Invest
Government announces overhaul of JobKeeper and JobSeeker programs
The Morrison government will extend JobKeeper and JobSeeker beyond September, but eligibility will change as the government looks to reign in some of its spending, a Treasury update has revealed.
Government announces overhaul of JobKeeper and JobSeeker programs
The Morrison government will extend JobKeeper and JobSeeker beyond September, but eligibility will change as the government looks to reign in some of its spending, a Treasury update has revealed.
The overhaul was revealed on Tuesday, 21 July, prior to full details being released by Prime Minister Scott Morrison and Treasurer Josh Frydenberg in an economic update on 23 July.
“JobKeeper has been an economic lifeline to millions of Australians and that lifeline will be extended for those businesses that need it most,” Mr Frydenberg said.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg have announced that the current $1,500 per fortnight JobKeeper payment will be reduced to $1,200 per fortnight from 28 September, and $750 per fortnight for employees working less than 20 hours a week.
From 4 January, the rate will again fall to $1,000 per fortnight, and $650 for people working less than 20 hours a week.
The program will run to 28 March 2021, at a further cost of $16 billion, taking the entire JobKeeper program to $86 billion.
The changes to JobKeeper include two payment tiers to help align wages closer to pre-COVID incomes and a rebalancing of the $550 a week JobSeeker program.
“The review of JobKeeper found that the program has been well targeted to those businesses that suffered an average decline in turnover in April of 37 per cent compared to the same month last year,” Finance Minister Mathias Cormann said.
“What the review also found was that there were a number of features of JobKeeper that created adverse incentives which may become more pronounced over time as the economy recovers. This formed part of our considerations as we looked at the next phase of the JobKeeper program.”
Changing rates
The Treasury’s update revealed that one in four of the 3.5 million Australians on the JobKeeper program is currently benefiting from higher wages.
A quarter of those Australians with higher salaries are earning $550 more than they were before the COVID-19 shutdown.
It is understood that the government will adopt two payment tiers to more closely reflect the incomes of those who previously worked fewer hours.
“JobKeeper was designed to prioritise macro-economic support and speed and ease of implementation,” the Treasury said.
“However, JobKeeper has a number of features that create adverse incentives which may become more pronounced over time as the economy recovers.
“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.”
RELATED ARTICLES
About the author
About the author
Economy
Inflation concerns grow as consumer price index rises, prompting potential interest rate hikes
The latest Consumer Price Index (CPI) data has sparked fresh concerns about inflation in Australia, with experts suggesting that further interest rate hikes may be on the horizon. The CPI, a key ...Read more
Economy
State Street economist comments on latest labour force data amid market anticipation
The latest labour force data, released today, has prompted a measured response from financial experts, with insights provided by Krishna Bhimavarapu, APAC Economist at State Street Investment ...Read more
Economy
RBA's interest rate hike impacts Australian employment landscape
The Reserve Bank of Australia (RBA) has decided to increase interest rates by 25 basis points, raising the cash rate to 3.85%. This move, aimed at controlling inflation, has elicited responses from ...Read more
Economy
RBA’s latest rate hike sparks debate over economic impact
In a surprising move, the Reserve Bank of Australia (RBA) has increased the cash rate, signalling a significant shift in its monetary policy approach. This decision comes amid a backdrop of unexpected ...Read more
Economy
When inflation reopens the rate door: A broker-sector case study in defending margins, clients and share
Australia’s latest trimmed-mean inflation reading at 3.3% has revived the prospect of another Reserve Bank move and put lenders, brokers and borrowers back on a tightening footing. This case study ...Read more
Economy
Inflation rise dampens hopes for interest rate cuts as employment dynamics shift
In a development that has dashed hopes for an interest rate cut, Australia's Consumer Price Index (CPI) has surged back to 3.8%, erasing the progress made since October. This unexpected rise in ...Read more
Economy
Inflation surge poses challenges for small businesses and consumers
The latest inflation figures have sparked concern among Australian businesses and consumers alike, with the rising costs expected to influence the Reserve Bank of Australia's (RBA) upcoming interest ...Read more
Economy
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
Economy
Inflation concerns grow as consumer price index rises, prompting potential interest rate hikes
The latest Consumer Price Index (CPI) data has sparked fresh concerns about inflation in Australia, with experts suggesting that further interest rate hikes may be on the horizon. The CPI, a key ...Read more
Economy
State Street economist comments on latest labour force data amid market anticipation
The latest labour force data, released today, has prompted a measured response from financial experts, with insights provided by Krishna Bhimavarapu, APAC Economist at State Street Investment ...Read more
Economy
RBA's interest rate hike impacts Australian employment landscape
The Reserve Bank of Australia (RBA) has decided to increase interest rates by 25 basis points, raising the cash rate to 3.85%. This move, aimed at controlling inflation, has elicited responses from ...Read more
Economy
RBA’s latest rate hike sparks debate over economic impact
In a surprising move, the Reserve Bank of Australia (RBA) has increased the cash rate, signalling a significant shift in its monetary policy approach. This decision comes amid a backdrop of unexpected ...Read more
Economy
When inflation reopens the rate door: A broker-sector case study in defending margins, clients and share
Australia’s latest trimmed-mean inflation reading at 3.3% has revived the prospect of another Reserve Bank move and put lenders, brokers and borrowers back on a tightening footing. This case study ...Read more
Economy
Inflation rise dampens hopes for interest rate cuts as employment dynamics shift
In a development that has dashed hopes for an interest rate cut, Australia's Consumer Price Index (CPI) has surged back to 3.8%, erasing the progress made since October. This unexpected rise in ...Read more
Economy
Inflation surge poses challenges for small businesses and consumers
The latest inflation figures have sparked concern among Australian businesses and consumers alike, with the rising costs expected to influence the Reserve Bank of Australia's (RBA) upcoming interest ...Read more
Economy
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
