Nerves fade as JobKeeper’s end nears, but poverty looms for thousands

Confidence is growing among business groups and the state government that Victoria’s economic recovery from the COVID-19 crisis can withstand the end of the JobKeeper wage subsidy next week.

But there are concerns about hundreds of thousands of Victorians whose brief respite from poverty will end when the last of the federal government’s coronavirus supplements to welfare benefits, which have been tapering off since September, end on March 31.

Hyatt Hotels’ Robert Dawson says he is pretty confident the hotel chain can get through the end of JobKeeper without letting any of its employees go.Credit: Joe Armao

Victoria’s leading business lobby group, the state Treasurer and even the hotel accommodation sector, one of the industries hardest hit by the pandemic, say they are facing the end of the Commonwealth’s $100 billion JobKeeper scheme with more confidence after recent positive jobs and economic growth figures.

The end of JobKeeper has loomed for several months as a potential economic shock amid uncertainty about how many workers would be left out of work when the subsidy stopped flowing to their employers and how many businesses would fail.

The federal Treasury predicted in February that up to 100,000 jobs could be lost across the nation when the subsidy is withdrawn next Saturday and both the Commonwealth and Victorian treasurers – before Thursday’s better-than-expected February jobs figures – had been braced for economic turbulence in March, April and May.

Victorian Treasurer Tim Pallas told The Age that February’s drop in the state’s jobless rate to 5.6 per cent was “amazing” but said he still expected the growth to slow after JobKeeper ended.

“We’ve made it clear, our view about JobKeeper coming off [is that] there’ll be a softening in the growth,” Mr Pallas said.

“There’ll be a near-term risk in terms of the resurgent economy so I expect we’ll have a little less exciting figures in April, May and June, but what [the job figures show] is that the Victorian economy is more than capable of absorbing that challenge.”

RMIT economics professor David Hayward, whose team has been tracking the effect of JobKeeper and the coronavirus supplements in the community, said the latest jobs data meant the hoped-for ‘V-shaped’ recovery was now looking very likely.

But Professor Hayward, who calculated that poverty had been all but eradicated in Victoria between April and September 2020, when the supplementary payments were at their high point of $275 a week, said hundreds of thousands in the Victorian community would be left behind when the welfare supplements ended.

“Things are looking much better than they were but those broad figures mask a significant rise in the number of people who are going to be living in poverty.” he said.

“We’re seeing the return of something that we had just gotten rid of and I don’t think that’s a good development.”

The economist said Australia could try to match President Joe Biden’s new $US1.9 trillion ($A2.4 trillion) COVID stimulus package, which Professor Hayward said would “make major inroads into poverty”.

“What they’re proposing will have a lasting impact, not just a temporary thing, and the changes they’re making to support families will probably halve the rate of poverty among families with children in the US. “Whereas we’ve gone the opposite way, it’s short and then it finishes, it’s a lost opportunity.”

The federal government has defended the level of payments for jobseekers by saying the benefits system is intended as a safety net, not a wage replacement and that people are supported in other ways, including universal health care and free education.

Federal Treasurer Josh Frydenberg said on Friday that the government was having success at getting Australians into work but that there “were still sectors and regions that are doing it tough”.

“In February the [national] unemployment rate fell from 6.3 per cent to 5.8 per cent with 88,700 jobs created in the month.

“More than 80 per cent of these jobs went to women and more than 40 per cent went to young people.”

“Importantly the participation rate remains at a record high while the level of employment is now back at pre-pandemic levels.”

Using Tax Office data, federal shadow treasurer Jim Chalmers estimates 413,000 Victorian workers and 134,000 businesses in the state will be in receipt of JobKeeper at the end of the scheme but there is great uncertainty on how many of those workers will go back onto the payroll when the subsidy ends and how many businesses will survive.

Victorian Chamber of Commerce and Industry chief executive Paul Guerra says the time is right for JobKeeper to end with the economy coming back strongly except hospitality, tourism, and events, arts and entertainment and the university sectors.

Mr Guerra argues that more important than wage subsidies now, is the ability to trade without restrictions, and renewed his calls for the remaining health restrictions to be lifted.

“What we need is support for those sectors that can’t trade at normal levels and they can’t trade at normal levels because there are still restrictions on business,” he said.

In the hotel accommodations sector where venues in central Melbourne and Sydney are struggling with occupancy rates at 50 per cent below their pre-pandemic levels and which has relied heavily on JobKeeper, one major chain says it is not planning to let any of its staff go when the subsidy ends.

Hyatt Hotels and Resorts Pacific vice-president Robert Dawson said JobKeeper had been a lifeline for the industry and that there was “genuine cause for concern” with the scheme about to end.

But Mr Dawson said there were no plans to shed any position when JobKeeper ended and that the group was even trying to hire in some areas.

“We feel confident that the changes made will allow us to move forward into April with no additional changes to our staffing levels post JobKeeper,” Mr Dawson said.

“In Melbourne over the last few weeks we are starting to see momentum building as there is more certainty around vaccine rollout and the opening of internal borders.”

Tourism Accommodation Australia’s Victorian General Manager Dougal Hollis also called for “business continuity” and an end to trading restrictions and border closures.

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