Major economic lifelines from the government, including JobKeeper and the coronavirus-boosted JobSeeker, will be extended and revamped beyond September.
The JobKeeper wage subsidy will be extended for another six months until March 28, while those on the COVID-19 supplement benefit may continue to receive it until the end of the year.
JobKeeper and the increased JobSeeker was originally due to finish on September 27 and September 24 respectively.
There will be major differences between the existing JobKeeper and the new scheme, starting on September 28:
- JobKeeper payments will be tapered, from the current fortnightly payment of $1500 to $1,200 in the December quarter, and then $1,000 in the March quarter for full-time workers.
- Employees who work for less than 20 hours on average per fortnight could receive $750 in the December quarter and $650 in the March quarter.
- Businesses may only be eligible if its turnover remains below the threshold in the December and March quarters.
JobKeeper will remain open for eligible organisations that have not received the subsidy in its current form.
JobKeeper 2.0 is expected to cost an additional $16.6 billion.
JobSeeker and the coronavirus supplement
The fortnightly coronavirus supplement will be reduced from $550 to $250. For the typical unemployed person receiving the supplement, this brings the payment from $1,100 a fortnight down to about $800 a fortnight.
The pre-pandemic unemployment benefit, formerly Newstart, was about $560 per fortnight.
Those already receiving the COVID-19 supplement as well as new applicants may be eligible for the revamped benefit boost after the current measures end on September 24.
How you can protect your finances
The news of government support being extended follows the announcement in early July that some banks may consider continuing mortgage repayment deferrals by up to four months, or until March, for those struggling financially.
Pauses in home loan repayments won’t be extended automatically across the board, and may only apply to mortgage holders who are in ongoing financial hardship and can’t restructure their home loans.
Also concerning is the increasing proportion of people without jobs, with the unemployment rate hiking consistently from 5.2 per cent in March to 7.4 per cent in June, according to the Australian Bureau of Statistics. Factoring in the JobKeeper extension, this is still expected to rise to 8.4 per cent in the 2020-21 financial year, IBISWorld senior industry analyst Matthew Barry predicts.
Australians now have up to another six months to prepare for a potential worst-case scenario. With the extra time bought by the government, there are three things you can do until then to plan ahead and help protect your finances. Consider consulting a financial expert for advice specific to your situation.
1. Clear high-interest debts
One of the first things you should do while you still have some form of income is to consider paying off your short to medium-term debts. If you have more than one debt, it might be difficult to clear everything you owe. The general advice in this situation is to pay off your debt with the highest interest rate. This could be a credit card debt or a personal or car loan, as the debt with the highest rate will incur the most interest costs.
If you have a credit card debt, you might consider switching to a balance transfer credit card. By doing this, you could transfer an outstanding balance to a new card with a set interest-free period, allowing yourself some time to pay off existing credit card debt.
If you have a personal or car loan, you could consider refinancing to a lower-interest option. If you have more than one debt, consolidating your debt into one personal loan could be something worth considering to simplify your repayments.
2. Check in with your mortgage lender
If you’ve deferred your home loan repayments, you might want to check in with your lender to see where you stand and what your options are. If you’re struggling financially, the lender may consider restructuring your home loan or potentially extending your repayment deferral. Another option is to negotiate a lower interest rate with your lender ahead of time to potentially help you manage your monthly repayments. Many home loan interest rates start with a two, especially for owner-occupiers, so it could be worth asking for a rate reduction.
3. Set up an emergency fund
In times of uncertainty, it may make sense for concerned Australians to strengthen their financial safety net. While there are many ways to do this, one relatively straight-forward option is to set up an emergency fund. Aiming for $2,000 in your emergency fund may potentially be a good place to start. However, different households may have different needs, so you should always consider your own financial situation when thinking about emergency funds.
To get a clear idea of how your emergency fund should look like, it could be worth your time to budget your family’s expenses and income. For those who already have an emergency fund, you could consider topping it up for a more secure financial safety net if you’re in a position to do so. What’s more, you might even want to sell any unused household items on eBay or Gumtree for some extra cash.