JobKeeper payments which support an estimated 3.5million Australians are being reduced from today.
The federal government has extended the $86billion scheme until March but is gradually reducing the payments to wean the economy off government support.
From 28 September to 31 December, JobKeeper will be reduced to $1,200 per fortnight for full-time workers and to $750 for people working 20 hours or less per week.
JobKeeper payments which support an estimated 3.5million Australians are being reduced from today. Pictured: A cafe worker in Melbourne
From 28 September to 31 December, JobKeeper will be reduced to $1,200 per fortnight. Pictured: A cafe worker in Sydney
The payments will be made directly to companies that suffer a 30 per cent drop in revenue in the previous three-month period.
The companies then pass on that benefit in full to their workers and can also ‘top-up’ their wages if they chose.
Businesses with more than $1billion in turnover have to demonstrate a 50 per cent fall to get the payments.
From January to March, the full-time JobKeeper rate will be $1,000 and the part-time rate will reduce to $650.
In July the government estimated that 1.4million Australians will be on JobKeeper until December and 1million from December until March.
The federal government has extended the $86billion scheme until March but is gradually reducing the payments to wean the economy off support. Pictured: A tradie in Melbourne
The cost of extending the scheme from September until March is estimated at $16.6billion.
The government is reducing the payment to ease the burden on taxpayers – who have already forked out $70billion for the scheme.
It is also concerned that JobKeeper is propping up so-called ‘zombie’ firms that will not be viable even after the coronavirus pandemic.
Labor and unions have argued that the JobKeeper payments should be kept at $1,500 per fortnight.
Shadow treasurer Jim Chalmers said the cuts would strip $680million a fortnight out of the economy just when it is needed.
‘It makes absolutely no sense for the government to be cutting support to workers, communities, businesses and local economies when the economy is still as weak as it is today,’ he said.
Federal Treasurer Josh Frydenberg has promised the government will continue to support Australians through the pandemic, saying his October 6 budget will focus on economic recovery and creating jobs.
He said a new report by Deloitte Access Economics makes clear the government ‘acted fast and well’ and that JobKeeper and JobSeeker have been the ‘standouts’ cushioning the economy.
Treasury estimates that the JobKeeper scheme has saved about 700,000 jobs since March.
How are the support payments changing from September?
* The $1,500 fortnightly wage subsidy will continue until September 27 – covering 3.5million workers
* From the end of September to December 31, JobKeeper will be reduced to $1,200 for full-time workers and $750 for people working 20 hours or less – with 1.4million workers eligible
* From January to March, the full-time rate will be $1,000 and part-time will reduce to $650 – with the scheme covering 1million workers
* Businesses turning over less than $1billion will have to show a 30 per cent drop in revenue in the previous quarter
* Businesses with more than $1billion in turnover have to demonstrate a 50 per cent fall
* The elevated unemployment benefit will remain at $1,100 a fortnight until September 24
* From that date until the end of the year the $550 coronavirus supplement will be cut by $300 to make the overall fortnightly payment $800
* People will be able to earn up to $300 without having their payment reduced
* The mutual obligation rules requiring people to search for four jobs a month will restart on August 4
* Penalties for people refusing a job offer will be reintroduced
* Job search requirements will increase in September when the assets test will also return
Mr Frydenberg on Friday gave his strongest hint yet that the JobSeeker payment will continue to be boosted next year.
In April the government doubled the fortnightly payment to $1,100 as thousands lost their jobs due to coronavirus restrictions.
The $550 boost has now decreased to $250 and is due to end at the end of December.
The treasurer said his government is ‘leaning’ towards extending the boost.
‘As a government, later this year, we’ll make a decision about further support for people in JobSeeker, but we’re leaning in on continuing to provide support,’ he told reporters on Friday.
Social Services Minister Anne Ruston has said the government would not make a call until it could see the impact of the reduction.
About 1.5 million Australians are on JobSeeker, including people on unemployment, sickness and bereavement benefits.
Labor wants the base rate of JobSeeker to be increased but will not say by how much.
Mr Frydenberg on Friday said the federal budget deficit hit $85.3 billion in 2019/20 as the government wrestled with the initial impact of the virus.
He said Australia had approached the pandemic from a position of economic strength, having in December forecast a $5 billion surplus.
‘Yes, the hole in the Australian economy is significant. Yes, the road back will be long, bumpy and hard,’ Mr Frydenberg told reporters in Canberra.
In April the government doubled the dole payment to $1,100 as thousands lost their jobs due to coronavirus restrictions