In Tuesday’s federal budget, Treasurer Josh Frydenberg announced a new $4 billion JobMaker Hiring Credit that will provide Australian businesses with an incentive to employ additional young workers aged between 16 and 35 years old, with around 400,000 jobs anticipated to be supported.
Below is the summary of the program from the Treasurer’s budget speech:
The JobMaker hiring credit will be payable for up to twelve months and immediately available to employers who hire those on JobSeeker aged 16-35.
It will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35.
New hires must work for at least 20 hours a week.
All businesses, other than the major banks, will be eligible.
Treasury estimates that this will support around 450,000 jobs for young people.
According to the Fact Sheet on the wage subsidy:
To be eligible, the employee must have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one of the previous three months at the time of hiring.
The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the Australian Taxation Office (ATO) from 1 February 2021. Employers will need to report quarterly that they meet the eligibility criteria.
The JobMaker Hiring Credit is designed to support new employment. Employers do not need to satisfy a fall in turnover test…
To attract the JobMaker Hiring Credit, the employee must be in an additional job created from 7 October 2020. To demonstrate that the job is additional, specific criteria must be met.
The additionality criteria require that there is an increase in:
• the business’ total employee headcount (minimum of one additional employee) from the reference date of 30 September 2020; and
• the payroll of the business for the reporting period, as compared to the three months to 30 September 2020.
The amount of the hiring credit claim cannot exceed the amount of the increase in payroll for the reporting period…
ACTU president Michele O’Neil and minor party MPs have rightly warned that employers will seek to exploit the JobMaker wage subsidy:
ACTU secretary Sally McManus said the JobMaker program would become “JobReplacer” if employers were able to cut the hours of part-time workers or lay off existing casual workers and replace them with unemployed people subsidised by taxpayers.
With employers able to claim a double subsidy of $400 a week if they take on two low-paid young casual workers rather than $200 a week for an eligible full-time employee, ACTU president Michele O’Neil said the program was “really open to being rorted”…
Independent South Australian senator Rex Patrick said he wanted to know what safeguards were in place to make sure the program was not abused, as JobKeeper had been in some cases, while One Nation leader Pauline Hanson also cautioned that it would “only lead to more rorting by those who wish to game the system”.
Greens leader Adam Bandt said the “dodgy” JobMaker policy would fuel insecure, low-paid work by throwing money at big corporations to hire part-time workers on the minimum wage.
“McDonald’s will be rubbing their hands at this great big pot of cash. JobMaker will deliver for big corporations but not for young workers,” Mr Bandt said.
Alison Pennington, senior economist at the Australia Institute’s Centre for Future Work, similarly warned that “the program incentivises employers to sack existing, more expensive employees and risks undermining any possibility of youth obtaining permanent full-time jobs and building long-term careers”.
Fast-food and retail giants are set to reap massive wage subsidy rewards:
Citi analysis released on Tuesday said the JobMaker hiring scheme detailed in the budget was likely to assist high-performing retailers such as Coles and Woolworths, while the Retail and Fast Food Workers Union (RAFFWU) has pointed to McDonald’s as a major beneficiary because of its 100,000-strong workforce, largely aged under 21.
The flat $200-a-week subsidy to encourage the hiring of workers aged 16-29 would mean a retail and fast-food business recruiting an 18-year-old on the minimum 20 hours a week could effectively reduce their wage bill from $15 an hour to just $5 an hour.
Citi analyst Craig Woolford said businesses that had a relatively high staff turnover, younger employees and were in a position to expand their workforce were set to benefit from the subsidy and supermarkets were going to be “best placed”.
…More than 50 per cent of McDonald’s 105,000 workers are under 18 and about 80 per cent are under 21.
However, Australian Chamber of Commerce & Industry CEO, James Pearson, played down rorting concerns, claiming the subsidy scheme requires businesses to have had an increase in their overall employee numbers as well as their payroll, thus deterring employers from rorting.
Let’s get real for a moment. The Morrison Government’s JobKeeper program was widely rorted by businesses, juicing both company dividends and profits.
The JobMaker wage subsidy will be rorted even worse, resulting in businesses shifting their wage bills onto taxpayers, with owners pocketing extra profits.
The integrity measures requiring an increase in employee numbers and payroll are hardly onerous. Given the economy outside Victoria is recovering after lockdowns, both employment and payrolls are increasing anyway:
Victoria will obviously follow as its lockdown ends.
Thus, the logical thing for businesses to do is to cut existing employee hours and hire a bunch of people under the age of 30 or 35 on 20 hours a week. This way, they can pocket subsidies, reduce their out-of-pocket wage costs, earn fatter profits courtesy of the taxpayer, all without actually boosting overall employee hours above what would have occurred anyway as the economy slowly recovers.
The Morrison Government’s JobMaker program is another iteration is really a combined “JobRorter” and “DoleHider” program, since its real goal is to mask the unemployment rate and throw taxpayer subsidies at its business mates.
