Morrison’s $15bn worker lifeline Victorian outbreak cost soars
Hundreds of thousands more workers to be given access to JobKeeper as bar lowered for businesses to prove significant loss of revenue.
Scott Morrison will throw a further $15bn lifeline to workers and businesses devastated by the Victorian lockdown under a major expansion of JobKeeper payments, as losses to the national economy from the second wave outbreak spiral towards $12bn.
Josh Frydenberg will announce an emergency fiscal response to the deteriorating situation that will allow hundreds of thousands more workers to access JobKeeper payments and lower the bar for businesses to prove a significant loss of revenue.
It will be the second extension to the JobKeeper program after it was expanded last month, bringing the total cost of the scheme to $101.6bn. Treasury advice suggests the changes mean a further 530,000 Victorians will take up the wage subsidy in the September quarter, lifting the total number of recipients in the state to 1.5 million.
“We’re doing whatever it takes to save lives and save livelihoods,” the Prime Minister said. “Australia is facing a situation that is constantly changing. Our response is to get the right support to all those Australian families, workers and businesses that need us, as these circumstances change. This means more support for more workers and more businesses for longer, as we battle this latest Victorian wave.”
Mr Morrison revealed on Thursday that the extended Victorian lockdowns would push up to 400,000 more Australians out of work and condemn the country to three straight quarters of economic contraction for the first time in almost four decades.
He said Treasury anticipated a $10bn-$12bn combined hit from the stage three and four restrictions in Victoria, arguing it was a “heavy blow” that would subtract 2.5 percentage points from GDP growth in the current quarter.
As Victoria recorded 471 new cases out of a national tally of 486, new Treasury forecasts suggest Australia’s economy will contract by 1 per cent over the three months to September, compared with its previous forecast for 1.5 per cent growth.
As Mr Morrison warned that the “effective” rate of unemployment would reach more than 13 per cent, up from 11.7 per cent in June, analysis by The Australian using the same methodology suggests the true jobless rate in Victoria would reach nearly 19 per cent — close to one in five workers.
Mr Morrison also conceded the official unemployment rate would peak “closer to 10 per cent” instead of the 9.25 per cent forecast in the July 23 economic and fiscal update.
The unfolding economic and health impacts of the second wave in Victoria are fuelling growing concern within federal Liberal Party ranks that the Prime Minister’s refusal to criticise Daniel Andrews will damage the Coalition’s record on the coronavirus pandemic.
Senior Liberal MPs, particularly those in Victoria, are picking up increased anger from their constituents towards the Labor Premier and increasingly wanting Mr Morrison to distance himself from the Victorian “mess”. Melbourne-based Assistant Treasurer Michael Sukkar said the continuing toll in Victoria, which recorded another eight deaths in the 24 hours to Thursday, were not “bad luck”.
“I think naturally you ask the question as to what the failures have been and what have been the local decision-making issues that have led us to this position,” Mr Sukkar said. “Clearly the hotel quarantine catastrophe has led us to this point.”
NSW Liberal senator Andrew Bragg also said on Thursday that “the State of Victoria has gotten itself into this mess”
Mr Morrison is set to outline the scale of the economic disaster to Premiers and Chief Ministers at Friday’s National Cabinet meeting which will focus heavily on the emergency response to the Victorian crisis.
The second wave has seen an effective junking of the three stage COVID-19 recovery road map — agreed to in May — and which had worked on a timetable to have most restrictions across the country lifted by July.
National COVID-19 Commissioner and former Health Department secretary Jane Halton is also expected to hand down her initial findings of an investigation into the hotel quarantine failures.
The new eligibility tests for JobKeeper to be announced on Friday will apply nationally for all Australian workers and businesses.
But the government expects the bulk of payments will go to Victoria as well as tourism and aviation sectors hit hard again with the re-closure of the Queensland border.
Under the existing scheme, businesses have to prove revenue loss of 30 per cent – or 50 per cent for companies worth more than $1 billion – over two quarters.
However, this will be reduced to just one quarter in a move designed to rescue thousands of Victorian businesses.
The cut-off for workers to qualify for JobKeeper is currently set at March 1 this year, but this will be pushed out to July 1, throwing a lifeline to potentially hundreds of thousands more workers.
“The introduction of stage four restrictions by the Victorian Government will have a severe economic impact on the Victorian and Australian economy,” Mr Frydenberg said. “Already more than 270,000 businesses covering around 975,000 employees in Victoria are being supported by the Morrison Government’s JobKeeper Payment.”
“Under the changes that will apply nationwide, to be eligible for JobKeeper post 28 September, organisations will only have to demonstrate that their actual turnovers have significantly declined in the previous quarter,” he said. “Organisations that are able to demonstrate a significant decline in turnover in the September 2020 quarter will be able to access the JobKeeper extension in the December 2020 quarter.
“They will no longer be required to have also suffered a significant decline in the June quarter in order to remain eligible or access the payment for the first time post 28 September.”
“To allow more employees to access the payment, we will now allow employees who were on the books from 1 July 2020 to access JobKeeper.”
The Victorian government has contributed just $10.5bn in direct and indirect funding since March to deal with its COVID-19 crisis.
The new changes to JobKeeper will mark a third revision of the overall program since it was first announced in March.
The extra numbers of people taking up the wage subsidy as a result of the harsh Victorian restrictions will add an extra $4.5bn to the total cost of the program. The changes to the eligibility criteria are expected to cost an additional $11.1bn.
It will double the previous $15 billion extension to the scheme announced just three weeks ago and which pushed the end date of the program out from its initial cut-off date of September to March next year.
Under the first extension, businesses and not-for-profits seeking to claim JobKeeper payments beyond September 27 were required to prove a significant and continuing turnover loss in the June and September quarters relative to corresponding quarters in 2019 in order to qualify for the scheme through to January 3.
Under the new rules, they would only have to meet the turnover test of the September quarter.
Similarly to qualify for payments through to March 28, they would have had to meet the turnover test for all the June, September and December quarters under the previous version of the scheme. This will be changed to meeting the test for only the December quarter.
The turnover tests set under the first $70 billion JobKeeper scheme – due to expire in September – will remain.
This required businesses with turnover of $1bn or more to prove a 50 per cent loss of revenue and 30 per cent for businesses with less than $1bn in turnover. The test for charities and not for profits is 15 per cent.
The introduction of stage four restrictions in metropolitan Melbourne and stage three restrictions across regional Victoria are forecast to have a massive flow-on impact for the rest of the country.
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