A$130 billion over six months, A$1,500 a fortnight per worker, an estimated 6 million jobs. Those are the numbers behind JobKeeper, the wage subsidy Prime Minister Scott Morrison announced on Monday, March 30. In US dollars Reuters put the cost at $79.85 billion.
It is the third round of stimulus against the coronavirus pandemic. Reuters said it takes Australia’s virus-related spending to A$320 billion, about 15% of GDP.
Who qualifies
Any business that can show a 30% drop in turnover caused by the virus can apply. Firms with annual turnover of A$1 billion or more must show a 50% drop. Not-for-profits and self-employed people are covered too, along with sole traders and casual workers who have been with an employer for more than 12 months.
Employees must be over 16 and have been on the books on March 1, 2020. That lets a business claim for staff stood down in the past month. Reuters noted that thousands of Australians who have already lost their jobs can get the payments through their former employer. Temporary visa holders are excluded, with exceptions that include New Zealand citizens on the subclass 444 visa. A worker can receive the payment from only one employer.
Treasurer Josh Frydenberg said the payment is equal to about 70% of the national median wage. Employers must pass it on to staff, and the tax office will enforce that using single touch payroll. An employer may top up pay for anyone who normally earns more. Whether to keep paying superannuation is up to the employer.
What comes next
Payments are due to start in the first week of May, backdated to March 30. The ATO has opened expressions of interest on its website, and employers will later have to identify eligible staff and send monthly updates. Legislation still has to pass, and parliament will sit again to get it through, with support expected from Labor.
Morrison said the scheme should stop firms from shedding staff. “We want to keep the engine of the economy running through this crisis,” he said. “It may run on idle for a time, but it will still continue to run.”
Questions remain over startups with little or no turnover, and over how the 30% drop will be measured, year on year or against recent months. The ATO would not give detail on the application process before the measures pass.
Markets liked it. The share market closed 7% higher shortly before Morrison spoke, and economists still expect Australia’s A$2 trillion economy to enter its first recession in almost three decades. Commonwealth Bank CEO Matt Comyn forecast a 10% contraction in the March quarter and called the package “a pretty good start.”
Sources
- Government unveils $130 billion wage subsidy for small business, including sole traders
- Australia pledges $80 billion wages subsidy to protect jobs from coronavirus
