JobKeeper bill as high as $296,000 per job saved, Treasury says

The wage subsidy scheme ‘directly preserved’ somewhere between 300,000 and 700,000 jobs in early 2020, but the effects had evaporated a year later, a new Treasury report finds.

The JobKeeper program had a big impact at the height of the pandemic, but its effect on the jobs market had dwindled to zero a year later. Picture: NCA NewsWire/Andrew Henshaw

The cost to taxpayers of keeping Australians employed during the height of the Covid-19 lockdowns was as much as $296,000 per job saved, according to a new Treasury analysis of the $89bn JobKeeper program.

The wage subsidy scheme “directly preserved” somewhere between 300,000 and 700,000 jobs in early 2020 as authorities forced businesses to close and people to stay at home in order to limit the spread of the virus.

At the upper end of the estimate, the average cost was $127,000 per job saved, indicating the difficulty in modelling the impact of the biggest single peacetime social support measure in Australia’s history.

At its peak, JobKeeper was supporting 3.6 million workers, or around a quarter of the total workforce. It was particularly helpful to keep temporary workers “on the books”, the report says, but the effect was short-lived as the economy roared back to life as lockdowns were lifted.

“At the height of the recession, JobKeeper lifted the probability of employment for casual workers by around 40 percentage points, an effect that fell away to zero as health restrictions were lifted and aggregate employment rebounded,” it says.

“Smaller but more enduring effects are found for newly recruited permanent workers, suggesting the program may have played a more important role in ameliorating labour market scarring for these workers in the medium term.”

The authors of the report noted that they had not modelled the indirect impact of JobKeeper on confidence and the economy more broadly, which may have had its own positive ­effects on jobs.

The analysis is the latest in a number of reports aimed at assessing the impact of JobKeeper, which have broadly found that the subsidies successfully ­supported the economy and workers during an unprecedented health crisis, but that it was overly generous and, therefore, expensive.

An independent review undertaken by a former Treasury official in October estimated the wage subsidies helped keep 800,000 people in jobs and kept businesses afloat, was rolled out with incredible speed, and helped stabilise the economy.

An ANU study concluded that JobKeeper’s cost-per-job-saved was about $113,000.