Coronavirus: Wage subsidy plan to anchor jobless peak at 10pc

Unemployment will peak at 10 per cent, five percentage points lower than would have been the case without the $130bn JobKeeper scheme.

Treasurer Josh Frydenberg. Picture: AAP

Treasury analysis of the government’s JobKeeper programs suggests unemployment will peak at 10 per cent, five percentage points lower than would have been the case without the $130bn scheme.

Josh Frydenberg said the government’s historic wage subsidy program “will support millions of Australian jobs as we build a bridge to the other side following the ­severe economic impact from the coronavirus”.

“The economic shock facing the global economy from the corona­virus is far more significant than what was seen during the global financial crisis over a decade ago,” the Treasurer said.

There have now been more than 800,000 applications for the $1500-a-fortnight wage subsidy payment, according to Treasury, or about one-third of all active businesses. The number of applicants, as measured by ABNs, continues to climb each day.

Treasury’s unemployment projections chime with forecasts from the private sector, where the introduction of the JobKeeper program led economists to lower their predictions for the jobless measure from double digits to high single digits.

The unemployment rate stood at 5.1 per cent in February, and the Australian Bureau of Statistics will release March figures on Thursday. These are expected to show a still modest climb towards 5.5 per cent.

The ABS survey was conducted over the first half of March, suggesting the bulk of job losses from the partial shutdown of the economy will not be reflected until the April survey.

Business leaders and industry groups have hailed the six-month JobKeeper program, saying it will keep Australian workers connected to their employers and help the economy rebound more quickly once the health crisis has passed.

The government has now committed an unprecedented $215bn in direct spending, or 10 per cent of GDP. A further $105bn in cheap cash has been made available to banks to spur lending, particularly to businesses borrowers.

Economists estimate the budget deficit will approach $200bn in the next financial year. Reflecting this worsening financial position, S&P Global Ratings recently moved its outlook on Australia’s AAA rating to “negative”.

“The government’s economic support measures are temporary, targeted and proportionate to the challenge we face and will ensure Australia bounces back stronger on the other side, without undermining the structural integrity of the budget which Australians have worked so hard to restore,” Mr Frydenberg said.