JobKeeper, JobSeeker to continue at lower rates, PM says

By Shannon Jenkins

Tuesday July 21, 2020


The JobKeeper payments will be extended until the end of March 2021, costing the government an extra $16.6 billion, treasurer Josh Frydenberg has revealed.

Prime Minister Scott Morrison on Tuesday announced that just over $30 billion dollars have helped nearly 1 million businesses support roughly 3.5 million staff through the $1500-a-fortnight JobKeeper wage subsidy.

JobKeeper was set to wrap up in September. While the government has decided to allow the wage subsidy to run until the end of March, the rate will be lowered to $1200 a fortnight for full-time workers from the end of September, and $750 a fortnight for those who work less than 20 hours a week.

From January to the end of March 2021, full-time employees will receive $1000 a fortnight, and $650 for part-timers.

After September, businesses will need to show a continued impact, with eligibility to be based on whether businesses have experienced a 30% reduction in turnover over the past two quarters, and into the next quarter.

There will also be changes to the $550-a-fortnight JobSeeker payment. From September 28, JobSeekers will be able to earn up to $300 in order to receive a $250 coronavirus supplement, which will run until December 31 2020. Under the changes, the maximum amount JobSeekers can receive will be around $800.

From August 4, JobSeekers will be required to undertake four job searches a month. At the end of September, the government will require “a higher rate of job search” and will reintroduce the assets test.

Frydenberg said the cost of extending JobKeeper would be $16.6 billion, bringing the total cost to more than $86 billion.

He said about 2 million Australians either lost their jobs or saw their household incomes reduced between February and May this year, creating an unemployment rate of 7.4% and effective unemployment rate of 11.3%.

A Treasury review of the JobKeeper program found that 44% of businesses on JobKeeper said the wage subsidy program influenced their decision to keep their staff, Frydenberg noted. About 47% of JobKeeper recipients were women.

“Treasury’s review found that JobKeeper met its three primary objectives, namely to save jobs and businesses, to maintain the formal connection between employers and employees, and to provide income support,” he said.

The announcements have come ahead of an economic update to be delivered by Frydenberg on Thursday, which Morrison specified was “not a mini-budget”.

The Treasury review reportedly found that JobKeeper could “hamper” the economic recovery, and that workers who are receiving the wage subsidy are refusing work.

“It distorts wage relativities between lower and higher paid jobs, it dampens incentives to work, it hampers labour mobility and the reallocation of workers to more productive roles, and it keeps businesses afloat that would not be viable without ongoing support,” the review said.

“Several industry stakeholders advised the review team of instances where part-time workers have been reluctant to do additional hours of work more commensurate with the JobKeeper payment, as well as instances where stood down workers have been reluctant to take on any work hours as businesses have begun to re-open in recent weeks.”

Rather than targeting JobKeeper to the industries that have been most impacted, Treasury suggested a better approach would be to “maintain JobKeeper but reassess eligibility in October based on actual decline in turnover”.

The department also suggested “reducing payments to wean off businesses from ongoing support”.

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