Last Sunday, Treasurer Josh Frydenberg announced the temporary emergency support program JobKeeper came to an end. Saying it has achieved its objectives of supporting businesses and saving jobs, preserving employment relationships and delivering much needed income support across the economy.
JobKeeper was an economic lifeline which helped keep around a million businesses in business and 3.8 million Australians in a job at the height of the pandemic. The RBA estimated that JobKeeper saved at least 700,000 jobs.
When JobKeeper was announced on 30 March 2020 Australia was standing on the edge of an economic abyss.
Treasury feared double digit falls in GDP and a tripling in the unemployment rate to 15 per cent with more than 2 million Australians potentially unemployed.
We were all witness to the confronting scenes of tens thousands of our fellow Australians queuing up outside Centrelink as the economic impact was felt from health restriction being imposed to contain the spread of COVID-19.
Following the announcement of JobKeeper consumer confidence recorded its largest weekly gain on record and went on to increase for nine consecutive weeks.
On 21 July 2020 the Morrison Government extended the temporary JobKeeper payment for an additional six months from September until March with two tiers of payment to account for full and part time workers.
As of the end of February, ATO data indicates around 680,000 businesses employing 2.8 million people have graduated from JobKeeper with the unemployment rate today at 5.8 per cent.
While JobKeeper comes to an end, the Government’s economic support does not, with around $100 billion of our $251 billion in unprecedented economic support still to flow.
As we move to the next stage of the Government’s Economic Recovery Plan, private sector activity will continue to be boosted through a number measures including tax cuts, unprecedented business investment incentives, more skills and training places, new infrastructure projects and targeted support like the $1.2 billion aviation and tourism package.
The continued easing of restrictions together with incentives for households and businesses to spend will help unlock the more than $240 billion of savings accumulated throughout the pandemic and now sitting on household and business balance sheets.
As Treasury has indicated, the JobKeeper program must come to an end as the economy strengthens.
To do otherwise would be counterproductive for the Australian economy, as the continued operation of the program would hamper labour mobility and people moving to more productive roles in the labour market.
Having outperformed all major advanced economies on the economic front in the last 12 months there is no other country you would rather be in than Australia.