The Liberal party will slash the boosted Coronavirus dole payments during the greatest recession in Australia’s history.

Employment specialists and resume writers know that cutting the $550-a-fortnight coronavirus supplement will slay employment and consumer spending across Australia, Deloitte said in a new report.

The planned reduction to the supplement in two weeks – before it’s removed entirely after Christmas – will reduce the size of the economy by $31.3bn and cost the equivalent of 145,000 full-time jobs.

The report found the cut would hit those hardest in already-disadvantaged remote and regional communities, as well as Covid-ravaged Victoria.

From 25 September the supplement will be cut by $300, with the base rate of the jobseeker payment dropping to $815 a fortnight for about 1.5 million people.

Coalition MP’s have claimed in recent weeks that the higher rate of benefits was creating a disincentive for the unemployed to take up work.

But that argument is ignorant during periods of high unemployment.

“With large numbers of people seeking paid work competing for scarce job vacancies, higher unemployment payments are likely to have very little impact on the level of employment in the short term,” the report said.

Data reported by Guardian Australia has found job applications have increased significantly during the pandemic.

Estimates put the number of people receiving the supplement would peak in December at 2.34 million when the jobless rate hits 10% (in real terms, 17 per cent) falling to 1.73 million recipients by June 2022.

While the boosted payments would not stop people taking up work, reducing income support will cost jobs through a shock to household consumption.

The economic pain would be most severe in Victoria, where an estimated 41,000 jobs were threatened by the reduction in consumption over two years, compared with 35,000 in New South Wales and 33,000 in Queensland.