The Federal Government has expanded its JobKeeper support payment for businesses and relaxed eligibility criteria in the wake of a pandemic teetering on a second wave along Australia’s east coast.
Treasurer Josh Frydenberg announced a $15.6 billion expansion to the support program today, pushing the total JobKeeper bill to $101 billion.
"Around $13 billion of that will make its way to Victoria with an extra 500,000 Victorian employees going on to JobKeeper through the September quarter," Mr Frydenberg said.
“... Obviously with the stage four restrictions, particularly in Victoria, through the months of July, August and September, it’s going to be very difficult.”
The stimulus payment, of $1500 before tax per fortnight to help businesses keep employees at work, will be easier for more businesses to sign up to with some of the qualifying criteria being relaxed, Mr Fyrdenberg said.
Business turnover will only have to be down year-on-year over the September quarter -- as opposed to two quarters -- for businesses to be eligible for JobKeeper in September.
And employees who started working from July will now be eligible, whereas previously only those working from March were covered.
The JobKeeper payment is still expected to drop down to $1200 a fortnight from September.
What about JobSeeker?
The Government’s JobSeeker payment of about $1100 a fortnight is still expected to taper down to about $800 in September, in the wake of a growing unemployment rate and support from banks, analysts and advocacy groups to hold it at its current rate.
JobSeeker represented a $14 billion injection into welfare payments over a six month period, almost doubling the previously available unemployment benefit from $560 to $1100 per fortnight.
Reserve Bank Governor Philip Lowe credited the payment with cushioning the blow to households out of pocket due to the pandemic, amid what he described as the country’s “biggest contraction since the 1930s”.
“The Australian Government's recent announcement that various income support measures will be extended is a welcome development and will support aggregate demand,” he said, in a statement this week after the cash rate was held at 0.25 per cent.
“It is likely that fiscal and monetary stimulus will be required for some time given the outlook for the economy and the labour market.”
'The stimulus has helped’
Surveys conducted by banks, analysts and lobby groups mostly agree that the stimulus payment has helped prevent the financial toll of COVID-19 from being worse.
About 21 per cent of people had about $300 in savings, a survey of 1500 people by ME Bank found. This was notably less than the JobSeeker stimulus and they warned its eventual tapering could leave families facing a “saving’s cliff”.
“Unless the economy gains momentum, tapering government support too soon could have disastrous consequences on the financial comfort of households,” Jeff Oughton said, a consulting economist at ME Bank.
Research firm CoreLogic found the property market proved resilient in part due to the Government’s support, but warned the premature tapering of stimulus payments could skew the market’s medium term outlook to the downside.
“Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn,” Tim Lawless said, head of research at CoreLogic.
“Urgent sales are likely to become more common as we approach (the tapering of stimulus payments), which will test the market’s resilience.”
Advocacy group Better Renting surveyed 967 people and found the government’s stimulus payment was critical in ensuring they could afford their rent -- especially in cases where discounts and deferrals were not granted.
“The expansion of JobSeeker was an overwhelming positive (during the pandemic),” the advocacy group said. “On the old JobSeeker rate, it would have been an immense challenge to keep paying rent.”