Professor McKibbon, who is on a Treasury advisory group for the coronavirus response, is pushing for HECS-style loans for businesses to replace the government subsidies currently keeping businesses afloat.

He said programs such as the JobKeeper wage subsidy must continue after September to avoid a fiscal cliff, but the funding should shift to loans. Businesses would pay back the money when their revenue hit a certain level through higher taxes, in the same way students pay back their university loans.

That kind of income-contingent loans scheme would give business certainty and have a less damaging impact on the budget, Professor McKibbon said.

"The choice is either a massive blow-out on the budget or something creative on the financing, or don't do anything in which case the economy will crash," he said.

Given Australia's low-debt position before the coronavirus, it could continue with taxpayer subsidies for a little longer, increasing debt to pay for it, but at some point it would have to withdraw the support, with no end to the pandemic until and if a vaccine is found.

"You have to draw it to an end some time," he said. "If you can keep industry going and make it like an insurance policy without a time limit, then it's a much better strategy in my view."

At the end of February, professor McKibbin modelled the impacts of the coronavirus based on previous pandemics. His modelling didn't foresee the scale of the global lockdowns, so had much lower numbers for the economic impact - expecting a loss of between best-case $US27 billion and worst-case $US103 billion to the Australian economy. His estimates now are dramatically worse.

In his "optimistic" scenario, there is only a single wave of disease this year and a more mild outbreak next year, with the 2021 impacts limited to half the impacts in 2020, and a vaccine after that. This means no more infections or deaths in Australia this year, and another 3700 infections and 52 deaths next year.

Even then, Australia's economic losses amount to $US117 billion this year alone. Globally, the fall in gross domestic product amounts to $US14.7 trillion.

Worse-case scenarios see $US127 billion wiped from Australia's economy and $US21.8 trillion from the world economy.

Professor McKibbin said people were underestimating the economic shock, assuming there would be no more waves of disease and no more spikes sparking lockdowns.

He expects more disease waves and lockdowns to keep rolling through, with up to four waves of lesser intensity by the end of 2021 before a vaccine is found, or ongoing recurrence with no vaccine until herd immunity finally puts an end to it.

At the same time, professor McKibbin has downgraded infection and death predictions, based on the course of the pandemic so far.

In February, epidemiological models were predicting 21,000 deaths in Australia and 236,000 in the US. The US is more than halfway to that number but only 104 Australians have died.

Professor McKibbin's models all suggest Australia's deaths are likely to stay under 250 people across two years, other than in the herd immunity route, when almost 900 would die by the end of 2021.

"The really important lesson is you can actually implement policies to prevent the human damage and you can also implement economic policies to minimise costs," he said.

"So from Australia's point-of-view the important issue is what happens in September ... if you think there's going to be more waves, the economic costs are going to keep rising, so there needs to be a contingency plan to keep the economy functioning."