Coronavirus: Door not shut on extending jobless aid, says Scott Morrison

Scott Morrison has left the door open to overhauling the $130bn JobKeeper scheme.

Scott Morrison in Canberra on Monday. Picture: AAP

Scott Morrison has left the door open to overhauling the $130bn JobKeeper scheme contingent on the nation’s economic recovery, as new forecasts indicate one million Australians were forced out of jobs last month.

Ahead of Treasury finalising its review into the delivery of the wage subsidy scheme by June, the Prime Minister said the government would consider making ­adjustments to JobKeeper payments where necessary.

With states and territories moving to unlock social restrictions, Mr Morrison said his government was watching “how many people we’re getting back into jobs” and remained committed to JobKeeper’s six-month timeline. “And as we need to adjust based on advice and the strength of the economy and how many people we’re getting back into jobs … well, these are the things we’ll be watching carefully,” he said.

The Australian understands Treasury is monitoring the COVID-19 support measures, including JobKeeper, JobSeeker and the waiving of childcare fees.

Government officials and economists are predicting the revival of 850,000 jobs through the three-step “COVID Safe” road map to unlock restrictions would not be immediate and that it could take more than a year for the economy to get back on track.

Shifting away from his “snapback” rhetoric, which Labor has used to attack the Coalition, Mr Morrison said the government was “fully aware” the JobKeeper program might need to be adjusted or targeted to support “sectors that come under greater strain over a longer period of time”.

Mr Morrison, who said it was “premature” to speculate on whether timelines for JobKeeper would be scaled back or extended, warned of the financial burden on future generations.

“The thing that matters is getting Australian businesses back open, because when that happens, there will be no need for those levels of income support. Success for our economy is when we’re able to get ourselves out of the situation which requires such enormous taxpayer support,” he said.

“And it’s not just today’s taxpayers, it’s tomorrow’s taxpayers as well and our government will also always be extremely prudent in not putting burdens on future generations, let alone the current generation, in dealing with the challenges that we have today.”

JP Morgan said official labour force statistics for April, due for release on Thursday, will show one million Australians had joined the dole queue in the month, pushing the unemployment rate from 5.2 per cent to 8.5 per cent — the highest in more than two decades.

The challenge facing the government is not only the massive spike in unemployment but also the likelihood it will remain high for years.

The Reserve Bank predicts the jobless rate will still be 9 per cent by the end of this year, 7.5 per cent by the close of the next, and a still ­elevated 6.5 per cent by June 2022 — the end of the central bank’s ­official forecast horizon.

Looking further out, Deloitte Access Economics forecasts unemployment will not return to pre-COVID levels of around 5 per cent until late 2024.

Deloitte Access Economics lead partner Pradeep Philip said with the recovery uncertain and likely fragile, the government should consider using any potential savings on the original $130bn JobKeeper program to introduce a “JobTweaker” plan to phase out the policy over a period of eight weeks beyond the legislated six-month life of the scheme.

Dr Philip said the payments could be phased out slowly from $1500 a fortnight over the coming four pay periods to $1200 a fortnight, then $900, $600 and finally $300. That would add eight weeks and a further $20bn to the originally budgeted cost — or potentially just using up the already “unsubscribed” amount.

“For JobKeeper to stop ­abruptly, all it would have done is … kicked the unemployment can down the road,” he said.

With parliament returning on Tuesday, Anthony Albanese criticised the design of the JobKeeper program, suggesting it was focused on the employer and not the employee. The Opposition Leader has called on the government to widen JobKeeper to include more casuals and visa holders.