The Changes to Jobkeeper and Jobseeker
The Prime Minister, Scott Morrison, announced the changes to Jobkeeper and Jobseeker at a press conference at Parliament House on Tuesday. Given the Treasurer is making his economic statement on Thursday this is a bit like talking about the bandage before you have diagnosed the wound but the PM reacted angrily to suggestions that he was being driven by politics rather than the national interest.
The press gallery is getting very excited by the idea that there will be an election in October or November so the government can capitalize on the coronavirus poll advantage.
The changes to the Jobkeeper program have corrected some of the flaws in the original system that was put together quickly to prevent economic collapse. Labor was critical of the fact that there were nearly 900,000 people who were overpaid by the first iteration of Jobkeeper. Labor argues that the $6 billion over-payment could have been re-allocated to people, like casuals and university academics, who missed out in the first round.
The Prime Minister reacted to this criticism by saying that if the government had adopted a tailored approach it would have resulted in lengthy delays that saw businesses collapse while they were waiting.
Jobkeeper is being cut to $1,200 a fortnight and the Jobseeker corona supplement is being cut to $250 a fortnight. However, the big change to Jobkeeper is a condition of rolling eligibility as opposed to the approach in the first program, which was a one-shot hand out where anyone who qualified got it for six months.
In the case of Jobseeker, the $250 supplement will continue until Christmas when it will be reviewed again. This has created a great deal of anxiety in the welfare sector which is demanding a permanent increase to unemployment benefits.
Treasury modelling shows that 50% of the businesses that received Jobkeeper suffered only mildly from the downturn due to the virus. These businesses were able to increase their profits courtesy of the subsidy and the new eligibility requirement is designed to get them off government support.
From the end of September, organisations seeking Jobkeeper will be required to reassess their eligibility with reference to their actual turnover in the June and September quarters of 2020. If they had a big enough decline, they will get to keep Jobkeeper for the rest of the year.
If they want it beyond this year until the end of March 2021, they will need to reassess their eligibility based on their actual turnover in the previous three quarters.
Next year the Jobkeeper payment will be cut to $1,000 a fortnight. There is no indication of what will happen to Jobseeker after Christmas.
Unions have expressed concern about the cut to the payment being made to part-time employees who worked less than 20 hours a week prior to the receipt of Jobkeeper. They will see their payments cut to $750 a week. The unions argue that this payment is too low.
They point to a design flaw in the system in that Jobseeker at $800 a fortnight will be higher than Jobkeeper for part-tie employees at $750 a fortnight. When supplements are added, the difference is much bigger. There is, therefore, an incentive for workers to be sacked and lose their connection with their employer. Jobseeker has the additional benefit that workers can earn $300 a fortnight without affecting their eligibility for Jobseeker. The unions are also opposed to the re-introduction of mutual obligation.
This problem can obviously be overcome by the employers paying top-ups if they want to keep their employees.