Speaking to Parliament on Wednesday, Treasurer Josh Frydenberg confirmed that the review of the government’s $70 billion JobKeeper program has commenced and is expected to be concluded at the end of June.
As a result, he announced, the government has taken the decision to defer the economic and fiscal update to 23 July 2020 so that it can incorporate the outcomes of the JobKeeper findings.
Answering media questions, the Mr Frydenberg hinted that the $1,500 flat payment could face a significant overhaul to reflect real wages.
“We want to understand whether the quantum, that $1,500 payment, continues to be the right amount, also bearing in mind that some people are getting paid more than they would otherwise get by virtue of having a flat payment,” Mr Frydenberg said.
He confirmed that the government will also assess whether JobKeeper should be wound up or extended in certain sectors.
“In the context of an economy, where the restrictions are being eased, and people are getting back into work, we need to assess, and particularly paying a focus to certain sectors as well, we need to assess the continuation of that JobKeeper program in that context,” Mr Frydenberg said.
Underlining that he does not want to pre-empt the outcomes of the review, the Treasurer noted that “any government decisions” about the review will be incorporated into the statement due to be delivered on 23 July.
Australia in recession
The Treasurer also announced that the economy is officially in recession, having contracted by 0.3 of a percentage point in the March quarter.
He explained that while government spending and net exports contributed to growth in the March quarter, it was more than offset by the contraction caused by falls in consumption, investment and inventories.
“While fear of a lockdown saw panic buying of food and household items, total consumption still fell by 1.1 per cent in the quarter; this is the largest quarterly decline in consumption in 34 years, with 10 of the 17 consumption categories falling. Spending on transport services and hotels, cafés and restaurants experienced their largest falls on record,” Mr Frydenberg said, admitting that this was due to the introduction of the social distancing restrictions and travel bans.
Noting the pandemic’s severe impact on the economy, Mr Frydenberg concluded that “the impact in the June quarter will be even more severe”.