At a Senate estimates hearing on Wednesday, Treasury secretary Dr Steven Kennedy said that between 100,000 and 150,000 JobKeeper recipients may lose their jobs at the end of the program.
But Dr Kennedy added there was “a wide band of uncertainty around this estimate” and that it “does not mean that there will be a commensurate increase in unemployment”.
“In a given month during the years leading up to the pandemic, around 400,000 people moved into and out of employment, with a small net increase on average. Most of the people moving out of employment tend to leave the labour force altogether, rather than become unemployed,” Dr Kennedy said.
“So, the flow of people out of JobKeeper positions is within the normal flows of employment that we regularly observe.
“In summary, JobKeeper has played a crucial role in supporting the economy and driving the recovery.”
Dr Kennedy noted that the JobKeeper program has a number of features that create adverse incentives that are likely to become more pronounced as the economy recovers, including a distortion of wage relativities, a dampening of incentives to work and a hampering of labour mobility.
“Our view is that the adjustment away from JobKeeper will be manageable, and that employment will continue to increase over the course of this year, although the unemployment rate could rise a little over the coming months before resuming its downward trajectory,” he said.
“In the years ahead, we will further evaluate the program to ensure governments can benefit from these learnings.”
However, Per Capita executive director Emma Dawson responded to the Treasury’s estimate by saying that pushing another 150,000 people into the dole queue will likely see thousands of Australian families thrown into poverty.
“For small businesses in retail, tourism and hospitality that are still struggling to rebuild, the loss of spending power from 150,000 people across the country, many in hard-hit regional areas, could be devastating. This wrong-headed move could send many more businesses to the wall, destroying even more jobs over coming weeks and months,” Ms Dawson said.
“For a government that claims to be focused on ‘jobs and growth’, to pursue such a destructive economic policy during a recession simply beggars belief.”