Demise of JobKeeper to put 100k jobs at risk, says Treasury

Close to 100,000 recipients of the JobKeeper program who are working zero or very few hours are most at risk of losing their jobs when the scheme expires, Treasury secretary Steven Kennedy says.

Treasury secretary Steven Kennedy said the economic recovery has been faster than anticipated. Picture: AAP

Close to 100,000 recipients of the JobKeeper program who are working zero or very few hours are most at risk of losing their jobs when the scheme expires at the end of March, Treasury secretary Steven Kennedy says.

As economists debate the ­potential impact from the end of the wage subsidy scheme and coronavirus JobSeeker supplement, Dr Kennedy told a ­parliamentary committee that he was “quietly confident the recovery is locked in” — provided the virus remained under control. He echoed comments from Reserve Bank governor Philip Lowe last week that the improvement in the unemployment rate may briefly pause come the end of JobKeeper. He said the job losses in the immediate aftermath would be “roughly matched” by employment growth associated with a labour market recovery he argued had been surprisingly strong coming out of the ­recession.

“I don’t expect it (the end of JobKeeper) to disturb the trajectory of the unemployment rate coming down,” he said, as he foreshadowed material upgrades to Treasury’s jobs outlook in the May budget.

Speaking in the same committee room on Thursday, ATO second commissioner Jeremy Hirschhorn confirmed that about $83bn had been paid out in wage subsidies to February 1.

Eligibility for the first round of the wage subsidy scheme, which ran to September 30, was based on an applicant’s “reasonable estimate” that revenue would fall by at least 30 per cent due to the rapidly evolving COVID-19 crisis.

Many firms, however, have since experienced a boom in earnings as Australians spent big on certain items, such as household goods for home offices.

Mr Hirschhorn said the ATO had been in discussion with about 10 companies that volunteered to repay about $50m in wage subsidy payments which ultimately were not needed. Mr Hirschhorn said about $10m of that had already been returned.

There is no legal requirement for firms to give the public back JobKeeper money they didn’t need, nor were there plans to revisit the legislation to apply clawback provisions retrospectively, he said. Mr Hirschhorn said it would be another week or two before the ATO knew how many workers and businesses had transitioned off JobKeeper following the reapplication of the eligibility test from January 1.

Treasury deputy secretary Jenny Wilkinson, who leads the department’s fiscal group, said she expected there could be about 100,000 JobKeeper recipients still on zero or only minimal hours by the end of March.

She said how many ultimately received more hours from an ­existing employer, how many moved to different employers, and how many joined the ranks of the unemployed would be determined by a range of factors, including the strength of the labour market at the time.

Dr Kennedy said businesses and, in particular, households were “well cashed-up”. He said he expected consumers would draw on those financial buffers to keep spending, even as income growth fell from the government-­supported highs of 2020.

“My sense is the current fiscal settings, the combination of very substantial commonwealth money supported by the state money, is about right,” she said.