The Federal Government has today affirmed it will maintain current JobKeeper arrangements until the end of September, before introducing JobKeeper 2.0 with staged reductions until 31 March 2021.
The new two-tiered payment support scheme is expected to lift the total cost of the initiative by $16 billion.
From October, businesses that continue to meet the revenue reduction requirements will be entitled to $1,200 per fortnight for employees who were working 20 hours or more weekly prior to the outbreak, followed by a reduction to $1,000 starting in 2021.
For employees who worked less than 20 hours per week in the pre-COVID environment, their supports will drop to $750 per fortnight as of October and $650 from the start of next year.
Prime Minister Scott Morrison (pictured) told a press conference this morning more than $30 billion had been provided through the JobKeeper program to around 960,000 businesses and 3.5 million employees. The total cost of the adjusted program has been tabled at $86 billion.
"It has been effective in stemming the loss of business closures and job losses," he said.
"It has saved businesses and it has saved livelihoods. That is the feedback I've been getting direct as I've spoken Australians - employees, employers - all around the country. It has been the game changer for them.
"Their businesses would not be here, their jobs would not be here were it not for the intervention and the way it was undertaken so quickly and so effectively."
While JobKeeper has drawn some criticism for giving many casual workers higher incomes than before the pandemic, the PM emphasised a conscious decision was made to have a flat rate payment to avoid "crushing" Centrelink while recognising many people worked two or three jobs.
"The report [Treasury's JobKeeper review] points out some 39 per cent loss of income from other jobs, and JobKeeper was designed to only be provided through one employer, so you couldn't go and get it from all your other employers if you had multiple jobs," the PM said.
"This also had important aggregate demand impact of ensuring that we were channeling those payments at a flat rate right across the labour force.
"A key part of the design was to ensure that we leveraged private payrolls to ensure that we did not crush the Centrelink system."
To help buffer the blow from the phased reduction of JobKeeper, the government will increase income-free area that is available to those on JobSeeker unemployment benefits to $300.
"Where you may have been getting $550 before, you can earn $300 and and then there's the $250 supplement that will come through the COVID- supplement and that will run out till the end of this year," he said, later clarifying a review will be undertaken and there will likely be a need to continue those supplements next year.
"We will be reintroducing mutual obligation in two phases - from the 4th of August we will be requiring people to connect again to employment services and to undertake four job searches a month, and the penalties regime will kick in if people refuse a job that has been provided and offered through that process.
For the second phase of mutual obligation requirements at the end of September there will be a higher rate of job search, and the assets test will be reintroduced for eligibility.
These measures come at a time when the headline unemployment rate has reached 7.4 per cent, but the effective unemployment rate stands at 11.3 per cent.
Treasurer Josh Frydenberg said around 30 per cent of the pre-COVID private sector workforce was on JobKeeper, and Treasury's review found it had met its three primary objectives: to save jobs and businesses; to maintain a formal connection between employers and employees; and to provide income support.
"It cited ABS (Australian Bureau of Statistics) data that 44 per cent of businesses on JobKeeper said that JobKeeper influenced their decision to keep their staff on," he said.
The Treasurer added revenue reduction tests would remain the same although reapplied at 30 per cent for most businesses, 50 per cent for businesses with turnover of $1 billion or more, and 15 per cent for charities.
"Treasury expects that the number of JobKeeper recipients will reduce substantially, with around 1.4 million people remaining eligible in the December quarter 2020, and one million in the March quarter 2021.
"We know that the economic pain caused by COVID will end, and that many businesses now struggling will be viable once again. This is why we're extending the payment to buy time to get businesses and their employees to the other side."
This sentiment was shared by the Prime Minister, who said the government looked forward to a time when businesses would not need JobKeeper.
"When JobKeeper is not necessary that'll be a good day for Australia, because that will mean our economy is getting back to a much higher level of performance, and businesses are able to support their employees," the PM said.
"Australia is a country that just doesn't look to survive these things. We don't go through challenges with our heads looking down, overwhelmed by the circumstances - that is not who we are.
"Who we are is an innovative, adaptive people, supporting each other, reaching out to each other, drawing us all through not for survival but to be on the other side in a position where we can emerge strong."
Updated at 11:56am AEST on 21 July 2020.
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