This blog is part of a series relating to the economic and social impacts of the COVID-19, novel coronavirus outbreak of 2020.
The Federal Government recently unveiled its third and largest economic stimulus package in response to the coronavirus. Announced Monday 30 March, the package centres on $130bn in wage subsidies for businesses that have suffered at least a 30% drop in revenue since 1 March.
The new payments, known as “JobKeeper”, give businesses fortnightly payments of $1,500 per employee – including those who have been stood down and others who are still working. Eligible employees include Australian citizens, permanent residents, New Zealand citizens on a Subclass 444 visa, Protected Special Category Visa holders and non-protected Special Category Visa holders who have lived in Australia continually at least 10 years. Casual workers, sole traders and not-for-profit employees will also have access to the wage subsidies. Payments, while not available until early May, will be backdated to 1 March. These measures are intended to keep an estimated six millions Australians in work during the coronavirus pandemic and will be available for up to six months.
Payments will be administered by the Australian Taxation Office directly to businesses, who will be responsible for passing them on to employees. After last week’s widespread media coverage surrounding the difficulties and frustration of dealing with Centrelink, this will no doubt be a relief for many Australians. Employers are legally obligated to pay workers the full subsidy, regardless if employee was originally making less than $1,500 per fortnight. These payments amounts to $39,000 per annum per person, which is 70% of the median wage or 60% of the average wage in Australia.
The Australian Government outlined in a fact sheet the numerous ways employees may receive payments:
- If you ordinarily receive $1,500 or more in income per fortnight before tax, you will continue to receive your regular income according to the prevailing workplace arrangements. The JobKeeper Payments will subsidise part or all of your income.
- If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you, at a minimum, $1,500 per fortnight, before tax.
- If you have been stood down, your employer must pay you, at a minimum, $1,500 per fortnight, before tax.
- If you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, you will receive, at a minimum, $1,500 per fortnight, before tax.
For some Australians, these payments will leave them better off financially than their normal wages. The average fortnightly wage for people in the accommodation and food services industry is $1,149, with retail trade and arts and recreation services at $1,626.40 and $1,706, respectively. As these are some of the industries that have been hit hardest by the economic impact of the coronavirus, this package is key to helping businesses retain their employees and avoid extended shutdowns. Within an hour of the scheme being announced, over 8,000 business had registered to receive payments.
The Government has also agreed to ease up on the partner restrictions surrounding JobSeeker payments, which were recently doubled as part of a previous economic stimulus package. Previously, JobSeeker payments were only eligible to people whose partners earned less than $48,000 per year, meaning many individuals who were recently laid off were excluded from the payments. As part of this new package, anyone whose partner makes under $79,762 per year is eligible to receive JobSeeker payments.
Prime Minister Scott Morrison called the package an “economic lifeline” for over six million Australians who would otherwise be without income. On the other hand, Sally McManus, secretary of the Australian Council of Trade Unions, described the payments as “highly inadequate”, instead urging the Government to pay workers $1,375 per week, or 80% of the median wage. Regardless, this new package will undoubtedly give Australians a better chance at survival and the ability to retain some sense of normalcy during these uncertain times.