CANBERRA, AAP – The Australian economy could potentially face a nasty jolt as key support measures set up during the pandemic end, with predictions tens of thousands will fall below the poverty line.

The coronavirus JobSeeker dole payment supplement ends on Wednesday, coming after the JobKeeper wage subsidy came to a halt on Sunday, programs that have helped steer the economy through last year’s recession.

Market Economics managing director Stephen Koukoulas said these programs had given a real boost to spending.

While he understands these schemes were only supposed to be temporary, cutting them now will be a negative for the economy.

“At the moment, when we have still got a little bit of fragility in the economy, you might have wanted to err on the side of leaving it a little bit longer, of phasing it out a little more cautiously, rather than going cold turkey,” he told AAP.

Mr Koukoulas said that is why the Reserve Bank of Australia is being ultra-cautious in expecting to keep the cash rate at a record low for three years.

“They have not fallen for the trap of some good numbers and everything is going to be fine and dandy,” he said.

“They are looking at this from a more realistic perspective.”

But Prime Minister Scott Morrison defended the decision, saying at some point support measures have to be withdrawn.

“Our vision is one of economic responsibility, fiscal responsibility … you just can’t run around spending money recklessly like the Labor party,” he told reporters in Adelaide.

The Australia Institute predicted the end of the JobSeeker coronavirus supplement will push a further 155,000 people into poverty, meaning some 580,000 more people will be living in poverty than before the pandemic began.

It says scrapping the already reduced supplement and replacing it with a $50 per fortnight increase in the JobSeeker base rate on April 1 represents a $100 per fortnight cut for those currently on the dole.

The federal government introduced the coronavirus supplement in March 2020 at the onset of the COVID-19 pandemic, an initial $550 per fortnight payment which almost doubled the JobSeeker benefit – formerly called Newstart.

It came as news bulletins around the country showed thousands of people lining up at Centrelink offices as the country went into lockdown.

This one change lifted 470,000 Australians out of poverty and more than any other single government policy measure, the institute’s senior economist Matt Grudnoff says.

But at the end of September 2020, the supplement was reduced to $250 per fortnight and was cut again to $150 per fortnight at the end of December.

“If instead of cutting the coronavirus supplement, the government had instead chosen to restore the full $550 supplement, then half a million Australians would be lifted out of poverty, including 90,000 children,” Mr Grudnoff says.

The recently agreed $50 hike in the JobSeeker base rate was the first increase in over a quarter of a century, outside of index-linked increases.

Social Services Minister Anne Ruston does not agree this modest increase will leave people below the poverty line.

She says there are many other things in place to help people, whether it be assisting them with their rent and making sure they get the full amount of tax benefit.