JobKeeper morphs into JobLoser

Up to 150,000 jobs and 110,000 small businesses are at risk after JobKeeper ends on Sunday, warns the Treasury secretary.

Treasurer Josh Frydenberg speaks at the despatch box during question time in the House of Representatives on Wednesday. Picture: Getty Images

Up to 150,000 jobs and 110,000 small businesses are at risk after the $90bn JobKeeper scheme ends on Sunday according to Treasury secretary Steven Kennedy, with Josh Frydenberg unveiling a $135m government life line to help support thousands of workers in the arts sector.

Revealing official estimates around likely job losses for the first time, Dr Kennedy said about 1.1 million workers would lose their wage subsidy of up to $1000 a fortnight when the scheme ends on 28 March. He said he remained confident the bulk of recipients would remain in jobs and the ­labour market recovery would not be derailed.

“The unemployment rate could rise a little in coming months before resuming (a) downward trajectory,” he said.

Treasury’s December forecasts predicted the jobless rate would peak at 7.5 per cent in the March quarter, but instead Dr Kennedy noted the unexpectedly rapid fall in unemployment to 5.8 per cent in February.

Steven Kennedy Secretary to the Australian Treasury during estimates in Parliament House. Picture: NCA NewsWire / Gary Ramage

“In a given month during the years leading up to the pandemic, around 400,000 people moved into and out of employment, with a small net increase on average.

“Most people moving out of employment tend to leave the ­labour force altogether rather than become unemployed,” Dr Kennedy said.

The extra funds for the arts will add $125m to the Restart Investment to Sustain and Expand scheme, which will now total $200m after an initial tranche of $75m announced last year. It follows extra support for the airline sector via half-price tickets for flights to designated locations.

Federal Arts Minister Paul Fletcher said the extra money would support about 230 projects and 90,000 jobs while an extra $10m has been allocated for the mental health charity Support Act to assist people who work in the creative sector.

The RISE scheme so far has distributed $60m to arts producers including the Australian Ballet, the Byron Bay Bluesfest and the Michael Cassel Group, producer of Hamilton.

The government will also broaden eligibility criteria by making grants available to businesses associated with arts and entertainment production like sound and lighting providers and by encouraging projects from as low as $25,000.

Dr Kennedy said about 88,000 workers in receipt of JobKeeper were working zero or minimal hours in February, and raised concerns about the survival prospects of the 110,000 small business still receiving the payment that had reported a 75 per cent reduction in revenue in the December quarter compared to the same period in 2019. “We expect that the end of the JobKeeper program will lead to some businesses closing and jobs being lost,” he said.

Labor Treasury spokesman Jim Chalmers seized on the figures to call on the government to extend support for businesses affected by the pandemic.

“If the Morrison government hadn’t wasted hundreds of millions of dollars on companies which didn’t need JobKeeper, there’d be more room to support those small businesses and workers which still do,” he said.

Treasurer Josh Frydenberg, during Question Time on Wednesday. Picture: NCA NewsWire / Gary Ramage

“Nobody is saying JobKeeper should go on forever, but it should be tailored and targeted to what’s actually happening in industries and communities.”

This month, University of Melbourne economist Jeff Borland estimated up to 250,000 jobs would be lost once JobKeeper ended.

Economist Saul Eslake said the government’s job loss expectation seemed “plausible and reasonable”, pointing out that New Zealand’s similar wage subsidy scheme had ended without much impact on unemployment at all.

“It’s pretty clear there will be job losses at the myriad cafes and restaurants in capital city CBDs and other businesses such as dry cleaners, hair salons, newsagents etc, which cater to the CBD office workers who simply aren’t going back to those offices in the same number as pre-pandemic,” he said.

“Despite that, I agree completely with the government’s decision to terminate the scheme.”

Dr Kennedy said he was “surprised” by how broadly spread across industries and regions this vulnerable cohort of workers was.

Separately, the latest Skills Commission job advertisement data showed vacancies hit a nine-year high, rising 7 per cent or by 12,600 jobs in February to reach 192,000, adding to a range of data suggesting the labour market had been recovering more strongly than expected.

The new figures emerged as the opposition criticised the government’s JobMaker scheme, released in last year’s budget, which so far generated only 521 new jobs.

“That’s just 0.12 per cent of the jobs — and 0.02 per cent of the money — Josh Frydenberg promised struggling businesses, and the two million Australians searching for work or more hours, on budget night,” Mr Chalmers said.