Goodbye JobKeeper, hello JobKeeper 2.0

It’s important to remember why we got JobKeeper, just under a year ago, and what it aimed it do.

Victoria has rejoined the Australian economy. Picture: Paul Jeffers

JobKeeper will stop at the end of the month: challenging for many businesses, hurtful for many workers, but good.

It will, though, be replaced by some form of targeted jobs relief: again, appropriate and good.

It’s important to remember why we got JobKeeper, just under a year ago, and what it aimed it do; and therefore why its across-the-economy continuation is not appropriate for the world of 2021.

A year ago the federal government, with the co-operation of the state governments - but at the end of the day, it was the government in Canberra - did two big things.

It closed our international border and in a totally unprecedented move ordered the economy into recession.

That was the specific, direct consequence of the national lockdown. As never before in our history, we had a government – all governments – ordering businesses to be damaged or destroyed, ordering people to lose their jobs.

The main policy initiative to counter the lockdown order and to alleviate the impact of the business and jobs destruction was JobKeeper.

At its peak it kept 3.6m workers - one-in-every-four – from joining the two million-plus already on the dole queue or fled the work force. It also kept their spending feeding into the economy and preventing even further job losses and business failures.

So it was the right economic policy move. It was also, as I argued at the time, a basic obligation on government, in terms of the ‘social contract’ between government and the citizen.

It is impossible to deny that JobKeeper has been an outstanding success, despite the very silly media ‘gotchas’ over individual cases of companies getting JobKeeper and still making profits or paying bonuses.

Equally necessary and effective was the progressive removal of JobKeeper – at the end of September and the end of December - as the economy bounced off the bottom.

It made sense from an economic policy perspective. It made sense in terms of the ‘social contract’. Once the government ordered the economy out of recession, the obligation also ran down.

Of course, one state chose NOT to order its local economy out of recession – Victoria, with its premier Dan Andrews’s ‘curated’ Lockdown 2.0 through the September quarter.

But Victoria did join the rest of Australia in the December quarter and we are now all in the one boat, so to speak – what should be a post-Lockdown, post-JobKeeper normality.

But the international border closure remains, at least through the June quarter. And in exactly the same, albeit more targeted way, it is the basis for the targeted relief planed by treasurer Josh Frydenberg.

If the government is going to prohibit businesses from operating, directly as a consequence of the closed border, it has both an economic policy incentive and a ‘social contract’ obligation to provide countervailing, targeted, relief.

Continued closure of the international border makes fundamental sense, so long as the virus continues to rage and the vaccine rollout runs through the year and through 2022 as well.

Any further unilateral closures of state borders most decidedly do not – if indeed, they ever did, other than to win an election, as we saw in Queensland and are going to see even more emphatically in WA.

Sure, having inept oppositions doesn’t exactly hurt, but that’s another topic.

The prime minister and treasurer must insist that state governments commit to no further border closures, on pain of some form of fiscal penalty - if they won’t do it on the basis of common sense and what’s in the national common interest.

As we roll out the vaccine with zero local cases and the closed international border, there can be no justification for even threats – still, seriously damaging – of unilateral state closures.

Originally published as Goodbye JobKeeper, hello JobKeeper 2.0