Terry McCrann: JobKeeper sets the Australian economy up for blast-off

Australia conquered the coronavirus, kept the economy ticking over and is kicking into 2021 in far, far better shape than just about everyone else.

The great JobKeeper numbers are a huge and extremely pleasant surprise – and none would be more surprised than Treasury head Steven Kennedy and his team of ivory tower experts at (their personal) ‘JobKeeper Central’: Canberra.

Counting down to the cut to the JobKeeper payments at the end of September, 3.6m workers were being subsidised in their jobs by the taxpayer.

In the budget early October, Kennedy’s Treasury forecast there would be 2.2m still on JobKeeper through the December quarter.

The first two payment fortnights for October show the figure’s only 1.5m. Unless a lot of employers have been very tardy putting in their claims, Treasury is going to be (good news) way-off on its forecast.

Secretary to the Australian Treasury Dr Steven Kennedy. Picture: AAPImage/Mick Tsikas

Indeed, this will be the ‘second cliff’ that the economy was going to plunge over, but which turned into nothing more than a bump in the road out of the government-mandated recession.

This does in turn, though, hold out the great prospect that the next ‘cliff’ – which was threatening to send the economy replunging, at the end of December – will turn out to be the same damp squib. The same goes then for the ‘big final cliff’ at the end of March, when JobKeeper terminates completely, and every job and every business will be on their own.

The ‘first cliff’ was supposed to be when the six-month deferral on mortgage repayments ended at the end of September. So-called experts feared a wave of, if not actual mortgage defaults, serious borrower pain, and with that pain feeding into the broader economy.

But even with Victoria keeping one-quarter of the national economy in lockdown recession, banks and borrowers handled the challenge seamlessly. By mid-October nearly half the home loans were back to normal repayments, by mid-November two-thirds of them were.

What was especially encouraging for both individual borrowers, battered by the lockdowns, and so as a pointer also to the broader economy, was that even small and medium-sized businesses had largely got back to normal loan repayments.

Australian Treasurer Josh Frydenberg. Picture: Sam Mooy/Getty Images

The big fear was that we’d get a ‘one-two’ with ‘cliffs’ as JobKeeper was also cut at the end of September. As the figures from Treasurer Josh Frydenberg showed Monday, that didn’t happen and it didn’t happen big-time.

The numbers being subsidised by JobKeeper more than halved – from 3.6m workers to 1.5m. But it wasn’t because they’d been thrown on the dole queue; indeed exactly the opposite happened.

And, critically, this was essentially BEFORE Victoria rejoined the rest of the country AND, even more obviously, before we all went into full post-lockdown pre-Christmas spending mode.

Throw in those sub-2 per cent loan rates (on fixed-term mortgages) – and the opening up of tourism – and we’ve got a rocket charger for the economy in the December quarter and which should carry over into the March quarter.

It’s now a good bet that we will make up by the March quarter all the ground lost since the March quarter last year – albeit, there’ll still be many businesses and many jobs which won’t every come back.

JobKeeper has helped keep the Australian economy ticking over.

There is also one big, as in huge, qualification: that pesky virus; and will we or won’t we get a truly effective vaccine. By that I mean one that will work in the ECONOMIC and not just the medical context.

Right now though, whatever happens in 2021, it is all but impossible to sustain the argument that we ‘did it wrong’. – with the lockdown-JobKeeper-money printing mix.

We did conquer the virus, at least to this point; we did keep the economy ticking over; and we are kicking into 2021 in far, far better shape than just about everyone else.

Yes, we might still end with a huge headache from all the debt. But that’s MANANA.

Originally published as Terry McCrann: JobKeeper sets the Australian economy up for blast-off