JobKeeper, JobSeeker payments reduced but extended during coronavirus crisis
Scott Morrison and Josh Frydenberg will on Tuesday unveil the next phase of the JobKeeper wage subsidy scheme, after Treasury found it gave about 900,000 workers an average $550 fortnightly pay rise.
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THE federal government will extend JobKeeper payments until March but the $1500 subsidy will be cut back after September and split into two tiers so taxpayers do not keep bankrolling incidental pay rises.
About 1.6 million Australians on the dole will also have their fortnightly $1100 payment reduced after September, but the JobSeeker benefit will not immediately return to the pre-pandemic $40 a day.
Scott Morrison and Josh Frydenberg will reveal the exact level of the payments on Tuesday as the federal government moves into a new phase of economic support.
About 960,000 businesses and 3.6 million workers are relying on JobKeeper subsidies after an average turnover crash of 37 per cent during the coronavirus crisis, according to Treasury’s review of the scheme.
The Herald Sun understands the eligibility of businesses — currently set at a 30 per cent turnover fall — will be tested again at the end of September to ensure help is going to those needing it most.
The review found about 900,000 workers supported by JobKeeper are receiving an average $550 fortnightly pay rise because employers must pay the flat fortnightly $1500 rate to all eligible staff, regardless of their hours.
That has prompted the government to introduce two tiers of payments after September so casual and part time staff receive support closer to their usual income.
Mr Frydenberg said the $70bn scheme met its objectives by preventing widespread closures.
“JobKeeper has been an economic lifeline to millions of Australians and that lifeline will be extended for those businesses that need it most,” he said.
But the Treasury review warned the scheme created “adverse incentives” by keeping businesses afloat which were otherwise unviable, hampering the reallocation of staff to more productive roles and dampening incentives to work.
It recommended the new turnover test to better target the scheme and lower subsidy payments as “part of a transition strategy to wean businesses off support”.
The government has also decided to tighten the eligibility criteria for JobSeeker, with Treasury finding the doubled dole payment may have blunted “incentives to work”.
But new modelling from The Australia Institute, obtained by the Herald Sun, shows cutting JobSeeker to $715 a fortnight would push 150,000 Victorians into poverty, including 36,000 children.
The institute found almost 100,000 Victorians were lifted out of poverty by the increased JobSeeker payment, and cutting it back would see many struggle to pay their bills.
Executive director Ben Oquist said the JobSeeker base rate needed to be lifted substantially to avoid “condemning’ Victorians to poverty.
“Even if the government removes the supplement but increases the old rate of JobSeeker by $75 per week, the effects will still be disastrous,” he said.
Mr Morrison said it was “very difficult to say” how many phases of economic support would be required, but the government would continue to deliver temporary and targeted measures.
Kew East cafe The Bean Thief has struggled through Melbourne’s second lockdown, and owner Sophie Markessinis said that while their support of their community had been “fabulous”, more help was needed.
“People are getting scared and it’s hitting a bit closer to home, people are trying to protect themselves,” she said.
“We were running at capacity and now we’re operating as just takeaway … When you’re not running at capacity you need some assistance.”
Mr Frydenberg on Monday expanded a loan scheme for small and medium businesses, offering funding worth up to $1m per company to be paid back over five years.
Shadow Treasurer Jim Chalmers backed the changes to fix the “poorly targeted” package, with only $1.6bn of the original $40bn package accessed so far.
BY THE NUMBERS
$1500 — fortnightly JobKeeper wage subsidy which will be cut back after September
$70bn — cost of initial six-month phase of the scheme
3.5m — number of workers supported by the subsidy
37 per cent — average decline in turnover across eligible businesses
44 per cent — proportion of businesses that kept on staff because of JobKeeper
$130 — average fortnightly pay increase which JobKeeper is giving workers
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