Treasurer Josh Frydenberg says the Morrison government is "favourably disposed" to extending the coronavirus supplement dole payment beyond Christmas.
The government last week extended the JobSeeker supplement beyond its legislated September cut-off until the end of the year, although it will be reduced from $550 to $300, bring the overall dole payment to $800 per fortnight.
However, in last week's economic update, Treasury forecast the unemployment rate to peak at 9.25 per cent by the end of the year, compared with 7.4 per cent now, which would equate to a further 240,000 people being out of a job.
"We're favourably disposed to continuing it, but we've got to do an assessment of where the jobs market is at that time," Mr Frydenberg told ABC's Insider program on Sunday on the outlook for JobSeeker.
"It's about getting the balance right so that there are incentives for people to return to work, and at the same time, providing the safety net."
Business and welfare groups, economists, Labor and the Greens have long argued for an increase in the dole payment - formerly known as Newstart - which paid $40 a day before the COVID-19 outbreak.
Shadow treasurer Jim Chalmers wants to see certainty on the outlook for JobSeeker sooner rather than later.
"Almost two million people will be relying on this payment and need and deserve a bit of certainty about what it is," he told Sky News' Sunday Agenda program
In his much-awaited economic and fiscal update, the treasurer said the deficit for the 2019/20 financial year was expected to be $85.8 billion, rising to $184.5 billion in 2020/21.
AMP Capital chief economist Shane Oliver expects the government will be forced to provide at least a further $20 billion in stimulus between now and the delayed May budget on October 6, and he also thinks revenue will recover more slowly than the government anticipates.
That would see the 2020/21 deficit ballooning to $220 billion.
"Supporting the economy through this tough period is absolutely the right thing to do," Dr Oliver said in a note to clients.
Treasury confirmed the economy is suffering its first recession in nearly 30 years and expects the economy with contract by 0.25 per cent in 2019/20 and by a further 2.5 per cent in the following financial year.
Deloitte Access Economics economist Nicki Hutley concedes forecasting in the current climate is like building a "house on shifting sands" given the uncertainty surrounding the outlook.
"That said, we do have to say that the (government's) numbers are probably rosy," she said.
The assumptions are based on international borders opening on January 1 and Victoria opening up again after the six-week lockdown of Melbourne and the Mitchell Shire.
Victorian Premier Daniel Andrews isn't about to guarantee that restrictions will be lifted after six weeks, saying he doesn't know want the daily infection rates will look like on a day-to-day basis, let alone next month.
Residents in metropolitan Melbourne are subject to stay-at-home orders and can only leave home for essential work, study, exercise or care responsibilities. It is also mandatory to wear masks in public.
People in Australia must stay at least 1.5 metres away from others. Check your state’s restrictions on gathering limits.
If you are experiencing cold or flu symptoms, stay home and arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.
