Supporting Individuals and Households: JobKeeper and JobSeeker Continues
From the Desk of the Chief Economist – 21st July 2020
COVID-19 continues to impact the Australian economy, albeit currently at different levels for each individual and households, predominantly depending upon your geographical location (State) and the industry that provides a main source of income.
The Federal Government is continuing to provide financial assistance to Australians throughout this time. On 21st July the Federal Government announced it is extending the JobKeeper payment until 28th March 2021 and is targeting support to those employers who continue to be highly impacted by COVID-19.
The JobKeeper payment rate is to be reduced and paid at two rates:
- From 28th September 2020 to 3rd January 2021, the payment rate will be $1,200 per fortnight for all eligible employees who, in the four weeks before 1st March 2020, were working in the business for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week. $750 per fortnight for employees who were working in the business for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the same period.
- From 4th January 2021 to 28th March 2021, the payment rate will be $1,000 per fortnight for all eligible employees who in the four weeks before 1st March 2020, were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week. $650 per fortnight for employees who were working for less than 20 hours a week on average and business participants who were actively engaged in the business for less than 20 hours per week in the same period.
Because of COVID-19 the number of Australians on the JobSeeker payment doubled, to 1.7 million workers. Those currently on JobSeeker payments will continue to receive COVID-19 supplement of $550 a fortnight until 30th September 2020. Changes to JobSeeker:
- Adjusting the COVID-19 supplement down to $250 per fortnight. This is on top of a base rate of $565.
- Phase 1 (from 4th August): Connecting to employment services – requiring 4 job applications per month. Penalties will apply if a job offer is then refused
- Phase 2 (end of September): Higher rate of job search, reintroducing assets tests as part of eligibility criteria.
In addition to this the Government is extending the payment period and adjusting the amount of its temporary COVID-19 supplement for eligible income support recipents from 25th September to 31st December 2020. The Government is temporarily allowing individuals affected by COVID-19 to access some of their superannuation, extending access to 24th September 2020.
At present there are 3.5 million workers in 960,000 businesses receiving the JobKeeper subsidy. From 28th September 2020, employers seeking to claim JobKeeper payments will be required to reassess their eligibility for the JobKeeper extension with reference to their actual turnover. This may result in many being inelligible for the JobKeeper susbidy, particularly for industries that has seen a pick-up in trade due to easing of restrictions.
This news will come as a relief to many employers and inviduals, as many were looking down the “September cliff”. Individuals currently still unemployed temporarily, or working under 20 hours, have been on the edge of their seat wondering how their finances will look beyond the September deadline.
However according to Treasurer Josh Frydenberg, the Federal Government’s initiative to extend the JobSeeker supplement would cost $3.8 billion to December 2020. The JobKeeper scheme is costing about $70 billion for the first six months. Mr Frydenberg said the six month extension of a much more limited scheme would cost about $16 billion. Depending on business growth, employment rates, and the Federal Budget national accounts position; we may need to recoup these costs in the near future.
Click here for more information on the Federal Government’s Economic Response to the Coronavirus.