More than 5 million Australians will learn the future of what ongoing income support they will get through the coronavirus economic downturn on Tuesday — and it will be less than what they have been receiving over the past four months.
Key points:
- Prime Minister Scott Morrison will unveil changes to the JobKeeper and JobSeeker payments on Tuesday, extending their lives beyond September
- A lower rate and tighter eligibility requirements for the JobKeeper wage subsidy, currently paid to 3.5 million workers, will feature
- The JobSeeker unemployment benefit will also be tweaked
The plans come ahead of Treasurer Josh Frydenberg's budget update on Thursday, where he will detail just how much damage has been sustained by the Australian economy during the COVID-19 crisis, in an effort to separate devastating economic figures from debate over ongoing assistance for the community.
Pressure has been mounting on the Federal Government to detail how financial support will continue beyond the end of September, which is when the initial packages announced in March are due to expire.
A surge in coronavirus cases in Victoria, and clusters of infections in New South Wales, have hammered home the need for ongoing support.
As expected, the Prime Minister will announce the JobKeeper wage subsidy scheme will be overhauled, following a review which was handed to the Government in June.
Currently, 960,000 employers have been given a flat rate of $1,500 a fortnight for each staff member they kept on their books during the coronavirus crisis.
Some criticism has been levelled at the scheme, including that some of the 3.5 million workers who have received the subsidy got more in their pay packet under JobKeeper than they would normally.
Around a quarter of recipients fall into that category, and received an average of $550 more.
"JobKeeper has a number of features that create adverse incentives, which may become more pronounced over time as the economy recovers," the Treasury review found.
"It distorts wage relativities between lower- and higher-paid jobs, it dampens incentives to work, it hampers labour mobility and the reallocation of workers to more productive roles, and it keeps businesses afloat that would not be viable without ongoing support.
"There are two groups whose incentives to work or to take on additional hours may have been blunted: part-timers and casuals who have received an increase in income due to the flat-rate payment, and employees who have been stood down."
That is expected to be ironed out under the new arrangements, with a lower subsidy rate offered and two tiers of payments offered to reflect the number of hours employees work.
"Several industry stakeholders advised the review team of instances where part-time workers have been reluctant to do additional hours of work more commensurate with the JobKeeper payment, as well as instances where-stood down workers have been reluctant to take on any work hours as businesses have begun to reopen in recent weeks," the review said.
"No quantitative evidence has been presented on either of these matters."
Eligibility will also be tightened. Under the original scheme, a business had to prove a drop in turnover of between 30 and 50 per cent to get the subsidy for a full six months.
Businesses will have more frequent turnover-reporting requirements, to prove ongoing financial distress — which would in turn help the scheme be more targeted to certain industries,
"Practically, this could be done by using a fresh test of turnover decline, using measured or actual turnover change rather than projected change when businesses first applied," the Treasury review stated.
By late June, JobKeeper payments had topped $20 billion.
The original scheme was expected cost in the region of $70 billion by the end of September. Initially, the Federal Government believed it would cost $130 billion — but the figure was revised down, after the Treasury revealed it had dramatically miscalculated the number of people who would need the payment.
The JobSeeker unemployment benefit, formally known as Newstart, will also receive attention on Tuesday. More than 1.6 million Australians are currently receiving the payment.
It was effectively doubled in March, when the Government announced recipients would receive a $550 fortnightly supplementary payment to get them through the worst of the economic downturn.
The supplement will continue, but is likely to be cut to a lower amount.
Debate over the base rate of JobSeeker, which equates to around $40 a day, will continue as the Government avoids touching it for the moment.
Business groups, welfare advocates and economists have long argued for an increase to the rate, arguing the current level is far too low for unemployed Australians to live on.
https://news.google.com/__i/rss/rd/articles/CBMiX2h0dHBzOi8vd3d3LmFiYy5uZXQuYXUvbmV3cy8yMDIwLTA3LTIwL2pvYmtlZXBlci1qb2JzZWVrZXItY29yb25hdmlydXMtc3VwcG9ydC1jaGFuZ2VzLzEyNDczODk20gEnaHR0cHM6Ly9hbXAuYWJjLm5ldC5hdS9hcnRpY2xlLzEyNDczODk2?oc=5
2020-07-20 12:30:00Z
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