Josh Frydenberg's first budget was a triumphant "back in black" performance but his second is predicted to show a $143 billion black hole in the nation's finances.
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Despite the anticipated size of the deficit, the government is playing down speculation it could end the $130 billion wage subsidy program earlier as the spread of coronavirus is subdued.
The Treasurer will deliver a statement on the outlook for the Australian budget on Tuesday, the start of a three-day sitting of parliament, and the day he was supposed to have delivered his 2020/21 budget.
That has been put back to October because of the coronavirus pandemic.
Deloitte Access Economics economist Chris Richardson expects the budget will show a deficit of $143.1 billion for 2019/20.
Big deficits are also forecast for at least the next three years.
That's in stark contrast to the government's predicted surplus of $5 billion at the time of mid-year budget review in December.
At the same time, Mr Richardson also forecasts the economy contracting by six per cent on a year-average basis in 2020/21, with the unemployment rate set to rise to 8.5 per cent in that year and not returning to five per cent until 2024.
Treasury has already predicted the unemployment rate will spike to 10 per cent in the June quarter as a result of the crisis while economic activity is expected to slump.
And the Reserve Bank said under its best-case scenario, unemployment would still be above six per cent by the end of 2022.
The government has spent hundreds of billions of dollars to help shield the nation from the worst of the pandemic.
But Mr Richardson warns rapid budget repair would be "misguided".
"The budgetary damage isn't structural, but the damage to our economy and our jobs would be if we start raising taxes and cutting spending," he says.
Prime Minister Scott Morrison cautioned against speculation about the future of measures including the JobKeeper wage subsidy after reports some in his party were agitating for it to end earlier than the six months legislated.
"We are six weeks into a six-month program in one of the most uncertain economic and health environments any of us have ever seen," he said.
"If you've got a crystal ball, you might want to share it with me - I don't have one."
But he said the economic lifeline had been budgeted to run for six months.
Federal Labor described Mr Richardson's report as a "sobering assessment".
Opposition Leader Anthony Albanese wants to see the recovery involve a manufacturing revival, more social and affordable housing, and a focus on rights for workers and more stable jobs.
Australian Associated Press
