Late last week, the Treasury and the ATO revealed that the estimated cost of JobKeeper is closer to $70 billion, well below the previously believed $130 billion, meaning that the actual number of workers on JobKeeper is 3.5 million and not the previously believed 6.5 million.
The drastic misjudgement of the program’s scale is being explained as an accounting error and a reflection of the economy’s perseverance, meaning it did not deteriorate by as much as was initially thought.
But despite an apparent saving of $60 billion, Treasurer Josh Frydenberg has now confirmed that there will be no “wholesale changes” to the program.
Speaking on ABC Radio, Mr Frydenberg said that the significantly lower take-up of JobKeeper is not “an invitation to go and spend more money”, ignoring persistent calls for casuals with less than 12 months service to be added to the program.
Mr Frydenbergy said: “Every dollar that we’re spending is borrowed money. It means that our children will be paying it back. It will take years to pay back the accumulated debt from the coronavirus period, there’s no doubt about that.
“But we make no apologies for spending where it’s been necessary. The JobKeeper program at $70 billion is the biggest such program the country has ever seen.”
Referring to the error as “unintentional”, the Treasurer confirmed no underpayments or overpayments have been made as a result of the accounting blunder.
“What has occurred here has not had the impact of underpaying or overpaying. What this has just meant is, in relation to the forecast that Treasury has made, that the number of people covered by the program is less, and therefore the spending by the taxpayer is going to be substantially less than was otherwise thought,” Mr Frydenberg explained.
Asked what will happen to the 3 million employees that were believed to be part of the program, but no longer are, the Treasurer diverted the question, confirming that a review of the program will be held in June.
“We’ll have a review, as we’ve always stated, mid-way through the program, and we’ll wait for the results of that review,” the Treasurer said, but he added that no big changes are expected.
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.
Around 150,000 enrolled businesses are yet to complete their employee declaration, which is required before payments can be made.
In his interview with the ABC, the Treasurer stressed that his overall view of the labour market is unaffected by this reporting error.
“In the statement put out by Treasury and the Tax Office, they’ve made it very clear that the forecast remains for unemployment to peak at around 10 per cent in this June quarter, but for the JobKeeper payment, you’re talking about the unemployment rate being another 5 percentage points higher.
“So it’s having a very significant and positive effect.”