A leading labour market economist has shot down suggestions the elevated dole rate is discouraging people from job hunting.
The Senate community affairs committee is looking at a government bill to extend the JobSeeker temporary coronavirus supplement - at a lower rate - until the end of March.
The support payment for the jobless was increased by $550 a fortnight at the start of the pandemic, but it has shrunk to $250.
University of Melbourne Professor Jeff Borland said the flow of people from unemployment to work and the job vacancy rate had not showed any signs people were avoiding work to stay on welfare.
"I don't see any evidence that the COVID-19 supplement has been a substantial or really any type of major disincentive for people to move into work from unemployment," he told the committee on Wednesday.
Prime Minister Scott Morrison has pointed to anecdotal evidence from business as a reason to cut the payment.
Professor Borland said there had always been some employers reporting difficulty recruiting, which was the nature of the labour market.
"To think the COVID-19 supplement was having a major disincentive effect, you would want to be looking at Australia-wide systematic evidence that showed up in the aggregate data," he said.
"That's what I've been looking at and I don't see effects there."
Professor Peter Whiteford, a social policy expert from the Australian National University, said compared with developed economies, Australia's unemployment payments were much lower than working incomes.
"There's a very large gap between what people receive on payments and what they would receive in paid work," Professor Whiteford said.
"There's no reason to think this is necessary in order to incentivise people to actively look for work."
Both leading academics subscribe to the wide-ranging consensus that unemployment payments should not return to the pre-pandemic rate of $40 a day.
Australian Retailers Association chief Paul Zahra backed extending JobSeeker to March and called for a permanent increase beyond that.
"It doesn't make sense to return people who do not work to the poverty line," he said.
He said JobSeeker had been the quiet achiever of the government's coronavirus support, with welfare recipients spending 58 per cent of payments.
National Council of Single Mothers and their Children's Terese Edwards urged the government to return to the initial $550 increase to the dole.
Ms Edwards said cuts to that rate meant homelessness, skipping meals and no cooling in summer for single mums.
"I'm deeply concerned about the increase of suicide, homelessness and domestic violence," she said.
"Christmas is already a frightening time for too many. Add a pandemic, throw in the cuts to income and we have a tsunami of horror ahead of us."
Australian Associated Press