The Morrison government has hinted that it will undertake further stimulus after Treasury painted an even bleaker outlook for the economy as a result of Victoria's tougher coronavirus restrictions imposed this week.
Treasurer Josh Frydenberg has warned the impact on the economy from Victoria's stage four restrictions to combat the pandemic will be severe and felt across the country.
Treasury predicts up to another 400,000 people could lose their jobs as a result of the lockdowns, pushing the national unemployment rate up to 10 per cent.
Just two weeks ago, and prior to Victoria ramping up its restrictions, Treasury had forecast the jobless rate to peak at 9.25 per cent this year.
This brings the jobless forecast in line with the Reserve Bank's baseline case.
"Australians should be under no illusion that on top of the heavy personal toll, the impact on the economy will be severe," Mr Frydenberg, who is a Victorian, told AAP.
Treasury also expects economic growth will be now slashed further by up to $12 billion in the September quarter, rather than a previous forecast of a $3.3 billion contraction under Victoria's stage three restrictions.
"Treasury has been clear that these estimates should be treated with caution given the high levels of uncertainty around the assumptions and the outlook more broadly," Mr Frydenberg said.
Prime Minister Scott Morrison said these latest forecasts were a "heavy blow" but not unexpected.
However, Mr Morrison said the unemployment rate did not give the full story.
He said the effective unemployment rate - which includes the jobless and people who are still in work but have had their hours reduced to zero - was heading to the "high 13s".
"So, that is very concerning."
Shadow treasurer Jim Chalmers said Mr Morrison appeared content in outlining a steadily deteriorating economic outlook without telling Australians what he'd actually do about it.
"When hundreds of thousands more jobs are at risk he still has no plan to create new jobs and protect workers, business and communities as this economic and health crisis worsens," Dr Chalmers told AAP.
Mr Morrison did hint further stimulus could be forthcoming before the October 6 budget.
"The treasurer and I are considering some further issues around JobKeeper," he said.
"We are making announcements constantly. The budget will be in October and that will be another significant, arguably the most significant, instalment in these announcements."
Deputy Prime Minister Michael McCormack has not ruled out providing further assistance to the crippled aviation sector.
"We will continue to look at what is necessary at the time," Mr McCormack told Sky News.
"That's what we have done right the way through since February-March. We have made sure the assistance is available, not just for the airline industry but for the economy, and we will continue to do that."
Australian Associated Press