Smaller firms made JobKeeper killing

JobKeeper is coming to an end and if there has been monumental gouging of the taxpayer, it’s mostly been out of sight, among smaller private businesses.

The ‘problem’ with JobKeeper is not that companies got it and still made a profit – a McDonald’s-style super-sized profit in the case of billionaire Solomon Lew’s Premier Investments.

The problem is the – three-month – gap that existed between the initial JobKeeper commitment along with the prime minister’s rather panicked rhetoric a year ago, and the actual far more sober and measured policy response to fighting what, to be fair, WAS a frightening unknown virus back then.

Remember when Scott Morrison was talking about the virus chaos lasting for months, “probably until September”, and maybe even longer as no-one back in March last year, really knew?

Well, the structure of JobKeeper assumed that would be the case.

It locked in the payments for six months - the more sensible NZ scheme which we copied and fiddled with, badly – was only for 12 weeks initially and then was reviewed and reduced.

Australian businesses only had to have had one bad month to get JobKeeper payments for all their staff (the ones they kept on the payroll) for all six months through the end of September.

Yet the national lockdown that was the basis for having JobKeeper, for needing to have JobKeeper, only went for three months.

With the exception of those businesses that continued to be whacked by the international border closures, the on-and-off state border closures, and the various ‘social distancing’ restrictions that continued to hurt jobs and businesses - and indeed still do even in a virus-free Australia – this meant large swathes of business got a ‘free handout’ of $1500 a fortnight for most if not all their employees through the September quarter.

The exception was of course Victoria, where thanks to Premier Dan’s specially curated just-for-Victorians second lockdown, the six-month initial JobKeeper payment exactly tallied with six-months of job-destroying lockdown.

The national lockdown was the reason why JobKeeper was introduced.

Now, at the macro level, an argument can be made that given the extraordinary, extraordinarily confidence damaging and destroying seeming unknown and unknowable abyss we were staring into back last February-March, making a six-month commitment was vital.

Secondly, whatever overpayments took place at the individual business level – and if they did it would have been far more among SMEs than the big end of town – there was still a major offsetting benefit at the overall macro level, which played out in Australia’s superior GDP performance through the June quarter and the December half.

That’s why I put the word problem in the opening paragraph in quotation marks – arguably this benefit across the economy, benefiting all 26m of us, outweighed the individual overpayments.

Further, as the very useful research from Dean Paatsch’s Ownership Matters showed, only 75 of the 300 biggest companies got the first, realty big lump of JobKeeper. And they only got $2.45bn of the $80bn handed out.

To state the obvious, this meant that 225 of the 300 biggest companies did not get a single cent out of JobKeeper. And so $77bn or so really did go to the smaller end of town.

If there has been monumental gouging of the taxpayer, it’s mostly been out of sight, among smaller private businesses.

This should also be obvious from the key metric for getting JobKeeper: bigger businesses had to show a 50 per cent drop in revenue, smaller businesses (under $1bn turnover) had to show ‘only’ a 30 per cent drop.

Yes, they only had to show it for a single month, but there would have been very few businesses that did not hurt to some significant degree through all three months of the national lockdown – and six in the case of Victoria.

All that is yesterday; JobKeeper is now ending, as it must, as there are no lockdowns. We are going to find out what life is like without it.

Originally published as Smaller firms made JobKeeper killing