Treasury secretary Stephen Kennedy says the end of JobKeeper may not be the "cliff" it seems, as the department considers extending the wage subsidy for certain industries as part of its review.
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The department was ironing out a number of transition issues expected to arise when the six-month subsidy ends in September, Dr Kennedy told a parliamentary committee examining Australia's response to COVID-19 on Thursday.
Around $8.1 billion had been paid out under the scheme so far. Comparatively, around $5.3 billion had gone out under the JobSeeker supplement.
Dr Kennedy said how well different sectors of the economy were recovering was a "very relevant consideration" for the review.
However, there would be "some tricks" to making a tapered scheme work.
"As soon as you get into targeting either by a threshold or by a sector, then you have a lot of messiness around the edges, you know, which sectors are in, which sectors are out, just exactly how things apply," Dr Kennedy said.
Dr Kennedy also said the looming end of JobKeeper and other fiscal measures was "not quite the cliff they look like".
Cash advances would sit on balance sheets for a while, allowing businesses to keep going and stimulus to keep flowing.
The full impact of the stimulus measures would build over the next four to six quarters, Dr Kennedy said.
However there would be other impacts come September.
"For example, the banking sector will have to think very carefully about all those people it's deferred payments for for six months," Dr Kennedy said.
He also warned Australia's unemployment rate would continue to rise as the economy reopened.
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Australian Bureau of Statistics data showed nearly 600,000 jobs were lost in April.
The unemployment rate rose by 1 point to 6.2 per cent.
However, Dr Kennedy said there were 489,000 people who withdrew from the labour force in April and who were not qualified as unemployed.
Under the statistical rules used by the ABS, people needed to be looking and available for work to be classified as unemployed.
As the reference week fell during a period of heightened social distancing restrictions, respondents were not able to say they were available to work.
As social distancing restrictions lifted and people became available to work, Dr Kennedy expected the unemployment rate to be about 9.6 per cent - close to the 10 per cent estimated by Treasury.
However, Dr Kennedy said another 720,000 would have been unemployed without JobKeeper.
