JobMaker Hiring Credit in line for overhaul

Josh Frydenberg is considering an overhaul of the $4bn JobMaker Hiring Credit aimed at getting younger Australians into work after the program was undersubscribed.

The Treasurer Josh Frydenberg. Picture: NCA NewsWire / Gary Ramage

Josh Frydenberg is considering an overhaul of the $4bn JobMaker Hiring Credit aimed at getting younger Australians into work after the program was undersubscribed, with just 521 new hires and $800,000 in payments being made under the scheme.

A stronger than expected economic recovery and a surging labour market, with employment dropping from January’s 6.3 per cent to 5.8 per cent in February, have been cited by the government for the decision to reassess the program.

Announced in the October 6 budget, the hiring credit was limited to those aged up to 35, with Treasury estimating it would support about 450,000 jobs for young people. The credit is available to employers who hire individuals on JobSeeker and paid at a rate of $200 per week for under 30s and at $100 for those aged between 30-35.

While it is unlikely the program will be scrapped, The Weekend Australian can reveal redesign options are on the table ahead of the May budget, with the Treasurer saying the economy had recovered “85 per cent of its COVID-induced fall, six months earlier and twice as fast as we expected”.

“In February, the unemployment rate fell from 6.3 per cent to 5.8 per cent, with 88,700 jobs created. Importantly, more than 40 per cent of these jobs went to young people,” Mr Frydenberg said.

“Employment is now back at pre-pandemic levels while the participation rate remains at a record high ... These factors have contributed to fewer businesses taking up the credit.”

The Weekend Australian also understands that large retailers and employers have indicated they will not take up the credit because they do not need additional support to encourage them to hire.

The scheme requires new hires to work for at least 20 hours a week and is available to most businesses not on JobKeeper, but was heavily criticised by Labor for “excluding almost a million Australians aged over 35 on unemployment payments”.

Opposition treasury spokesman Jim Chalmers said last year that it was vital the new program be “better designed, better implemented and better monitored than JobKeeper”.

At Senate estimates in October, Treasury argued that about 45,000 of the 450,000 projected jobs the government expected to be supported by the hiring credit would be “genuinely” new, or would not have been created if not for the scheme.

Mr Chalmers seized on the evidence, claiming that 90 per cent of the jobs supported by the scheme would remain in place even without the taxpayer funded payments, while the small business community argued the payments would need to be 50 per cent higher to encourage “large-scale” hiring of new staff.

Increasing the payments is one of a range of options the government could consider ahead of the May budget. When the scheme was announced in October, the government estimated that unemployment would be running at 7.25 per cent in the March quarter and would not fall below 6 per cent until 2023-24.

Since opening on 6 December 2020, there have been 15,000 registrations for the hiring credit. Applications opened on February 1, with 521 new hires being made and $800,000 in payments going out the door since then.

Mr Frydenberg on Friday flagged that unemployment would now need to reach about 5.25 per cent before the government’s fiscal strategy shifted towards budget repair.