The main danger is fear.
Fear of getting the virus, fear of not being able to get essential supplies, fear of not getting medical attention, fear of not being able to pay the bills.
Fear brings panic and discontent with government. Discontent and fear could breed violence like we've already seen at supermarkets. It could happen in Centrelink queues or against people 'suspected' of being infected.
To successfully handle the situation, the government has to attack all these sources of fear. First it has to flatten off the infection curve otherwise an increasing number of cases could see competition for resources. Doctors and nurses could get sick and this would make matters worse. A total lockdown of nothing essential seems inevitable, including schools. Hit it hard and hit it quick and be prepared to use tough tactics to enforce the isolation. Norman Swan reckons it could be done in a few weeks. I hope he's right.
Just look at Spain. Workers allegedly left nursing homes and the elderly were found dead in their beds. Looks worse then italy at the moment.