Treasury boss Steven Kennedy says it would be good to see Australia's migration levels return to normal levels, but he accepts the need to tread carefully as nations struggle to contain the coronavirus.
Mr Kennedy used his first major speech since taking the role to argue this year's federal budget supported households and encouraged business investment, while also funding essential services such as health.
But with international flights severely limited to stop coronavirus getting into the country, the budget numbers were also based on a significant cut in migration and falling population growth.
Australia's net overseas migration is set to fall into negative territory for the first time since World War II.
The budget papers predicted a loss of 72,000 people for the current financial year, with no return to positive levels until 2022/23.
As well, the government will not increase the migration cap of 160,000 places per year.
"That leaves us smaller, slightly older and it means the level of GDP is lower," Dr Kennedy said.
He said as Treasury worked on the next five-yearly intergenerational report - expected in 2021 - officials were thinking carefully about migration levels.
"The government will approach that appropriately cautiously because the economic shock from second waves and from the virus spreading in an uncontained fashion are very significant," he said.
"It would be good to see Australia's migration return to our previous levels but it has to be done with management of the virus."
He said there was a lot of dynamism to be gained for the Australian economy through a vibrant migration program.
The immediate priority in terms of international flights is getting Australians home, but then looking at students, business travellers and skilled migrants.
Dr Kennedy said the government was giving active thought to safely scaling up migration.
"We have to take these things one step at a time because of the level of uncertainty that's in front of us.
"But then, as the government has made clear, they will look at building the program more back to its usual levels."
He said productivity would also be key to economic growth, but it was still unclear how the coronavirus shock would affect it.
There has been some forced innovation, such as more businesses going online and working from home, but at the same time, there has been a lot of small business closures and reduced competition in some sectors.
Dr Kennedy said the smarter use of technology, regulatory reform, cutting the cost of doing business and insolvency reform would help.
"The recovery will take time and there are new challenges for macro policy, but Australians can be confident that while bumpy, there is a clear path to recovery."
Meanwhile, the Australian Bureau of Statistics reported the trade balance in September increased $3 billion to $5.63 billion.
It was the 33rd successive monthly trade surplus, with export values up four per cent and imports down six per cent.