Canberra Report - COVID Measures Must Be Balanced- Wednesday, 22 July 2020

Canberra Report - COVID Measures Must Be Balanced- Wednesday, 22 July 2020 Main Image

By Joel Fitzgibbon

22 July 2020

The Morrison Government has announced the next phase of its COVID-19 assistance. Business operators, in particular, have been anxiously waiting for too long. Over the past couple of months it’s been hard to plan ahead without knowing what support might be available after September. Hopefully there’s now less uncertainty for employees and business owners.


The JobKeeper wage subsidy has not been without its shortcomings but the Government was right to embrace it after some considerable early resistance. The alternative was longer dole queues than was necessary. The program is expensive, yes, but keeping employers and employees together has not only been important throughout the crisis, it will be crucial to the economic recovery.


The Government has extended the JobKeeper scheme until March next year. However, businesses using JobKeeper after September will have to show their continued eligibility for the wage subsidy, meaning the scheme will become targeted to sectors which need it most because of the Corona crisis.


The other big decision relates to the future of JobSeeker and the COVID supplement payment. After September, the supplement payment will reduce from $550 per fortnight to $250, until the end of 2020.


Formerly known as Unemployment Benefit and then Newstart, JobSeeker was subject to much debate even before COVID-19 because many, including me, considered it to be too low, having been stuck at the same rate for many years.


There are those who lack sympathy for the recipients of unemployment benefit, usually because when they think of the unemployed, they see a stereotypical “dole bludger”, typically a young person off the rails and unprepared to work. While such young people exist, they are not your typical JobSeeker recipient. Rather, those on the payment are more likely someone, typically middle aged, who has lost their job to changes in our economy.


In any case, whatever the cause of their marginalisation it’s important that we provide a level of income support to younger people which allows them to live safely, eat, and explore work and training opportunities. Many try very hard: I know, I talk with them.


Yes, there will always be the no-hopers, but forcing them into abject poverty is only a recipe for further trouble and intergenerational unemployment. Remember too, that competition for work just became much more intense with more people chasing work, and less jobs available. The unemployment payment can’t go back to $40 per day.


While the headlines have focused on JobSeeker and JobKeeper, new and further initiatives will be required to bring the economy back to something approaching normal. The recession promises to be a long and deep one, and ongoing government intervention will be required.


Those concerned about the cost of support and intervention are right to be so. Government debt is reaching dizzy heights and it will take a long time to repay it. But remember, a failure to intervene will simply drive the economy further south and cause tax revenues to fall further and outlays for support payments to rise. So, either way, the cost is great, but doing little will cost more.