Josh Frydenberg to go smart way with JobKeeper 2.0

The Victorian government should cop the bill for damage done to businesses from the lockdown but the Feds have to pick up the tab for the individual workers that have lost jobs or income.

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

There’s a smart way and a dumb way of doing this: I’m glad to see treasurer Josh Frydenberg is opting for the smart way.

He mightn’t go all the way to re-establishing JobKeeper, just for Victoria, and just for two weeks. Or could two weeks turn into four? Or more?

Canberra is more likely to do JobSeeker-Plus or JobSeeker-accelerated or something – whatever which way - to get money quickly into the hands of Victorian workers locked out of their jobs by the Victorian government.

As I argued last week, the state government should cop the bill for the damage done to the actual businesses by the lockdown it ordered.

It should, it must, put more money on the table than the $450 million it’s offered so far – spread over all the locked down businesses that’s clearly inadequate.

But the Feds have to pick up the tab for the individual workers that have lost jobs or income from the lockdown.

Federal Treasurer Josh Frydenberg. Picture: Sam Mooy/Getty Images)

Why? Because they do anyway – when people lose their jobs it’s the federal government that pays JobSeeker and picks up the tab for lost jobs and lost wages. So the question has always been what’s the best way of paying that bill – and is precisely why I wrote we had to go temporarily back to JobKeeper for Victoria; and indeed, why we, very sensibly, got JobKeeper for the whole country in the first place.

As I argued more than a year ago, it was much better to keep businesses alive and workers in touch with their jobs and their workplaces, than force them all onto the dole queue.

Exactly the same applies again now in Victoria.

Also, very fundamentally, Victoria’s problem is Australia’s problem – in terms of the virus and of the economy.

If you close down 25 per cent of the national economy – hopefully, only for now two weeks – the national economy hurts.

Thanks to the Victoria-only lockdown in the September quarter last year, national economic growth was 3.3 per cent instead of 5 per cent.

With Victoria re-joining the rest of the country, we have now recovered all the ground lost since the virus arrived and government – ALL nine governments: state, territory and big brother Canberra – decided the best way to fight it was to close the economy down.

This is what I wrote when we got the last growth figures early in March for the December quarter.

“The economy will grow by at least….1.1 per cent through this current March quarter; indeed, I suggest we will do better than that, so when the March quarter numbers are in, we will clearly have passed the December 2019 quarter previous peak.”

Well, we grew by 1.8 per cent in the March quarter; and we are now nearly 1 per cent above that previous December 2019 quarter peak. We can thank two things in particular – JobKeeper and China; with a “little bit of help”, of course, from the Reserve Bank’s zero interest rates and money printing.

It’s a no-brainer: if an economy is locked down by government order; government is obliged to pay something like JobKeeper, in terms of fairness, but also simple economic logic.

Frydenberg all-but explicitly conceded Wednesday afternoon both the basic logic and that ultimately responsibility for worker payments, starting with the dole, JobSeeker, fell on Canberra.

He said his initial rejection of any JobKeeper-type payment for Victoria was based on the lockdown only lasting one week; but he would now “consider” any request for support.

Rather than shout at each other, the two treasurers, Frydenberg and Victoria’s Tim Pallas need to sit down and agree a joint program: Canberra provides the most effective support for workers, the state does it for the businesses.

And agree: that after this, vaccinate, vaccinate, and no more generalised lockdowns.

Originally published as Josh Frydenberg to go smart way with JobKeeper 2.0