MPs brace for ‘rough’ JobKeeper landing

Josh Frydenberg has told a joint Coalition partyroom meeting to ‘be prepared for a rough couple of months’ when JobKeeper ends in two weeks.

Treasurer Josh Frydenberg said the Morrison government’s policies have been the ‘catalyst’ for a recovery led by the private sector, but that the end of JobKeeper will lead to a “rough couple of months’. Picture: Getty Images

Josh Frydenberg has told a joint Coalition partyroom meeting to “be prepared for a rough couple of months” when JobKeeper ends in two weeks, and said the government would “respond with targeted programs where appropriate”.

The Treasurer’s comments came as industry sources told The Australian they expected the tourism and aviation support package revealed last week would be the first of three phases of support for the hardest-hit sectors, with further announcements expected in the May federal budget, or before.

The Treasurer on Tuesday told Coalition MPs and senators the private sector was now leading the recovery, but new figures from the Australian Bureau of Statistics showed the hospitality sector ­continued to trail well behind the national labour market recovery.

The ABS report, drawing on the Tax Office’s single-touch payroll system over the week to February 27, showed there were still 110,000, or 12 per cent, fewer pay-rolled employees in hotels, restaurants and cafes than before the pandemic hit early last year.

Only two in three hospitality jobs had been regained by the end of last month, the ABS reported.

However, across all industries, the number of payroll jobs — which represents about 80 per cent of total employment — was 0.4 per cent higher than a year earlier, the data showed.

While certain sectors of the economy and parts of the country remain under pressure, Reserve Bank board minutes released on Tuesday showed the central bank was confident that the end of JobKeeper this month was “unlikely to result in a sustained increase in the unemployment rate”.

“The ongoing recovery in the labour market conditions could be broadly sufficient to offset the job losses arising after the end of the JobKeeper program,” the minutes from the March 2 meeting state.

Board members heard the number of employed people working zero hours had “declined significantly in recent months to be close to pre-pandemic levels”.

Additionally, the RBA’s business liaison program “suggested that many firms in receipt of JobKeeper subsidies had already reduced the size of their workforces and were not planning on another large round of lay-offs”.

CBA economists have estimated that about 110,000 jobs could be lost following the end of the scheme, a number that would lead to a temporary uptick in the official unemployment rate but not prevent a fall in the jobless measure from 6.4 per cent in January to 6.1 per cent by the end of year.

In parliament on Tuesday, Mr Frydenberg pointed to a combined $240bn war chest of savings accumulated by households and businesses over the past year that could be drawn on to support spending as emergency support was withdrawn. He said Australians would also benefit from $12bn in tax relief over the coming seven months.

The RBA minutes reiterated the board “concluded very significant monetary support would be required for some time, as it would be some years before the bank’s goals for inflation and unemployment were achieved”. The RBA’s balance sheet had expanded by $175bn since the start of 2020, the RBA minutes noted. There had been $74bn in bond purchases as part of the $100bn first phase of its quantitative easing program, which will be followed by another $100bn in purchases.

The minutes also revealed that the banks had drawn down $91bn in cheap funding provided by the RBA under the $185bn term funding facility.