Prime Minister Scott Morrison said the government was committed to protecting jobs in its response to the coronavirus outbreak.Credit:Alex Ellinghausen
"The actions of our government will always put jobs first,will always put those businesses first,will always put that investment first,"he said.
He and Treasurer Josh Frydenberg said any stimulus,likely to be announced within days,would be targeted and scaleable. Sectors most affected include international education,tourism and seafood.
The OECD singled out Australia as one country that should look to protect the economy by loosening its purse strings.
"Additional stimulus measures could be implemented without endangering debt sustainability in a number of economies including Australia and Germany,"it said.
Stimulus options including pulling forward the next tranche of the government's personal income tax cuts,adoption of the Labor Party's investment guarantee policy or assistance to directly affected industries or regions.
Liberal MP Tim Wilson said in 4-6 months many businesses may not be able to meet their obligations and they will need help to stay afloat.
He said the Reserve Bank should consider extending payment terms to banks so that they can be passed onto customers.
“If that doesn’t happen people will lose their jobs and it will cascade from there,” he said.
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Another Liberal MP said tax cuts would be preferable to stimulus,while one cautioned that tax cuts were unlikely to work if “people are scared”.
Nationals MP Barnaby Joyce said “we need to analyse needs,prioritise,cost,then make decisions".
Liberal MP Craig Kelly warned against a sudden cash splash."The worst thing would be reckless,unproductive and wasteful government expenditure,"he said.
Markets and economists believe the government will be aided by the Reserve Bank board,which meets on Tuesday and is expected to cut official interest rates by at least 0.25 percentage points.
That would take cash rate to a new all-time low of 0.5 per cent.
Any cut may have to be accompanied by regulations to tighten lending standards. CoreLogic's measure of home values showed another large lift in February with Sydney's median house price now back over $1 million while in Melbourne it is now $810,000.
NAB chief economist Alan Oster said a rate cut on Tuesday,followed by another next month,were now likely given the hit to the local economy being caused by the virus outbreak.
NAB chief economist Alan Oster says the RBA is likely to cut official interest rates on Tuesday and next month to protect the economy from the coronavirus outbreak.Credit:Bohdan Warchomij
"While we have long factored in further rate cuts given an underperforming economy,the coronavirus is having a large negative effect on China,which is Australia’s largest trading partner,and also in the local economy,with the travel ban curbing tourism and education exports and spill-overs to local spending and disruptions to supply chains,"he said.
"Lower interest rates can help cash flows,lower the exchange rate and potentially boost confidence,but easier fiscal policy will also be required,particularly when both the household sector and business investment are already weak."
The ASX200 suffered its sixth consecutive daily fall,shedding another $15.5 billion in value. It could have been worse,opening $60 billion down before improving after Chinese markets showed a lift in investor spirits.
The sharemarket has now lost more than $225 billion or 11 per cent of its value since it hit a record high on February 20.