Everything You Need To Know About The Govt's $60 Billion JobKeeper Mistake
If you’ve scrolled through any news sites over the weekend, there’s a good chance you would’ve seen something's up with the govt's JobKeeper scheme. If you haven't been following along closely, it can all seem very confusing. Everything you need to know below.
What is JobKeeper, again?
The JobKeeper payment scheme is a temporary subsidy introduced by the govt to keep workers in their jobs during the pandemic. It’s a flat $1500 a fortnight (per employee) paid to eligible employers hit hard by coronavirus, which then gets passed on as a wage subsidy on to employees. It began on March 30 and is set to run until September 27.
So, what’s with the JobKeeper reporting error?
The govt had initially estimated JobKeeper would cost $130 billion, making it the single biggest piece of govt spending ever. But on Sunday, ScoMo announced the govt had overestimated how much they’d be spending on JobKeeper by a huge $60 billion. It had gotten wrong estimates on how many people would access the scheme – it predicted 6.3 million Aussies to enrol, but only 3.5 mill did – and how hard Aus would be hit by COVID-19, reports The Guardian.
The ATO and Treasury said in a statement the error came about because of the vagueness of the forms that businesses were asked to fill out when they were estimating the cost of the scheme. On them, businesses mistakenly reported how much financial assistance they expected to receive, instead of how many employees they thought would be eligible.
"For example, over 500 businesses with '1' eligible employee reported a figure of '1,500' (which is the amount of JobKeeper payment they would expect to receive for each fortnight for that employee)," the departments said via the ABC. Oops.
ATO Second Commissioner Jeremy Hirschhorn: "With hindsight, perhaps the form could have been more straightforward. The question was reasonably clear, it is just unfortunate that 1,000 employers misunderstood it."
You can read more about the reporting error here.
What else went wrong with JobKeeper?
One of the major problems with the scheme – something that also played into the overestimation – was timing. Businesses couldn’t apply for the program if they were closed or had sacked their staff. Though the program was announced in April, it was only in May that the cash started to flow and, with limited funds coming through beforehand, many businesses couldn’t hold out until then. Essentially, the program kicked in too late.
The PM gave a presser on Sunday announcing the error and sharing his thoughts. During it, he likened the shortfall to a housing contractor quoting one price for a home and then final bill coming in under. "That is news that you would welcome," he said.
He later went on to say: "There are many things you don't know in the middle of a crisis and when you're designing programs and schemes the size of JobKeeper, there were many unknowns and Treasury did the best they could to estimate what the cost would be," he said via SBS.
ScoMo then went on to say the govt was to blame but that the mistake was actually a good thing as it meant Aussies wouldn’t have to borrow as much.
"This is not money that is sitting in the bank somewhere, this $60 billion, this is money that would have otherwise had to be borrowed against the taxes that future generations would pay and so the result of this is that the program will cost not what it was estimated to cost.
"That means for the taxpayer, their debt levels will be lower, their interest bill will be lower and the government will be able to ensure it will continue to provide the many other essential services without the burden of that greater debt."
What are the critics saying?
Opposition frontbencher Penny Wong called it a "$60 billion black hole in the economic credibility" of the govt.
"We can't trust anything Scott Morrison or [Treasurer] Josh Frydenberg say about the economy or the budget, and perhaps worse has been the failure to front up and take responsibility," she said on ABC’s Insiders program via SBS.
"What I would say to Josh, this is your opportunity to front up and explain the $60 billion blunder to the parliament and to the Australian people."
Where's the extra cash going?
When the error was first reported, many thought the extra cash would be given to those who’d originally missed out on JobKeeper: casual workers employed for less than 12 months, uni staff and creative’s, or businesses who relied on overseas tourism. But the treasurer announced today (Monday) that wouldn’t be the case.
"We're doing a review and obviously we will see how it's being implemented as well as seeing how the economic conditions are at the time," Mr Frydenberg said via Nine.
"There are no plans for wholesale changes to the eligibility criteria. We recognise there are some sectors like tourism that are going to do it tough for quite a while because the international borders will remain closed for quite a while.
"Now, we've already provided support to those sectors, but we will continue to look at other options that we may have to continue that support. But the best way to get people back in a job is through the easing of the restrictions.”
If your head is a little scrambled, make sure you pop over to WHO.int to get all of your official COVID-19 updates.
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