In a joint statement with the ATO, the Treasury said that a reporting error has inflated the number of employees expected to benefit from JobKeeper to 6.5 million from an actual 3.5 million, meaning that the overall cost of the program is well below the announced $130 billion.
“Late yesterday, the ATO and the Treasury advised the government of a reporting error in estimates of the number of employees likely to access the JobKeeper program,” the joint statement reads.
According to the statement, the enrolment forms completed by 910,055 businesses who have self‑assessed as eligible under the scheme had indicated that this program would cover around 6.5 million eligible employees. However, following a review, the ATO has found that around 1,000 of those businesses appear to have made significant errors when reporting the estimate of eligible employees on their enrolment form.
The ATO and Treasury said: “The most common error was that instead of reporting the number of employees they expected to be eligible, they reported the amount of assistance they expected to receive.
“For example, over 500 businesses with ‘1’ eligible employee reported a figure of ‘1,500’ — which is the amount of JobKeeper payment they would expect to receive for each fortnight for that employee.”
Stressing that the reporting error has no consequences for JobKeeper payments that have already been made to eligible businesses — as businesses are asked to make a subsequent declaration to each and every eligible employee — the Treasury and the ATO have confirmed that a much smaller figure or 3.5 million employees will actually benefit from the program.
“At the time the JobKeeper program was developed, the Treasury estimated that around 6.5 million employees would access the program,” they said.
“This estimate was developed at a time when coronavirus cases were growing significantly in Australia and restrictions were being tightened across Australia and much of the world.”
The reporting error has come to light as the ATO and the Treasury have been analysing the amounts being paid out under the scheme, reconciling these with the estimates provided by enrolled businesses of the likely number of eligible employees.
According to the statement, it was not picked up earlier as the ATO’s primary focus in the first fortnight of JobKeeper payments was on ensuring that JobKeeper payments were paid promptly to those eligible and not paid to those who were ineligible.
“These initial estimates from businesses of employees covered are not linked to payments, and so were not as carefully analysed,” the ATO and the Treasury said.
In light of the take‑up of the scheme to date, remaining enrolments, and that the scheme remains open to new registrations, the Treasury said it now expects the number of employees likely to be covered under the JobKeeper program to be around 3.5 million.
According to latest data, as of 20 May 2020, 910,055 businesses had enrolled in the JobKeeper program, and of these, 759,654 had made claims in relation to their eligible employees and had their applications processed. This resulted in $8.7 billion of approved payments to 759,654 businesses, covering around 2.9 million employees.
According to the ATO and the Treasury, 97 per cent of claims have been paid to employers within three business days of employers making the employee declaration.
Around 150,000 enrolled businesses are yet to complete their employee declaration, which is required before payments can be made.
Labour market predictions not impacted
The Treasury also stressed that its overall view of the labour market is unaffected by this reporting error.
“The JobKeeper program is providing important support to employers and employees through these unprecedented economic times.
“It remains the case that in the absence of the JobKeeper program, the Treasury expects the unemployment rate would have been around 5 percentage points higher.”
The Treasury reaffirmed it expects the unemployment rate to reach around 10 per cent, although underlining that the measured level of unemployment is highly uncertain given the impact of social distancing restrictions on the participation rate.
Businesses are also being reminded that they can still apply up to 31 May for payments made in April. Moreover, the program will remain open to businesses that meet the eligibility criteria at any time over the six months it is in operation.