The Federal Government is under pressure to expand the eligibility of its Jobkeeper program to the millions of workers it has deliberately excluded, after a major blunder resulted in a $60 billion underspend and 3 million fewer people being supported by the wage subsidy than previously reported.
Prime Minister Scott Morrison has said Jobkeeper was a $130 billion “program of historic proportions that is helping 6 million Australians”.
But on Friday the government was forced to admit that the wage subsidies were only supporting 2.9 million workers. The original Treasury forecasts of 6.5 million people to be helped by Jobkeeper have been revised down to 3.5 million, with a cost of $70 billion.
Millions of casuals, migrant workers, university workers, arts sector employees, local government employees and staff of foreign-owned companies were shut out of Jobkeeper; Treasurer Josh Frydenberg has been resisting calls to include them saying “we had to draw the line somewhere”.
Even before the blunder was revealed a broad spectrum of economists have advocated for increased stimulus spending as the only way Australia can avoid a deep and prolonged economic depression.
But on Friday evening Frydenberg said the Jobkeeper stuff up was not an “invitation to spend more money” and the government was “not making wholesale changes” to the program. He also remains committed to reducing the Jobseeker dole payment in September to the $40 a day poverty level it was at before the crisis.
This will be a hard line to maintain as only last week Deputy Treasurer Michael Sukkar said hypothetically if Jobkeeper was only supporting 3 million people (rather than the 6 million thought to be on it at the time) then there would be a case for “wholesale changes” to Jobkeeper eligibility.
The ATO said it discovered the discrepancy at the start of the week, but Treasury officials were still saying the Jobkeeper program was supporting 6.3 million workers on Thursday this week at a Senate commitee hearing.
The government has blamed the bungle on businesses incorrectly filling out their application form for Jobkeeper which overstated the number of employees who were covered by the scheme. Frydenberg said no excess payments were made and the discrepancy was a good sign because it shows the health and economic impacts of the virus were not as bad as originally expected.
Some have questioned where the original $130 billion figure came from given that this was announced long before the application forms were being filled in. Each recipient receives $750 a week over the 26 week program ($19,500) and so the $130 billion forecast costing implies almost 6.7 million people would be eligible.
A former Treasury economist told Voice of Action that the chain of command would have been happy that the supposed 6.3 million workers on Jobkeeper matched so closely with the original costing estimate and therefore the error remained undetected for so long.
“They ran with it until someone in the boring data matching/compliance section of the ATO found there were not 6 million TFNs, only 2.9 million, and then the digging began to get to why the ‘dashboard’ output from the applications data feed was saying 6 million,” the former Treasury official said.
But the former Treasury official and other economists interviewed by Voice of Action said this claim was a stretch. The faulty forecasting was based on expectations that the economy would be shut down for six months with a much more severe health impact.
Chris Edmond, professor of economics at the University of Melbourne, told Voice of Action that the bungle meant a lot less fiscal stimulus would be hitting the economy than was anticipated in March. He said the impact would depend on the reason why the number of businesses taking up Jobkeeper was less than anticipated.
“Is that because the economy is not as weak as anticipated (in which case less need for stimulus) or because more businesses are giving up and not even bothering to claim even though eligible (in which case even more need for stimulus),” said Edmond.
Australian Council of Trade Unions secretary Sally McManus said: “The estimates are very likely wrong because the statistics on the number of people with permanent secure jobs in Australia have been way out for a while seriously under-estimating the number of casual and insecure jobs.”
Per Capita economist Shirley Jackson said the government’s reluctance to spend to help pull the economy out of the crisis telegraphed an austerity agenda to come.
“What they’ve borrowed wasn’t intended to stabilise the demand base within the economy, like the Rudd stimulus during the GFC, but rather to minimise the effects felt by business,” Jackson told Voice of Action.
The university sector, despite reporting more than $12 billion in war chests pre-crisis, has been particularly hard hit by the shutdown, which has cut off their main cash cow of international students.
The government has changed the rules multiple times to exclude universities from the Jobkeeper wage subsidies which has put tens of thousands of jobs in jeopardy.
Universities Australia chief executive Catriona Jackson on Friday called on the government to reconsider its decision to exclude universities or there would be 21,000 job losses and “a significant reduction in the essential research undertaken on our campuses”.
The Australian Services Union wants Jobkeeper extended to employees that were excluded because they work for a company that is foreign owned, such as those who worked for dnata and Air Nuigini.
“They should have access to the same financial support as other Australians,” said ASU assistant national secretary Linda White.
“Dnata employees have been stood down without pay since March and are struggling to put food on the table for their families. It doesn’t need to be this way.”
The Victorian Trades Hall Council (VTHC) said starving migrant workers were queuing up at food banks because they didn’t have access to Jobseeker or Jobkeeper.
The Migrant Workers Centre, part of the VTHC, said: “How can Josh Frydenberg condemn over a million migrant workers to starve when the Morrison Government has $60 billion in its back pocket?”
Greens education spokeswoman Mehreen Faruqi said: “Desperate international students, who have been going hungry and falling into destitution, should urgently be given access to Jobkeeper and provided with income support.”
ATO second commsioner Jeremy Hirschhorn said the revising down of the Jobkeeper forecasts from 6.5 million to 3.5 million, while large, showed “the economy has been more resilient than anticipated in the original estimates, which is good news”.
He said about 1000 businesses incorrectly filled out the part of the Jobkeeper appilcation form that asked how many of their employees would be covered – with about 550 employers putting down 1500 employees instead of one employee. The ATO worked out the error earlier this week when it realised that the 3 million or so people it had paid out did not match the 6.5 million estimate.
“With hindsight, perhaps the form could have been more straightforward … However, I do note that only 1,000 of the 900,000 employers misinterpreted that question,” said Hirschhorn.
Labor said millions of Australians were being deliberately excluded from support by the government purportedly because the program was full, but in fact it was three million workers short.
“This is a mistake you could have seen from space, and this is a government that couldn’t run a bath, let alone be good economic managers,” said Labor leader Anthony Albanese.
Greens senator Rachel Siewert said the government has no excuse to return the Jobseeker dole payment to $40 a day at the end of September.
“Further, the Government can top up the DSP and Carer Payments so that disabled people and carers can meet the additional costs they are facing because of the pandemic,” said Siewert.
“No one in a country as wealthy as Australia should be living in poverty and cutting income support payments to those who need it most is a choice, not an inevitability.”
Independent MP Zali Steggall has called on the government to “consider a special package to arts & entertainment industry and casuals that have missed out”.
Greens arts spokeswoman Sarah Hanson-Young said: “The arts and entertainment industry has been one of the hardest hit by coronavirus restrictions and will be one of the last to recover, yet the government has left many artists and creatives without support due to the nature of the work.”
Greens leader Adam Bandt wants Jobkeeper expanded, the Jobseeker rate retained, a jobs and income guarantee for young people and investments in “nation-building planet-saving projects”.
GetUp national director Paul Oosting said the Jobkeeper bungle was one of the biggest policy failures of the pandemic and if Morrison didn’t extend Jobkeeper to casual workers and temporary visa holders “he cannot say it’s because of the cost”.
“We’ve heard devastating stories of people turning to the generosity of local restaurants providing free food to eat, families who have called Australia home for years now facing homelessness, and workers who’ve lost their jobs, with no way to return home,” said Oosting.
Business groups such as the Council of Small Business and the Australian Chamber of Commerce and Industry have also supported expanding the Jobkeeper eligibility.
Treasury secretary Steven Kennedy said a review of Jobkeeper would be conducted at the end of June. Only $8.7 billion has been paid out to Jobkeeper recipients so far compared to $13.2 billion paid out for people accessing their superannuation early.