Here’s How The Government Could Spend The Extra $60 Billion From JobKeeper

What could Australia do with a cool $60 billion?

Well, it’s enough to cover the 2019-20 budget revenue for the entire state of Queensland. It would pay for the overblown budget of the $51 billion NBN. It could help top up the NDIS, which last year saw a $4.6 billion “underspend“. It’ll cover the $35.5 billion price tag of transitioning to a low-carbon economy. It could also get you 588 Sydney Opera Houses (ok, now we’re getting off track).

That $60 billion is how much the government is “saving” thanks to what you can probably safely call the biggest fuck up in Australia’s economic history.

Late on Friday the government quietly put out a statement admitting that their lauded $130 billion Jobkeeper scheme — costed to cover 6.5 million workers — would actually only need to cover 3.5 million of them. That oversight brings the scheme down to $70 billion. It’s still a hell of a lot of money, but it’s not quite what they were bragging about a few weeks ago.

Sure, they tried to cover their asses by blaming businesses for giving them the wrong figures. And then they tried to blame public servants for dodgy forecasting. But at least we’re seeing a government scheme come in under budget for a change.

So what now happens to that $60 billion they were eager and willing to spend just last week?

Well, groups are lobbying the government to expand JobKeeper so more people are eligible for the $1500 wage subsidy. So far the government has ruled that out — in fact, Treasurer Josh Frydenberg says the mistake is “good news” because the government can now just “save” that $60 billion was never spent in the first place.

“This is all borrowed money. And that means future generations, children and grandchildren of your listeners will have to pay it back and it will take years to pay back,” Treasurer Josh Frydenberg told Ray Hadley yesterday.

“We make no apologies for spending to support the economy during a crisis, but if a demand driven programme is supporting three and a half million people, and costing $70 billion, instead of $130 billion, then that means less money we have to borrow, and it’s just foolish for the Labor Party to think otherwise.”

It’s true, it’s not like the government had $130 billion in cold, hard cash sitting in a fat vault somewhere. The government has to borrow that money, and whatever they borrow now we’ll be paying back for decades.

The fact that the burden of economic recovery will disproportionately affect the younger generation isn’t new information.

But with the Treasurer saying they were happy to spend money to “support the economy”, people are asking why he’s not happy to use that money to support the vulnerable.

Here are just some of those groups crying out for extra government support in the middle of this economic crisis.

Casual workers $0
Universities $0
Arts $0
Disability and Carers $0
Accounting error $60,000,000,000
Aged pensioners $0

Someone who is good at the economy please help me budget this. My credibility is dying.

— Hamish Taylor (@HamishTaylor31) May 22, 2020

Casual Workers

Even before social distancing restrictions were enforced, casual workers were particularly vulnerable to the pandemic.

They’re often the lowest paid members of society, and found in industries with high rates of person-to-person contact, like hospitality, retail and aged care. That’s not to mention they have no paid leave to fall back on if they get sick, or if their workplace temporarily shuts down.

Right now, casuals can only access JobKeeper if they’ve been working for the same employer for more than 12 months. That means more than one million casuals miss out.

They do have access to JobSeeker, but that’s about $400 less a fortnight.

Temporary Migrants

Temporary visa holders get nothing from the government — they’re ineligible for the JobKeeper wage subsidy and the JobSeeker welfare payment.

Like we said earlier, the government budgeted for an extra 3.5 million workers in its original JobKeeper announcement. There are almost 900,000 temporary visa holders with work rights in Australia (not including New Zealanders, who are eligible for assistance).

The Council of Small Business has urged the government to extend the scheme to help them.

The $60 billion not spent on #JobKeeper isn't a saving. That's $60 billion not in the pockets of working people.

— Australian Unions (@unionsaustralia) May 25, 2020

“There’s a lot of them that work for small businesses and I know it’s been a concern for a lot of employers out there,” chief executive officer Peter Strong said.

Many businesses have been forced to choose between standing down local workers who can access government benefits, or standing down visa holders with access to no support. The only liberty the government has granted them has been the option dip into their super.

Last month Unions NSW surveyed 3700 migrant workers and found half had lost their jobs because of coronavirus. Fewer than two percent had access to financial support (either financial or from the government), and around 47 percent were skipping meals.

The Creative Industries

The incomes of hundreds of thousands of people were wiped out when social isolation measures forced the closure of live music events, cinemas, theatres and galleries. It was a move that sadly needed to happen, but it didn’t make it any less culturally devastating.

This is an industry that’s pretty used to having their budgets slashed by successive governments, but to suddenly lose thousands of jobs overnight was a huge blow to the workers who each year contribute $111 billion to that ol’ economy the government is so desperate to stimulate.

Between March 14 and April 18 data shows jobs in arts and recreation fell by 27 percent — outdone only by the hospitality sector, which has struggled even with access to  JobKeeper.

But the nature of the creative industries means many staff are employed casually, or freelance. On top of this many creative businesses, like those associated with festivals and events, earn a large chunk of their income in just a few months of the year. Their cash flow isn’t steady across the year, which makes it hard to prove a downturn in line with the JobKeeper requirements.

All this combines to exclude an industry that is often the first one to step up and donate their time and talent to raise money in times of need.

Earlier this years $9.5 million was raised during the Fire Fight bushfire relief concert. Local artists teamed up with international stars to raise $127 for the One World: Together At Home concert. Even Powderfinger managed to raise $427,000 for Beyond Blue and Support Act with their One Night Lonely concert.

Meanwhile a website set up to record the lost income from cancelled gigs has hit $340 million.

Disability Support

People on disability support payments or carer payments weren’t included in the government’s coronavirus supplement, which saw other groups like JobSeeker get an extra $550 a fortnight.

Those on the DSP saw no increase to their standard payments due to the coronavirus. The government did flick them a $750 support payment of $750 in April, and they should be entitled to a second $750 payment in July.

People on the DSP can also access JobKeeper if eligible but that affects their DSP payments, since they’re calculated based on how much they earn.

Superannuation

According to the ATO, $13.2 billion has been withdrawn from superannuation funds so far.

Half of that comes from the retirement funds of people under 35. More than 450,000 of those people — more than 33% — were under 30.

That’s going to costing hundreds of thousands of people hundreds of thousands of dollars in compound interest.

Labor’s treasury spokesman Jim Chalmers blamed the government’s decision to exclude a large chunk of workers for the figures, and said it would have a “devastating consequence” on their level of income in retirement.

Extend The Coronavirus Supplement

In September, funding for JobKeeper and JobSeeker will end. Businesses will no longer get a $1500 wage subsidy to keep staff on, and unemployed Aussies will see their income support halved.

Welfare groups are pushing the government to permanently increase Jobseeker. The payment was basically doubled when coronavirus hit and forced tens of thousands of Aussies onto the dole — many for the first time.

The $550 supplement was seen as a tacit acknowledgement that the old $40 a day rate wasn’t liveable. Still, the government has ruled out any permanent increases.

Treasurer says that his $60bn error is good news for taxpayers. No its not. It’s bad news. The point of stimulus is to pump $ into the economy to fill the hole caused by a shrinking private sector. Underspending on stimulus causes more unemployment #auspol https://t.co/SUjH9r08Xt

— Richard Denniss (@RDNS_TAI) May 22, 2020

Economists were already concerned the sudden end of the stimulus could lead to huge economic shock. The news that we’ll now have $60 billion less flowing into the economy has worried them even more. That’s a lot less money being spent to stimulate the economy and support jobs.

As chief economist Dr Richard Denniss wrote in the AFR, “Trying to minimise government spending in the middle of a recession makes as much sense as minimising your firefighting budget in a bushfire crisis”.

Who’d be silly enough to do that?