The federal government expects to spend more on Services Australia's departmental funding as the agency responds to greater demand for social welfare following the COVID-19 economic downturn.
A growing spend on JobSeeker payments will maintain pressure on Services Australia to deliver the federal government's economic response to COVID-19, new forecasts show.
The economic statement released on Thursday forecast payments relating to Services Australia's departmental funding would grow by $512 million over two years to 2020-21 as the agency deals with large numbers of welfare claims.
Funding increases would largely reflect the greater volume of claims to process as unemployment rates remained high, the government said.
An $11.8 billion increase in government payments relating to the JobSeeker income support program is expected over the two years to 2020-21.
Growth in unemployment as a result of the COVID-19 economic downturn is forecast to drive the multibillion dollar increase in the JobSeeker program spend, according to the economic statement.
The expanded social welfare program is likely to keep Services Australia staff at the front line of the government's efforts to absorb the economic shocks of the pandemic.
Treasurer Josh Frydenberg on Thursday said the unemployment rate was forecast to peak at 9.25 per cent in the December quarter, while the economic statement said it would take some time to decline despite strengthening conditions after 2020.
The coronavirus pandemic has led to a surge in demand for job seeker payments that has stretched the federal bureaucracy's largest service delivery agency.
Services Australia, which lost 1500 staff last year, processed 1.3 million claims in 55 days as strict social distancing measures led to growing levels of joblessness.
The agency absorbed the additional workload caused by COVID-19 with an expansion of its workforce taking in public servants temporarily redeployed from across the federal bureaucracy.
Services Australia also grew its spending on labour hire staff from the private sector, entering $150 million in contracts with service delivery companies Serco, Datacom and Stellar Asia Pacific.