Selected

The Australian economy and federal budget will be impacted by the Russian invasion of Ukraine, Treasurer Josh Frydenberg says.

Mr Frydenberg is deep in preparations for the budget to be delivered on March 29, ahead of a likely May federal election.

Economic forecasts produced for December's mid-year budget update, including unemployment and growth, will be recast in the budget.

Mr Frydenberg said the fighting in the Ukraine presented a "significant headwind for the global recovery", coming as nations sought to emerge from the two-year shock of the COVID-19 pandemic.

"For Australia, we may be geographically remote from events in the Ukraine and Russia but we will certainly be impacted economically by what transpires," he told ABC TV on Friday.

He said higher fuel prices could be expected, but talked down the potential for fuel excise to be cut in the budget to ease pressure at the bowser.

"The fuel excise is the money that flows directly back into infrastructure spending," he said.

Mr Frydenberg said there were some positive signs in the Australian economy, including the unemployment rate and the reduction in hospitalisation rates from COVID-19.

"(But) the events in Ukraine are a reminder that things can change very quickly and we can't take our peace and prosperity for granted," he said.

With Australia imposing a third tranche of sanctions on Russia on Friday, Mr Frydenberg said it would also be welcome if nations agreed to exclude Moscow from the main international payments network known as SWIFT.

"It would really hurt them and it would effectively remove them from the international financial system."

However, he noted that with Europe getting 40 per cent of its gas from Russia the inability to settle such transactions could have damaging knock-on effects for European nations.

The US would also need to agree, he said, because the dollar was central to cross-border transactions.

© AAP 2022

Photo: Treasurer Josh Frydenberg (AAP Image/Daniel Pockett)

Russian President Vladimir Putin has authorised a military operation in eastern Ukraine in what could be the start of war in Europe over Russia's demands for an end to NATO's eastward expansion.

Shortly after Putin spoke on Thursday, a Reuters witness heard the sound of what appeared to be explosions in the distance from the capital Kyiv.

Explosions also rocked the breakaway eastern Ukrainian city of Donetsk and civilian aircraft were warned away as the United States said a major attack by Russia on its neighbour was imminent.

In comments reported by Russian media, Putin said he had authorised a special military operation in breakaway areas of eastern Ukraine and clashes between Russian and Ukrainian forces were only a matter of time.

Hours after pro-Russian separatists issued a plea to Moscow for help to stop alleged Ukrainian aggression - claims the US dismissed as Russian propaganda - Putin said he had ordered Russian forces to protect the people and demanded Ukrainian forces lay down their arms.

He repeated his position that NATO expansion to include Ukraine was unacceptable.

At the UN Security Council, the US said shortly before Putin's announcement that an invasion was imminent.

"We are here tonight because we believe, along with Ukraine, that a full-scale, further invasion into Ukraine by Russia is imminent," US Ambassador to the United Nations, Linda Thomas-Greenfield, told an emergency meeting.

"Tonight we're seeing the Russians close airspace, move troops into Donbas, and move forces into combat-ready positions. This is a perilous moment."

Ukraine restricted civilian flights in its airspace due to "potential hazard", hours after a conflict zone monitor warned airlines should stop overflights over the risk of an unintended shoot-down or cyber attack.

An El Al flight from Tel Aviv to Toronto and a LOT Polish Airlines flight from Warsaw to Kyiv turned out of Ukraine's airspace around the time a notice was issued, according to flight tracking website FlightRadar24.

Russia also partially closed its airspace in the Rostov flight information region to the east of its border with Ukraine "in order to provide safety" for civil aviation flights, according to its notice to airmen.

Convoys of military equipment including nine tanks were seen moving towards Donetsk earlier on Wednesday from the direction of the Russian border, a Reuters witness reported.

Shelling has intensified since Russian President Vladimir Putin this week recognised two separatist regions as independent and ordered the deployment of what he called peacekeepers, a move the West calls the start of an invasion.

The UN Security Council met to discuss the stand-off on Wednesday night, in the 15-member body's second late night meeting on the crisis this week.

A total of 80 per cent of the Russian soldiers assembled are in a position to launch a full-scale invasion on Ukraine, a senior US defence official said.

Satellite imagery taken on Wednesday showed new deployments in western Russia, many of them within 15km of the border with Ukraine and less than 80km from the Ukrainian city of Kharkiv, a US company Maxar said.

The images showed field deployment, military convoys, artillery and armoured personnel carriers with support equipment and troops. The images could not be independently verified by Reuters.

A 30-day state of emergency in Ukraine restricting the freedom of movement of conscripted reservists, curbing the media and imposing personal document checks, according to a draft text, begins on Thursday.

The Ukrainian government has also announced compulsory military service for all men of fighting age.

While the West has held off the most stringent sanctions measures it could impose, the United States stepped up the pressure by imposing penalties on the firm building the Nord Stream 2 gas pipeline and its corporate officers.

Germany on Tuesday froze approvals for the pipeline, which has been built but was not yet in operation, amid concerns it could allow Moscow to weaponise energy supplies to Europe.

While both sides have said they are still open to diplomacy to resolve the crisis, Ukrainian President Volodymyr Zelenskiy said earlier Moscow had approved an offensive and not replied to an invitation for talks.

"Today I initiated a telephone conversation with the President of the Russian Federation. The result was silence," he said.

Ukrainian government websites, which have experienced outages in recent weeks blamed by Kyiv on cyber attacks, were again offline on Wednesday. Ukraine's parliament, cabinet and foreign ministry websites were affected.

© RAW 2022

Photo: United Nations Secretary General Antonio Guterres (2-L) addresses an emergency meeting on the situation between Ukraine and Russia at United Nations headquarters in New​ York, New York, USA, 23 February 2022. (AAP/EPA/JASON SZENES)

Victoria is pushing for COVID-19 isolation rules to be further eased before winter to avoid a repeat of chaotic scenes during this summer's Omicron wave.

As the state announced it would relax indoor mask rules and scrap its work-from-home advisory, Premier Daniel Andrews revealed he had spoken to NSW counterpart Dominic Perrottet and at national cabinet about easing isolation protocols.

He proposed the changes could be linked to a person's third vaccine doses and potentially operate under an "honesty" policy rather than a mandate.

"This would be another way of trying to encourage people to go get a third dose," Mr Andrews told reporters on Tuesday.

"What we know as we head into winter is we've got to do everything we can to try and have a better outcome when it comes to furloughing."

With tens of thousands Australians forced into seven-day isolation, national cabinet in late December agreed to change the close contact definition to those who spend more than four hours with a confirmed COVID-19 case in a household setting.

A raft of essential workers in Victoria identified as close contacts were later allowed to continue working on site if they were asymptomatic and returned daily negative rapid antigen tests for five days.

Mr Andrews flagged Victoria and NSW could form a unity ticket to expand exemptions to other workers if a national approach isn't brokered.

"It's a big shift. That's something our health team are working on and I know that Dom (Perrottet) and his people are as well," he said.

"I don't know if we'll get a national position on that. But if we can get a consistent position between Victoria and NSW, then we'll absolutely work towards that."

Federal Health Minister Greg Hunt has indicated support for the NSW and Victorian stance, saying the measures had been successful for essential workers.

Meanwhile, Victoria is preparing to repeal some indoor mask mandates and its work-from-home recommendation.

Under the changes from 11.59pm on Friday, masks will no longer be required in offices and most other indoor workplaces but remain mandatory on public transport, in taxis and rideshares, planes and in airports, and at hospitals and care facilities.

Hospitality, retail, court and corrective services workers must also continue to don a mask, on top of primary school students in year 3 and above as well as teachers.

Mr Andrews cited lower vaccination rates among students in years 3 to 6 for them having to keep wearing masks in classes.

"We've got to draw the line somewhere," he said.

Opposition Leader Matthew Guy, a father of kids in grades three and six, said the partial primary school mask mandate didn't make "any sense".

"How's that going to work in ... a grade two/three composite? Half the class is going to wear a mask and half won't," he said.

In addition, the state government confirmed remaining elective surgery caps will lift on Monday and granted a deadline extension for education workers to get their mandated third COVID-19 jab.

Victoria reported a further 14 COVID-related deaths and 6786 new cases on Tuesday, taking the state past one million total infections since the pandemic began.

VICTORIA'S LATEST COVID-19 FIGURES:

* Hospital cases: 345, down 16

* Intensive care cases: 48, down one

* Ventilated cases: eight, down three

* Positive PCR tests: 1744

* Positive rapid tests: 5042

* Active cases: 47,464, up 2186

* Victorians 18 and over with three vaccine doses: 55.9 per cent.

© AAP 2022

Photo: Victorian Premier Daniel Andrews (AAP Image/Joel Carrett)