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The JobKeeper Stuff Up – Was It A Case Of Artificial Imbecility?

On Thursday, the Treasury announced a $60 billion shortfall in the amount of money required for the Jobkeeper program. The question is – How did this happen?

The truth is, there were two stuff-ups: the tax Office overestimated the number of people applying for Jobkeeper while Treasury over-estimated the eventual cost of the program. The Tax Office mistake was due to a simple error on the part of employers filling in the form. In the box asking for the number of employees to be put on Jobkeeper, 1,000 businesses entered the amount of money to be paid to them. So if there were two employees to go on Jobkeeper they entered 3,000.

When the computer counted the number of people to go on Jobkeeper, it assumed that every answer was correct. Coincidentally, the number the computer-delivered was close to the Treasury estimate of 6.5 million people to go on Jobkeeper, which seemed to confirm its accuracy.

It wasn’t until Thursday that Treasury Secretary, Stephen Kennedy, was told that the amount of money to be paid out was $60 billion short of estimates. A quick review revealed computer error.

At the moment there is no explanation as to why 3 million less than the predicted number of employees were put onto Jobkeeper. A number of explanations have been tendered: a large number of tradies operate partially in the cash economy and do not want to disclose it; a larger number of people remain in employment than previously anticipated; and the fact that a 50% fall in turnover for companies earning more than $1 billion or more was too big a threshold. Another explanation is that Treasury based its estimates on a New Zealand style lockdown rather than the less restrictive Australian model.

Labor wants Treasurer, Josh Frydenberg, to provide an explanation for the stuff-ups. They intend to call him before the COVID 19 Senate Committee. Labor’s Senate leader, Penny Wong, said Frydenberg should have “the courage” to accept a forthcoming invitation to appear before the Senate select committee on Covid-19 to take responsibility for the error.

“We’d say to Josh when you’ve got a budget blunder of this size, I reckon it is about time you fronted up and explained it,” Wong told the ABC’s Insiders program.

When asked about this on Sunday, Prime Minister Scott Morrison said it was not parliamentary practice for House of Rep's ministers to appear before Senate Committees.

“I think to now try and change the rules exposes that as a bit of a political stunt,” the Prime Minister said at a media conference alongside the pre-selected Liberal candidate for Eden Monaro Fiona Kotvojs.

He said, “When the Treasury had calculated its original estimate that the program would cost $130bn over six months, it was a very uncertain economic time.”

“I’ve got to tell you, on the day it was a big gulp for the government to understand what we needed to do but we didn’t flinch,” Morrison said.

“We knew this was necessary and we responded quickly. We made the estimates based on the best information we had available to us and that proved to be overly cautious.”

He said there had been no loss to the taxpayer – “in fact, it’s been the reverse”.

The Prime Minister hinted that the spare $60 billion would be used to support the media, arts, and tourism sectors.

In the circumstances the Senate Committee may have to be content with calling Treasury Secretary, Dr. Kennedy, to explain what went wrong. Otherwise, we will have to wait until the review of the scheme which is scheduled for June.