JobKeeper should be paid in advance: Grattan Institute

Prime Minister Scott Morrison. Picture: Sitthixay Ditthavong
Prime Minister Scott Morrison. Picture: Sitthixay Ditthavong

The government should switch as a priority to pay the JobKeeper wage subsidy in advance, the Grattan Institute says.

The $1500 a fortnight wage subsidy, which goes from the government via businesses to about three million workers, is being paid in arrears. The system means businesses are having to borrow to pay the wages bill being being reimbursed by the tax office, and has discouraged some from signing up.

"It would be very easy to switch to payment in advance by paying double with the next payment - effectively advancing for the next month of wage subsidies," the think tank said in a report on Monday. "The government should do this as a matter of priority."

The Grattan Institute is pushing the government to spend another $70 to $90 billion over two years, on top of the $136 billion of stimulus already announced. If it extended JobKeeper and permanently increased the unemployment benefit among other measures, an extra 430,000 to 510,000 people could be back in work within two years, it says.

Migrant workers and casuals should be brought into the Job Keeper scheme, given the high number of overseas workers such as hospitality, retail, aged care and healthcare. University staff should also be included.

But the government should reduce the JobKeeper payment to part-timers who are getting more than they were before the crisis, the institute says. It estimates that as many as 80 percent of part-timers have had a wage boost from JobKeeper and suggests adopting the New Zealand approach of paying a lower rate to part-timers working fewer than 20 hours a week. It suggests $400 a week instead of $750, saving $2 billion every three months.

The Grattan report calls for a phased reduction in JobKeeper. The payment was to last till the end of September, but Grattan says businesses with whose turnover is up to 20 per cent down should have the subsidy cut off at the end of July.

Businesses should have another turnover test at the end of September, and those who by then had recovered to within 20 per cent of pre-coronavirus turnover should exit the scheme.

Currently JobKeeper is paid to businesses whose turnover in March was 30 per cent down on March last year (or 50 per cent for big businesses).

For businesses whose turnover was still 20 per cent below pre-coronavirus levels after September, the wage subsidy should be extended till the end of December, Grattan says.

"Ultimately the program must end so that it does not preserve businesses that are unlikely to be viable in the longer term because the crisis has induced changes in habits and behaviours, and therefore changes in demand from consumers and businesses," the report says.

Prime Minister Scott Morrison received a Treasury report on Monday on the future of its support packages, and Mr Morrison will announce plans when he updates the budget on July 23.

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The Grattan Institute says the JobSeeker unemployment rate should stay at the current level of $1100 a fortnight till the end of the year then be phased down over three months to a level $100 a week above the old Newstart, which was $280 a week.

Newstart was worth just 27 per cent of the average wage, lower than any other OCED country, and even with the extra $100 people on the unemployment benefit would be well below the poverty line, the think tank says.

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This story JobKeeper should be paid in advance: think tank first appeared on The Canberra Times.

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