The cost over the period constitutes an increase in total government spending of 50 per cent. There has never been anything like this. Past ideological prescriptions are annihilated.
Scott Morrison and Josh Frydenberg have defined the mission of their government — to ensure the Australian economy neither collapses nor hollows out during the COVID-19 crisis. The government has acted later than the UK or New Zealand, but it has chosen a superior and more expensive model. Morrison and Frydenberg have given a new meaning to “whatever it takes”, with the price of averting depression at $130bn in this package alone. That’s 13 per cent of national income for the period.
The aim is to guarantee the income of workers and sustain Australian businesses until the health crisis passes. It applies to all companies, regardless of size. It is an “equality of outcome” model — everybody eligible gets $1500 a fortnight, sold by Morrison as reflecting the Australian way.
The key is the design. The scheme has breadth, applying to full-time, part-time, casuals, the self-employed and not-for-profits, runs for six months, is backdated to staff numbers at March 1 and the payment has sufficiency — at 70 per cent of the median wage and 100 per cent of the median wage in hospitality and retail.
Prominent economist and Deloitte Access Economics partner Chris Richardson said: “We are cradling three things here — providing the incomes for workers, meeting the costs of Australian businesses and seeing the temporary nationalisation of businesses that we need on the other side of the crisis.”
This third package must be pushing towards the limits of what the national government can commit in terms of spending off the budget. No Liberal government has remotely contemplated such spending before. The deficits and debt will linger for years and maybe decades.
The policy is both a mechanism to keep business and jobs alive in the crisis and provide hope — psychological therapy — when despair looms over so many. The aim is to destroy the Centrelink queues haunting the nation last week. The policy is designed as a lifeline during the crisis but enabling business to emerge from “hibernation” and restart when the virus is on the retreat. The big but justified gamble is that six months will suffice.
Businesses will be eligible with an annual turnover of less than $1bn who self-assess they have a reduction in revenue of 30 per cent over a minimum one-month period. Those with a turnover of $1bn or more will be required to show a revenue reduction of 50 per cent or more to be eligible.
Full-time and part-time employees, including workers stood down, will be eligible for the JobKeeper Payment. Casuals need to have been with their employer for 12 months. But the onus is on businesses to apply. Those workers retrenched since March 1 have the potential to receive the payment if their employer decides to nominate and re-establish the link.
The scheme will need to be legislated. Given Labor’s policy on voting bipartisanship, its support can be assumed.
Morrison has foreshadowed regular dialogue with federal Labor on the crisis, a welcome move.
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The Morrison government has averted a depression in Australia. This is the most momentous and unprecedented fiscal decision in our history. The government will pay a wage subsidy to as many as six million private sector Australians, or half the total workforce, for six months.