Reserve Bank boss Philip Lowe has told a Senate inquiry the JobKeeper scheme might need to be extended beyond September.

Dr Lowe said the Morrison government’s wages subsidy had been vital in maintaining the connection between workers and employers.

“If we’d lost all those connections between workers and their employers, the recovery, which is going to be difficult, would be even more difficult,” he told the inquiry on Thursday.

The program – which will cost the federal government $60 billion less than originally budgeted – will be reviewed in June. It was forecast to cover 6.5 million workers, but is supporting 3.5 million.

The government has consistently said JobKeeper will end in September, although senior ministers have hinted at tweaks since the underspend was revealed last week.

Dr Lowe told the Senate inquiry the economic downturn from coronavirus might not be as severe as first thought, because of better-than-expected health outcomes.

But although the economy was tracking well, there were many challenges ahead.

“It’s still a pretty depressing scenario,” he said.

A shadow would be cast over the economy as the recovery got under way – “as a country, we’ll need to turn our minds as how to best move out of that shadow”.

Dr Lowe said the outlook remained uncertain, and September would be a critical point for the national economy.

“If the economy is not recovered reasonably well by then, as part of that review we should be looking at, perhaps, the extension of that scheme or the modification in some way,” he said.

Dr Lowe said he expected more job losses to come in the ongoing economic fallout from coronavirus shutdowns. But they would not be as bad as in April, when nearly 600,000 jobs were lost and lengthy queues formed outside Centrelink offices across Australia.

He described April’s losses as “shocking”, but not as bad as predicted.

He also warned that industries that held onto their employees at the start of the pandemic would start to struggle as their pipeline of work dried up.

The country’s recovery from the coronavirus pandemic largely depended on when Australians regained confidence in their health and finances, he said.

“With the national health outcomes better than earlier feared, it’s entirely possible the economic downturn will not be severe as earlier thought,” he said.

On Thursday, News Corp Australia became the latest employer to shed workers. It said it would move to digital-only publishing for most of its local and regional papers, and more copy sharing among its metropolitan mastheads, at the cost of hundreds of jobs.

Australian Prudential Regulation Authority chair Wayne Byres and Australian Securities and Investments Commission chair James Shipton were also to appear before the COVID-19 committee hearing on Thursday.

-with AAP