Coronavirus: Part-timers enjoying a $6bn windfall from JobKeeper

Treasury’s review has found 875,000 part-time employees on JobKeeper are making on average $550 a fortnight more than before the crisis.

Treasurer Josh Frydenberg in Canberra on Tuesday. Picture: Gary Ramage

A quarter of the 3.5 million Aust­ralians on JobKeeper are earning an average of $550 a fortnight more than they were before the pandemic struck, Treasury’s review­ into the wage subsidy scheme has revealed, suggesting total overpayments of more than $6bn over the initial six months of the program.

As a result of the haste with which the emergency support plan was implemented, the repor­t revealed, 875,000 part-time workers are enjoying the payment bump versus what they were earning in February, before the full force of the COVID-19 reces­sion began to be felt.

Treasury’s findings suggest that over the full 13 fortnights of the first phase of the program, the Morrison government would have saved $6.3bn had it restricted the maximum payable to part-time workers under JobKeeper to their pre-pandemic income level.

Scott Morrison said on Tuesday that under JobKeeper 2.0, which will have two tiers of payments for full- and part-time workers, there would be “dimin­ished” scope for workers to be earning a higher wage subsidy than they were making in their part-time jobs before the crisis.

The Prime Minister also defended the initial decision to apply a flat payment rate regardless of income, saying the scheme was designed to keep as many Aust­ralians in work as possible and to avoid a surge in unemployment which might have “crashed” the social services system.

The Treasury report notes that the actual overpayment figure would likely be lower, as many of the JobKeeper recipients enjoy­ing higher incomes would have lost secondary jobs, which are not accounted for in the data, while others would have forgone welfare benefits when they trans­itioned to JobKeeper.

Nonetheless, Treasury worries that the initial scheme “has a number of features that create ­adverse incentives which may becom­e more pronounced over time as the economy recovers”.

The review also makes the surprising discovery that 15 per cent of businesses on JobKeeper experien­ced an increase in turnover in April versus a year earlier.

The department theorises that, once firms were able to get over an initial slump in trade, business may have come back much more strongly than expected, and notes that to be eligible firms needed to meet the threshold decline in eith­er actual or projected revenue.

Firms may also have brought forward revenue in April to help with cashflow.

With just one month of data, Treasury says it would be “premature” to leap to conclusions about the proportion of businesses on JobKeeper “that may not merit support”.

“The ATO will use actual decline­ in turnover as a part of its compliance program and would be expected to look closely at those organisations which have overestimated their projected decline­ in turnover absent an evidence base to support that projection,” the review says.

Treasury expects the unemployment rate to lift to 8 per cent in the September quarter, from 7.4 per cent in June, and continue to rise over the final three months of the year.

And with JobKeeper only apply­ing to existing employees, the report recommends that the government should consider “targeted­ wage subsidies aimed at people newly entering the labour market during a recession”.

The review of JobKeeper’s performa­nce over the first two months of its operation informed the Morrison government’s decis­ion to continue with a tapered wage subsidy and JobSeeker suppleme­nt beyond the original September expiry date, and only to those recipients who can show they continue to be affected by the health crisis. Treasury recommends that an independent review­ into the scheme should eventually be conducted.