn't know in advance. They get told when everyone else gets told. But on this occasion I met with the prime minister and the treasurer before our board meeting and gave an outline to them of my thinking, and they've done exactly the same with me. At every step along the way they've outlined their thinking on each of the fiscal packages. There's been incredibly strong coordination. I've also met with the national cabinet a couple of times to talk about the economic outlook and what's going on in financial markets. So there's been an unprecedented level of cooperation.

DAVID SPEERS: The reserve bank cut official interest rates to their lowest level ever and began buying bonds at a record scale to lower the cost of borrowing.

PHILIP LOWE: I didn't think in my term of governor, I'd be buying $40 billion of government bonds, which we've done in the past few weeks and lending over $100 billion to the banking system. So we're all doing things here that we thought we would never have to do.

DAVID SPEERS: Acknowledging the escalating crisis, the government gave up all pretence of business as usual. It deferred the federal budget then delivered a second rescue package. The coalition had now promised to spend more than Labor did during the global financial crisis.

SCOTT MORRISON: (March 22 press conference ) Good morning everyone.

JOSH FRYDENBERG, TREASURER: Today, the government is announcing a second package, $66 billion to cushion the blow to households as a result of the coronavirus and to support businesses and we are enhancing in an unprecedented way Australia's safety net. Anyone eligible for the maximum jobseeker payment will now receive more than $1,100 a fortnight effectively doubling the jobseeker allowance.

DAVID SPEERS: But as the prime minister and treasurer detailed this new rescue package word was spreading of a revolt by the two big states. In a challenge to the fledgling national cabinet process they were openly breaking ranks announcing further shut-downs.

REPORTER: (at press conference) I just got a text message saying we have just broken the news that NSW and Victoria are pushing for a total shutdown of all non essential business so a statewide lockdown and school closures from Tuesday. Would you support that? What is your reaction to that?

SCOTT MORRISON, PRIME MINISTER: My reaction to that is the medical expert panel, the HPPC, is meeting this afternoon. That includes the health officers of all the states and territories. They will form a view on all the range of issues I have asked for them to form a view on, that will be presented to all Premiers and Chief Ministers this afternoon and we will meet as a national cabinet tonight to consider our response.

DAVID SPEERS: The Victorian and NSW premiers issued statements saying they would shut down all non essential business in their states. In Victoria, school holidays would be brought forward.

DAVID SPEERS: (to Daniel Andrews) Why did you release that statement ahead of that night's national cabinet meeting?

DANIEL ANDREWS, PREMIER OF VICTORIA: I made a judgement , and, Gladys made a judgement as well, that this thing needed a big jolt. We needed to take a big step. I was never going to have a situation, David, where in six months time I look back and said, "I wish we'd done more and we'd done it faster." This is life and death, and I think the job that we, and the big step that we took that, that day, and since, has absolutely saved lives, and has positioned us well to, to flatten the curve, to decrease the rate of increase, to see less people getting this virus, and less people dying. My job is to flatten our curve, make our contribution to our national fight against this virus-

DAVID SPEERS: Were you worried that the national cabinet wouldn't go as far as you wanted them to?

DANEIL ANDREWS: Look, it's not a matter of being critical of the national cabinet, it was simply, I, I knew what we needed and, you know, this is not about good manners, or etiquette, or process. If I'm planning for it, I've always made a judgement that I should share it with Victorian people and that's exactly what I did.

GLADYS BEREJIKLIAN, PREMIER OF NSW: Premier Andrews and I did talk and both of us had similar concerns representing the two largest States. We felt we had to act quickly and strongly and I'm glad we did. And again you know the situation at that stage in our States was very different to what was happening in Tasmania or the Northern Territory. And the Federation is great, but it does work on the law of averages, and for New South Wales in particular, it wasn't an average situation. We had the highest population, highest number of cases, most overseas travellers returning. The risk was high in most cases. And I couldn't afford to wait a few more days because it would have got out of control.

DAVID SPEERS: There was now confusion about which business was essential, which would be closed and who would be going to work the next day.

DAVID SPEERS: (to the Prime Minister) Is the National Cabinet process fracturing today?

SCOTT MORRISON: No I don't believe it is David, because I think your expectations of what you think it will do may be overstated.

DAVID SPEERS: Well just some clarity on who goes to work and not.

SCOTT MORRISON: And that will be provided by those states who are going to put those arrangements in place in their states.

DAVID SPEERS: Should they have waited till tonight?

SCOTT MORRISON: Well that is a matter for those individual states and territories but this is not the only matters that we consider.

DAVID SPEERS: The Victorian and NSW premiers put their positions forcefully in the national cabinet meeting.

DAVID SPEERS: (to Daniel Andrews) Was it a frosty meeting?

DANEIL ANDREWS: No, no. Look, there are people who are all around that table, everyone is absolutely focused on doing what has to be done to keep their community and our nation safe. There's economic pain, of course there is, and that's very challenging for all of us.

DAVID SPEERS: Is he, is the Prime Minister been more concerned about protecting those jobs, rather than shutting things down, than others?

DANIEL ANDREWS: No, I would say to you that the Prime Minister, has had, knows now... And I, I, I'm talking to him every single day about all sorts of different things. He understands acutely that we've got to get the health stuff right, we've also got to look after those who've lost their jobs.

GLADYS BEREJIKLIAN, PREMIER OF NSW: Had we not acted quickly, had we not jolted our population, had we not told them how serious this was, I don't think we'd be in the position we are today. And at the time it was difficult, at the time it copped a lot of criticism, but I was happy to wear that because I felt in my heart it was the right thing to do. And it's certainly jolted the population, it caused us to act a bit more quickly, but also to make sure that we stem the tide of the number of cases that were growing in New South Wales and also in Victoria.

DAVID SPEERS: (to Mathias Cormann) Sunday looked confusing. They announced positions that then they backed away from that night after the national cabinet meeting about closing all non-essential business. Did the PM have to read them the riot act?

MATHIAS CORMANN, FINANCE MINISTER: No, I wouldn't characterise it that way. I mean this is an evolving situation. It's very important that the states, territories and the Commonwealth come together in this forum to coordinate the approach nationally. And I think overwhelmingly it's working very well.

DAVID SPEERS: At a late night news conference the prime minister had to clear up the confusion over which businesses would be closed the following day.

SCOTT MORRISON, PRIME MINISTER: (at news conference) Registered and licenced clubs, licenced premises in hotels and pubs. Entertainment venues and cinemas, casinos and nightclubs. Restaurants and cafes will be restricted to take away only. Indoor sporting venues. Places of worship. Enclosed spaces for funerals and things of that nature will have to follow the strict four square meter rule which will be enforced.

DAVID SPEERS: Parliament resumed the next morning.

DAVID SPEERS: (in parliament house) On any normal sitting day this place is bustling with the usual rhythm of MPs and staffers, lobbyists and so on but today its very different. I mean this place is empty, it's also edgy and uncertain. This is of course the heart of our democracy, the place where the big decisions are debated and yes petty games are played. It's the place I've worked for 20 years. But right now who knows when parliament will sit again. It's a sad day.

DAVID SPEERS: The pared back parliament had one task - to pass the rescue package.

SCOTT MORRISON, PRIME MINISTER: (in parliament) We gather today at a time of great challenge for our nation and indeed the world. We are a strong nation and a strong people, but in the months ahead this will put us all to the test.

DAVID SPEERS: The business closures had an immediate and shocking impact. Hundreds of the newly unemployed lined up outside Centrelink - images reminiscent of the great depression.

SALLY MCMANUS: And we saw absolute carnage happen immediately after that announcement in the jobs market. People were being let go left, right and centre. All of a sudden all these employers were letting go and standing down permanent workers as well because somehow they'd got a message that they weren't going to be essential. So a whole lot of factories, a whole lot of workers in a whole lot of industries were all of a sudden without work, stood down. We had to work 24/7 to convince those employers that that's actually not what's been said and you need to bring your workers back.

JOSH FRYDENBERG, TREASURER: Well, the pictures were very graphic of thousands of people joining the Centrelink queues every day and what became abundantly clear was how disrupted people's lives were. How concerned the employees were from losing their jobs and wondering where they would get the money to meet the next bill, to meet their mortgage payments, to provide for their family. Our focus has been on keeping people in a job and then cushioning the blow for those who have lost their job. That continues to be the case.

SENATE PRESIDENT (in parliament): The aye's have it so the motion is passed unamended.

CHRIS RICHARDSON, DELOITTE ACCESS ECONOMICS: I happened to be in Parliament House when the Senate was debating the fastest and biggest surge in government spending that Australia's ever seen. And it was a weird experience with almost no one there and it had a wartime feel to it, but it has to. It genuinely is war what we do now, what we do fast, what we do well, will save a bunch of lives.

DAVID SPEERS : It's been a pivotal couple of days here in Canberra. Just 24 hours after announcing an enormous $66b economic rescue package - another $40b has been added this afternoon after a speedy negotiation with Labor. It's there to be spent as required over the coming months. These are huge sums of money - but no one is batting an eyelid - the pared-back parliament has rubber stamped the lot. In fact the Prime Minister's biggest challenge in the last 24 hours hasn't been the parliament - this single sitting day showed an extraordinary level of unity. That's in stark contrast to the cracks we've just seen in the national cabinet. This is the crucial body right now - and the divisions on show between leaders has only fed the nation's anxiety.

DAVID SPEERS: The states began to close their borders and Australians were told to stay home unless it was absolutely necessary to travel.

GLADYS BEREJIKLIAN, PREMIER OF NSW: Who would have thought in 2020 that some states would choose to close their borders? Now that was an issue that came to national cabinet, which not all of us adopted. New South Wales and Victoria have chosen to keep all of our borders open vis a vis the other states. But the other States took a different stance. And that's another example of why the federation doesn't always work on the law of averages. Every state has different conditions. And when my colleagues in other states had to take those decisions about closing borders, I think they then appreciated why Dan and I had been so strong a few weeks before then in making sure that our states moved quickly to stem the tide of the infection.

MATHIAS CORMANN, FINANCE MINISTER: These are pretty tricky circumstances, and I mean if you severely restrict people's individual freedoms, and essentially their economic opportunities, and their livelihoods, without a clear and obvious reason to do so, I mean, clearly there would be a pretty massive reaction. And I mean in the end, I mean, you try to get the balance right between protecting people's health while making sure that the economy can continue to run at the best possible pace. Because, I mean these are people's livelihoods at stake. We're very, very conscious of that.

DAVID SPEERS: The government had now spent more than $80 billion providing economic relief but it was still not enough.

DAVID SPEERS: (to Tom Dickson) What assistance have you got?

TOM DICKSON, SAME DAY PRINTING: Uh, little at this stage. And I'm not gonna get on any political sides because I think whoever's in the chair at the moment has got an extremely tough, tough job. You know, it's come hard and fast. Now, the support packages rolling out at the moment, we seem to be missing out.

DAVID SPEERS: Would a, would a wage subsidy help?

TOM DICKSON: Wage subsidy would certainly help. I'd keep my team on if I know, knew it wouldn't send me out the back door, right, so the next bit of stimulus coming along with the working capital is a difficult one. Do we borrow money to pay wages to get further in debt to kick the can down the road? You know? And how do we pay that back? We're not ma-, you know, we're a printer, but we're not licenced to print money.

DAVID SPEERS: In the UK Prime Minister Boris Johnson announced a wage subsidy to pay workers directly up to 80% of their salaries if companies kept them on the payroll. The unions wanted a similar scheme here.

SALLY MCMANUS, SECRETARY ACTU: So we had engaged economists to do work for us on what a wage subsidy would look like. We're also having a lot of conversations with our colleagues in other countries because this is one situation where it's a global pandemic, so unions all around the world are facing the same problems.

DAVID SPEERS: The government was resisting the pressure to adopt the British wage subsidy model.

SCOTT MORRISON, PRIME MINISTER: (at press conference) One of the weaknesses of the system that you're advocating for is that it has to build an entirely new payment system for that to be achieved which is never done quickly and is never done well. And that can put at great risk the sort of resources we're trying to get to people.

SALLY MCMANUS, SECRETARY ACTU: I knew how hard it was going to be for the government to move from their position. The prime minister effectively ruled it out, and you know how hard it is once people rule it out, especially if you're the leader. So essentially what we did is we went about building a big alliance of supporters. So that was those employers, so all the big employer groups, the employer representatives. We went back to them and said, "Well, look, you can see the effect of trying to deliver support through the social security system. It isn't going to work. You're going to lose your workers anyway. You think about the loss of productivity, all the time you spent training them up. Your casual workers as well, you've depended upon." And we managed to convince them to move from the position that they had that it was better off delivered through Centrelink to the idea of wage subsidies. So one by one those employer groups came on board.

DAVID SPEERS: Employers also began making the case for a wage subsidy directly to the government.

JOSH FRYDENBERG, TREASURER: When I was speaking to Solomon Lu, that day he had stood down 9,000 workers and he was telling me about the heartbreak of that decision and speaking to the managers who are actually on the

front line passing that information on. He burst out crying on the phone to me. It was just another

moment that really hit home as to how severe the impact was on people who were engaged in standing down thousands of workers.

DAVID SPEERS: Josh Frydenberg commissioned treasury to come up with a costing for a wage subsidy.

JOSH FRYDENBERG: They came back to me with a series of options. One of the options that they put to me had an amount lower than a $1,500 amount.

DAVID SPEERS: How much?

JOSH FRYDENBERG: A few hundred dollars lower than the $1,500 amount. Bearing in mind the huge cost of such a broad based scheme. I said to them on that phone call, this was a break glass moment for the Australian economy. This was a time to give the Australian people a psychological boost and we had to stretch. We had to stretch as far as we could because we wouldn't be able to have two bites at this. We had to put our best foot forward at the first instance, so they did some further work. Then they came back to me with the number. The initial number was $125 billion. When they told me that number, I sort of took a deep breath and I thought that's enormous and obviously the next question was how can we manage such a high level of debt? They were very constructive and obviously very experienced around managing those sort of levels of debt.

DAVID SPEERS: 125 billion. Why then didn't it end up at 130?

JOSH FRYDENBERG: We made some tweaks to the programme and obviously we were ensuring that it was as broadly based as possible. It landed on $130 billion and the prime minister again took a step back when he was told, but he was very much focused on the outcome.

DAVID SPEERS: The government announced its wage subsidy scheme, delivering critical relief to workers and business.

SCOTT MORRISON: (to press conference) Today I announce that we are committing $130 billion over the next 6 months to support the jobs and livelihoods of what we anticipate of being almost six million Australians who will need that lifeline in the months ahead.

DAVID SPEERS: A new allowance worth $1500 a fortnight would be provided to employers to pay their staff.

SCOTT MORRISON, PRIME MINISTER: We will pay employers to pay their employees and make sure they do. To keep them in the businesses that employ them and to ensure they can get ready together to bounce back on the other side.

SALLY MCMANUS, SECRETARY ACTU: It wasn't the type of wage subsidy we were advocating for. We were advocating for one that was 80% of your wage. It was a flat rate. So different to what we were asking for. If we were designing it'd be different. But the big thing was is the government had moved. They'd moved, they'd made that decision. It's obviously a lot of money, and at that point there was relief. We were relieved. We don't want to be the generation that sees the same mass unemployment that our great grandparents did.

PHILLIP LOWE, GOVERNOR RESEVE BANK OF AUSTRALIA: The last number, the job keep programme, 130 billion, it's a huge number. So it wasn't a surprise when it was announced, but I was very pleased the government moved in that direction. I think it's the appropriate thing to do to support businesses through this very difficult period and was exactly what was required. So I know it's a large number, but it was the right thing to do.

DAVID SPEERS: (to Josh Frydenberg) How will this be paid for?

JOSH FRYDENBERG: It is an enormous amount of money and it will be paid for by the issuing of bonds as governments do to raise funds on the global markets.

DAVID SPEERS: It's a lot of debt.

JOSH FRYDENBERG: It's a lot of debt and we pay back in the years ahead, but it's a function of the challenge that we face. But I want to reiterate, Australia has gone into this economic crisis from a position of economic strength and that's given us the financial firepower to respond in a way that many other countries can't.

DAVID SPEERS: (to Philip Lowe) Should we be worried about the levels of debt involved here?

PHILIP LOWE: We shouldn't be worried. It's the right thing to do. We've got a huge shock to national income as economic activity constraints, and the right thing to do in response to that shock is to borrow to help smooth the income shock out through time. We have the capacity to borrow. Interest rates are as low as they've ever been. The Australian government has a long record of a responsible fiscal policy so the budget accounts are in reasonable shape. And if ever there's a time to borrow, now is it. We will have to pay that debt back in the future and that will constrain some of our choices in the future. But right today it's the right thing to do to borrow, to support incomes, to build that bridge to the recovery. And then once the recovery comes, hopefully there's enough national income to repay the debt over time.

DAVID SPEERS: Total support from the federal government and reserve bank is now more than $300 billion. It's an extraordinary level of support and winding back the payments won't be easy.

DAVID SPEEERS: (to Josh Frydenberg) After six months, can the government afford to keep paying this subsidy?

JOSH FRYDENBERG: Well, obviously after the end of the coronavirus, the subsidy will end and people will go back and businesses will go back to usual.

DAVID SPEERS: This might run longer than six months is my point. You're prepared to keep going?

JOSH FRYDENBERG: These are not decisions that we need to take today. These are not scenarios that we need to compliment a contemplate today. What we need to do right now is get as much money out the door as quickly as possible to the people who need it most. We have provided this economic security blanket for millions of Australians.

DAVID SPEERS: (to Chris Richardson) What does history tell us about what's going to happen on the other side?

CHRIS RICHARDSON So the upfront tragedies will all be about our health. The tragedies that we'll be trying to avoid on the other side of this is that longterm unemployment. The lesson out of the recessions Australia had many years ago or recessions around the world more recently, if you lose your job in a recession and you don't get one back in the next two years, you stay on the job scrap heap forever. That's why it will be vital for governments to, not just Federal Government, state governments to keep going hard. As we switch from a health crisis to and that goes, thank God, and it becomes much more an economic crisis, we'll need to keep running hard with our budgets for a while.

DAVID SPEERS: It's 4 weeks since most of the closures and social distancing rules came into force. They've worked in slowing the spread of the virus. But it's feared the efforts to contain Covid 19 will deliver the worst economic downturn since the great depression..

PHILIP LOWE, GOVERNOR, RESERVE BANK OF AUSTRALIA: Well, we're going to have a very significant economic contraction. The magnitude of it is still hard to tell. No one can be sure how long the restrictions and shutdowns are going to stay in place. I think we need to know how long they're going to stay in place before we can say exactly how sharp the economic contraction is going to be. But it will be sharp and there's a very significant loss of income when people aren't working. There's no income being generated. So that's the reality we face.

DAVID SPEERS: The next challenge for Australia's leaders is how long to leave the restrictions in place and what the ultimate cost will be.

GLADYS BEREJIKLIAN, PREMIER OF NSW: We know the virus won't just go away until there's either a cure, a good way of dealing with people who acquire it or there's a vaccine. So, we know we have to live with this for a considerable period of time, 12 to 18 months, depending on who you talk to, but around the 12 month mark. But we also have to accept, which is the most difficult thing to accept, that every time you ease restrictions or tweak them in any way, more people are going to get sick. But it's a question of what your capacity is and how you can manage that. And that's a really difficult question because everybody wants a little bit of relief and our health system can cope with a little bit of relief, but it does mean more people are going to get sick, and that's a really difficult decision to make, but it's one we have to do as leaders.

DAVID SPEERS: (to Philip Lowe) Can we afford six months of these closures?

PHILLIP LOWE: Well, can we afford it? It's not an issue of kind of affording it. The first order question is what do we need to do to contain the virus because we can't go back to normal economic activity until we have reasonable confidence that we contained the virus. So if we need to have restrictions for six months to contain the virus, that's what we need to do. It's very serious, but we will bounce back as the fundamentals are there. And I think next year we can look forward to strong growth in the Australian economy. Again the economy will look slightly different but there's no reason it can't be strong robust and resilient.