The Morrison government will cut the JobKeeper wage subsidy at the end of September to $1200 a fortnight for full-time workers and to $750 for part-time workers, down from the current single rate of $1500.
The scheme is being extended until March 28 next year, but will be revised down further at the end of December to $1000 for full-time workers and $650 for part-time workers, defined as those with 20 hours of work a week or less.
Treasurer Josh Frydenberg and Prime Minister Scott Morrison.Credit:Alex Ellinghausen
The JobSeeker coronavirus supplement will also be reduced at the end of September meaning those without a job will have their payments cut back to about $800 a fortnight until the end of the year under the unemployment scheme.
The rate of JobSeeker, formerly known as Newstart, before the pandemic was about $560 a fortnight. This was increased to $1100 with a $550 supplement payment that was due to end in September, alongside the wage subsidy scheme.
Prime Minister Scott Morrison said on Tuesday morning at a press conference in Canberra there was "no one thing" that can remove the heavy burden on Australia due to coronavirus.
"We made the conscious decision to have a flat rate payment [when introducing JobKeeper] because we understood at that time that people were losing second and third jobs," he 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."
Now, he said, there was the capacity to have a two-tiered system of payments.
A recent review of the JobKeeper scheme by Treasury found a "strong" case to extend JobKeeper past its legislated date to help businesses and workers hard hit by the shutdowns imposed to stop the spread of coronavirus. About 3.5 million workers are supported by the subsidy.
"The report recommends that we should continue JobKeeper and we shall, but it needs to be done in a way that is responsive to the circumstances," Mr Morrison said.
Businesses with turnover up to $1 billion are required to show a 30 per cent drop, while those with more than $1 billion have to show a 50 per cent decline to be eligible for the scheme. Companies will face a renewed eligibility test of turnover in October.
Mr Morrison also revealed the JobSeeker coronavirus supplement will be reduced to $250 for the last quarter of the year, however the government is also increasing the income-free threshold for those on the dole to $300.
This allows those receiving unemployment payments to earn up to this amount without affecting their benefits.
"In the second phase, which will be at the end of September, we will be moving to a higher rate of job search," Mr Morrison said.
"We'll be reintroducing the assets test for eligibility for those payments and we'll be reintroducing assets waiting period at that time."
From August 4, the government will be requiring those on the dole to connect with employment services and search for jobs at least four times a month, with penalties kicking in for those who refuse a role.
"So if there is a job to be taken and a job that is being offered, then it is an obligation, a mutual obligation, for those who are on JobSeeker to take those jobs where they're on offer," Mr Morrison said.
At the end of September there will be a higher rate of job search required and the reintroduction of the assets test for those payments. Sole traders will not face the same level of tests.
Partner income test thresholds will remain in place as will the ordinary waiting period waiver.
He said the government expects they will "likely" need to continue these supplements after December, but this would be decided later in the year.
"It is our intention that we would expect that there would be likely a need to continue those supplements post-December, but there is a difference between JobKeeper and JobSeeker," Mr Morrison said.
The Prime Minister has not provided any guidelines about what happens to income supports beyond March next year but has not ruled out further extensions if the pandemic continues to wreak havoc on the economy.
The new JobKeeper scheme, for the additional six months will cost $16 billion, bringing the total cost of the program to $86 billion.
"We're now three months into a 12-month program," Mr Morrison said. "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."
Unemployment payments under the JobSeeker scheme will be reviewed in a "few months", he said, with the reduction in the supplement of $550 to $250 provided until December. This extension will cost $3.8 billion, bringing the total cost of the program to $16.8 billion.
Mr Morrison said the government anticipates it's likely there "would need to be some continuation of the COVID supplement post-December".
Treasurer Josh Frydenberg said the pandemic was the "fight of our lives" and a "huge hit to the Australian and global economy".
"In the quarters to March and June, some 600 million jobs have been lost globally. I mean, our friends in the region, and broader, in Europe and the United States, they are going through the most difficult times, economically and from the health side," he said.
"Australia, as the Prime Minister has said, has performed so much better than pretty much any other developed nation on both the health side and also on the economic side ... but we're not out of the woods yet, and what we've outlined today should be of great relief to the people."
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.
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2020-07-21 01:55:00Z
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