JobKeeper gaffe bonus to help rein in debt: Frydenberg

Treasurer Josh Frydenberg has deflected pressure from unions, universities and business groups who are urging him to expand the scheme.

Josh Frydenberg says ‘any opportunity to keep Australia’s debt as low as possible is welcomed’. Picture: AAP

Josh Frydenberg has described the $60bn JobKeeper gaffe as ­“regrettable” and confirmed the government has “no plans for wholesale changes to the eligibility criteria” of the wage subsidy scheme.

The Treasurer said the reduction in the estimated cost of the JobKeeper program from $130bn to $70bn would trim government borrowings, with the ­nation’s debt “already standing at $650bn”.

Writing in The Australian, Mr Frydenberg deflected pressure from the unions, universities and business groups who are urging him to expand the scheme to capture higher education employees, foreign workers and more casuals.

“There will be a Treasury ­review of the program in June, but with full-time, part-time, sole traders, long-term casuals and the not-for-profit sector already benefiting significantly from the program, its eligibility is expansive,” Mr Frydenberg said.

“This will reduce the government’s borrowings by $60bn. With the nation’s debt bill already standing at $650bn and all new spending initiatives during the pandemic debt-financed, any opportunity to keep Australia’s debt as low as possible is welcomed.”

Scott Morrison on Sunday took responsibility for the $60bn funding error, after the Australian Taxation Office and Treasury ­reported the mistake to Mr Frydenberg on Thursday night.

The extent of the ATO administrative error was established after Treasury officials told a COVID-19 parliamentary inquiry last Thursday that 6.3m workers were enrolled to receive the $1500-a-fortnight subsidy. The estimated JobKeeper enrolments were revised down to 3.5m on Friday afternoon.

The Prime Minister said Treasury had put forward an estimate “as to what they thought the ­demand for that program will be and they thought at that time it would be reaching out to around six million people”.

“Now it has proved that this has not been the case and the ­demand is not as high as ­Treasury estimated. And along the way the information we were getting from the Australian Taxation Office was indicating that ­official estimate was accurate. But as we have all seen, there was an administrative error in how that information was being tracked by the taxation office,” Mr Morrison said.

“So, sure, the estimate was overstated and the process with the taxation office to keep us updated with that had a flaw in it. We acknowledge that. I acknowledge that. And ultimately I have to take responsibility for those things.”

Opposition Senate leader Penny Wong on Sunday described the blunder as a “$60bn black hole in the economic credibility of the Morrison government” and reiterated Labor’s push to expand the ­eligibility for the scheme.

“$60bn of reasons why we can’t trust anything Scott Morrison or Josh Frydenberg say about the economy or the budget,” Senator Wong said. “And this is the key point: 600,000 Australians lost their job in April. How many fewer would have lost their jobs if Scott Morrison and Josh Frydenberg hadn’t made this blunder?”

Senator Wong called for the Treasurer to make a special ­appearance at the COVID Senate committee to answer questions on the blunder.

Mr Frydenberg, who has rejected the request, said of the nearly one million businesses that enrolled, “about 1000 of them, or around 0.1 per cent, put in the box the dollar amount they thought they would receive from JobKeeper each fortnight, not the number of employees that were eligible”.

“This was an inadvertent error by the businesses concerned, however, the data was used by the ATO to calculate the number of employees they thought would be accessing the scheme and it was in the order of 6.5 million,” he said.

“This number was then repeated by the government and by senior Treasury officials as ­recently as Thursday in front of the COVID parliamentary committee. Importantly, this incorrect data was not used to determine payments by the ATO; it therefore did not lead to underpayments or overpayments taking place.”

Mr Frydenberg said the ­reduced number of people on JobKeeper was a “positive sign for the economy” with more Australians remaining in work without needing government support.

“In the words of Treasury, it ­reflects ‘some improvement to the outlook’. The government recog­nises the need for ongoing support as we move to the recovery phase.

“The fact 5.1 million workers, nearly half of the nation’s private sector workforce, are estimated to be either on JobKeeper (3.5 million) or JobSeeker (1.6 million), illustrates the size of the task ahead.

“We know that some sectors may not recover as fast as others, like tourism, due to our international borders remaining closed and this may require additional support.”

Mr Frydenberg said Treasury’s initial forecast of 6.5 million Australians moving on to JobKeeper, and the $130bn cost, was made at the “high point of the pandemic”.

Mr Morrison said the funding revision meant “Australians won’t have to borrow so much money”.

“This is not money that is sitting in the bank somewhere, this $60bn,” he said. “That is all money that would have otherwise have had to be borrowed. Borrowed against the taxes that future generations would pay.

“I would liken it a bit to this: if you are building a house and the contractor comes to you and says it is going to cost $350,000 and they come back to you several months later and say: things have changed and it is only going to cost you 250,000. Well that is news that you would welcome.”