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JobKeeper 2.0 – Helping Australians in their time of need

Opinion Piece

Date : 20 July 2020

Author: The Hon Josh Frydenberg MP

Publication: Herald Sun

The coronavirus has hit the Australian economy harder than any previous event in the last hundred years.

Between February and May, more than 2 million people either lost their jobs or saw their working hours reduced.

While the official unemployment rate is 7.4 per cent, the highest in more than 20 years, the effective unemployment rate is 11.3 per cent once those who have left the workforce or had their working hours reduced to zero are taken into account.

As restrictions are eased and the economy opens up, it is true that more people will find work, but for those locked down in Victoria or working in sectors heavily dependent on open borders such as tourism, aviation or international education, the labour market will continue to be very tough.

It is against this backdrop that the Government has decided to extend the JobKeeper program for another six months until 28 March 2021.

Initially legislated for a six month period ending on 27 September 2020, JobKeeper has been an economic lifeline for more than 960,000 businesses and not-for-profits. It has supported 3.5 million workers – including 975,000 from Victoria – covering full-time and part-time workers, long-term casuals and sole traders.

According to the Treasury review conducted at the midpoint of the program, JobKeeper has effectively fulfilled its three key objectives, namely: to save jobs and business; maintain the formal connection between employers and employees; and provide income support.

At an estimated cost of near $16 billion, JobKeeper 2.0 will provide a two-tiered payment at a new rate depending on hours worked. From 28 September until 3 January, the two payments will be $1,200 and $750, with the lower payment for those eligible employees who worked less than 20 hours a week in the month of February pre-COVID.

From 4 January to 28 March, the two payments will be $1,000 and $650.

In the initial phase of JobKeeper, eligible businesses needed a reduction in turnover of either 30 per cent or 50 per cent depending on their size.

This test remains the same but it will be reapplied both at the end of September and again at the start of January, with businesses having to demonstrate to the ATO that their actual turnover has not recovered above the threshold.

Consistent with the gradual improvements across the economy, it is Treasury’s expectation that the number of JobKeeper recipients will reduce substantially with around 1.4 million eligible recipients in the December quarter and 1 million in the March quarter.

We know that the economic pain caused by COVID-19 will eventually end and that many businesses now struggling to survive will be viable once again.

This is why JobKeeper is being extended.

To buy time for those businesses and their employees to get to the other side of this crisis.

With ABS data showing that 44 per cent of businesses receiving JobKeeper said it influenced their decision to keep their staff on, the program has provided much-needed confidence and economic support to keep them going.

Also key to the success of JobKeeper has been the flexible workplace arrangements that have been put in place.

With the health restrictions forcing the closure of some businesses and reduced activity in many more, the Morrison Government passed legislation that would enable employers in JobKeeper businesses to be able to modify the hours, duties, and location of staff in a way they previously could not.

For example, in a retail business, moving a staff member from sales duties in the showroom to stocking shelves in the warehouse.

Not surprisingly, more than half the employers surveyed said they had made use of these flexible workplace arrangements during COVID-19.

With JobKeeper now being continued for another six months, the labour market remaining weak and health restrictions in varying degrees remaining in place, there is a compelling argument for these workplace arrangements to continue.

This applies equally to businesses that are transitioning off JobKeeper or those who remain on in the next phase.

As part of the Morrison Government’s comprehensive economic response to COVID-19, we have also introduced a fortnightly $550 Coronavirus Supplement.

It is helping to cushion the blow for around 2 million people on income support.

The Government will continue to provide the supplement of $550 until the 24th of September, and from that date to the 31st of December, it will be $250 per fortnight.

Significantly, the Government will increase the income-free area from $106 to $300 a fortnight, which will allow a JobSeeker recipient to earn up to $1,256 a fortnight and also receive the $250 supplement in full.

We are also providing greater opportunities for people to re-skill and re-train with the establishment a $1 billion Skills for Recovery Fund with the states to provide up to 340,000 training positions in areas of need.

This is on top of the announcement last week of a $1.5 billion apprentice wage subsidy scheme which will support 180,000 apprentices to remain in work.

JobKeeper is the largest economic measure Australia has ever introduced and has supported around 30 per cent of the pre-COVID private sector workforce.

It’s been a great success at one of the most difficult times in Australia’s history.

Its continuation will help ensure Australians are supported in their time of need.

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