Coronavirus Australia: How JobKeeper propped up employment figures

Australia has been hit with grim jobless figures but the picture would be much worse without the government’s $130 billion intervention.

Australia’s unemployment rate is set to double to 10 per cent, but the figure the Prime Minister describes as “heartbreaking” would look even worse without the government’s JobKeeper wage subsidy propping up the grim numbers.

The release of the new Treasury modelling today all but confirms a recession, with the only question how quickly the economy can “snap back” as Scott Morrison has predicted.

But the figures also provide the strongest clue to date on why the Morrison Government decided to dump $130 billion into the economy through the JobKeeper allowance.

By paying a $1500 a fortnight subsidy to six million workers for six months, the government will also remove millions of people from the official unemployment rate.

Without that injection of cash to pay workers’ wages, Treasurer Josh Frydenberg confirms the unemployment rate would be much higher.

“In the absence of the $130 billion JobKeeper payment, Treasury estimates the unemployment rate would be 5 percentage points higher and would peak at around 15 per cent,” he said.

“More than 800,000 businesses have already registered for the JobKeeper payment, which will allow the economy to recover more quickly once we are through to the other side of the crisis.”

As thousands of Australians queued for the dole outside Centrelink offices last month, the question of how high the unemployment rate would go loomed large in the Morrison Government’s mind.

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The queue outside a Gold Coast Centrelink office. Picture: Glenn Hampson

Those images prompted cabinet to do something previously regard as unthinkable: pay millions of workers’ wages for six months under the JobKeeper subsidy, including some who can’t work because of shutdowns to pubs and restaurants. People will literally be paid to do nothing.

However, the Prime Minister admits there’s no sugar-coating the impact of COVID-19.

“It is a serious impact on our economy. It’s impacting people’s livelihoods. It’s heartbreaking,” Mr Morrison told Today.

“It’s a big blow. I don’t want do lessen that in terms of how we speak of it. Despite all that hardship Australians have responded so well. And they’re doing their best.”

JobKeeper is designed to help workers maintain a relationship with employers and be ready to return to work when restrictions are lifted.

But Mr Morrison warned Australia today that lifting all of those restrictions remained months away.

“We can’t be complacent. We have seen what happened in Singapore most recently and Sweden and other countries,” the Prime Minister told Sunrise.

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Prime Minister Scott Morrison on Sunrise this morning. Picture: Sunrise/Channel 7

“If you take your eyes off this thing, he gets away from you so we do need to understand what the prerequisites are and the things we need to achieve before we can start to ease some of those restrictions.”

It’s a message the Queensland Premier Annastacia Palaszczuk echoed today despite the nation’s success in flattening the curve of new cases.

“It’s not going to be lifting restrictions in the next week or two,’’ she said.

“It’s simply not going to happen … and please, we don’t want to give your listeners any false sense of hope that suddenly there’s going to be planes flying in the sky in the next two months and tourism is going to be back to normal because we are in a world pandemic.

“So this is a marathon. It is not a sprint. And we’ve got to take each day and each week as it comes.”