THE federal government will extend the JobKeeper scheme until March next year, which would avert a fiscal cliff at the end of September and protect some 400,000 jobs in the property industry.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg revealed JobKeeper 2.0 yesterday which will become a two-tiered scheme – one rate for full time staff, another for part time and casuals.
- From 28 September 2020 to 4 January 2021, the current $1,500 per fortnight will reduce to $1,200 for full time and $750 dollars for part time and casual employees working less than 20 hours a week.
- From 4 January and 28 March, the rate will reduce to $1,000 dollars for full time, $650 for part time and casual staff.
Businesses also need to requalify twice. For the December quarter, businesses with less than a $1 billion turnover must show a decline of at least 30%, and businesses with over $1 billion turnover must show a 50% reduction.
For the March quarter, they must again show they experienced turnover decline in the June, September and December quarters.
At the same time, JobSeeker will reduce from $1100 to around $800 a fortnight and the coronavirus supplement from $550 to $250 for the last quarter.
About 3.5 million workers are currently supported by the subsidy, according to Treasury data. This has come at a cost of $70 billion but Westpac chief economist Bill Evans said the policies has injected some $95 billion into the economy for the September quarter.
Under the JobKeeper 2.0, it is expected 1.4 million workers, of which 175,000 will be part time/casuals, will be covered between September and January. Between January and March next year, some 1 million workers including 125,000 part time/casuals will be covered. The extended measure will come at a cost of $16 billion.
“We made the conscious decision to have a flat rate payment because we understood at that time that people were losing second and third jobs,” the PM said. “Ensuring we had one flat payment across the entire labour force ensured that we were protecting our social security system and you will also remember the great strains that that system was under early during the crisis,”
AMP Capital chief economist Shane Oliver said the bottom line is that the government is not completely eliminating the fiscal cliff that would otherwise have occurred from October if the income support programs had ended at the end of September as originally scheduled, but it is being softened and looks to be turning into a fiscal slope.
“We estimate that were it not for JobKeeper and people leaving the workforce the effective unemployment rate is current 11.3%, which is well above the official measured rate of 7.4%. This has fallen from 14.8% in April thanks to the reopening of the economy, but with the threat to the recovery posed by the second wave of cases in Victoria and the lockdown in Melbourne and the risk of a flow on to NSW, effective unemployment may only fall to around 10% or so by September so continued income support was essential.
“The government estimates the cost of extending JobKeeper at around $16bn and the extension to the JobSeeker supplement looks like costing around $3.8bn. This combined with an extra $2bn of Federal spending on apprentice subsidies and JobTrainer announced last week means total extra stimulus of around $22bn or 1.2% of GDP… and given the likely long tail of high unemployment its likely that income support measures will also have to be extended next year,” Oliver said.
The PM has not ruled out extending the program beyond March, although he said it is too early to tell.
“We’re now three months into a 12-month program. Where the world will be at the end of March is not something that we could speculate upon at this time.
“We’ll be assessing it and doing what’s best for the country, which is what we’ve sought to do today,” the PM said.
Treasurer Frydenberg said Australia’s unemployment rate is effectively 11.3%, higher than the official rate which is 7.4%.
The Treasurer said the effective rate takes into account those who have left the workforce or those who are on zero hours.
“As we stand here today, five million Victorians are in lockdown.
“It’s against the backdrop of that very difficult and challenging economic environment that we are announcing the extension of JobKeeper. JobKeeper 2.0, together with the extension of the coronavirus JobSeeker supplement, will assist Australians right around the country,” Frydenberg said.
The Master Builders Australia previously warned of the grim future ahead if the scheme was discontinued. According to its survey, the construction industry reported a drop of around about 40% in contracts and are forecasting a 30% decline in the next financial year. It warned that would equate to around about 400,000 job losses if JobKeeper was not there to fill the void.
Master Builders CEO Denita Wawn said building and construction is the industry with the most businesses registered for JobKeeper and that reflects that 98% of the industry is comprised of small businesses and with more small businesses than any other sector of the economy.
“There’s no doubt that JobKeeper continues to be lifeline for thousands of small builders and tradies as well as many in the building supply chain. The continuing easier accessibility for sole traders to access the scheme is also important,” she said.
