So long JobKeeper. Don’t come back.

The $90 billion JobKeeper wage subsidy ended yesterday.

Regular readers will know that I was Luke warm on this scheme from the outset. While I agreed wholeheartedly that generous emergency income support was needed at the beginning of the coronavirus pandemic to stave-off a depression, I instead argued for a $1500 temporary three-month universal basic income to be paid to every Australian taxpayer and welfare recipient. This, I argued, was far simpler than JobKeeper and other stimulus payments, treated everybody the same, and thus avoided ‘picking winners’ and leaving losers.

Instead we got JobKeeper – the $1,500 per worker wage subsidy that was paid to almost any business that suffered a 30% reduction in turnover. Like flies to honey, this payment was easily manipulated by many businesses that adjusted their turnover to qualify.

Unlike New Zealand, there is no public database showing which companies received what. There are also no obligations for companies that experienced rising profits to pay the funds back. Terry McCrann sums up the situation nicely:

…more than $77bn went to the ‘smaller end of town’ [i.e. outside the ASX 300]. We don’t have the faintest idea who they were and nobody seems particularly interested in finding out.

I should add that the ‘smaller end of town’ didn’t only get that $77bn-plus, but another $32bn under a different program [the Cashflow Boost]. All up the ‘smaller end of town got over $110bn…

Clearly JobKeeper and that other program – a straight cash handout to boost cash flows of SMEs – turned into a literal and extraordinarily lavish fiscal free lunch.

The upshot is that the $90 billion JobKeeper wage subsidy, combined with the $34 billion Cashflow Boost, drove one of the biggest corporate profit booms in the nation’s history despite Australia experiencing its sharpest economic downturn since the 1930s Great Depression:

Australia's booming business profits

The $90b ProfitKeeper wage subsidy and the $34 billion Cashflow Boost drove a massive corporate profits boom.

Emergency income support was definitely needed at the beginning of the pandemic. And in this regard, the Morrison’s Government’s various stimulus packages worked. The proof is in Australia’s V-shaped economic recovery.

However, this does not excuse the lack of transparency and poor design of schemes like JobKeeper and the Cashflow Boost, which together lavished $120 billion-plus on corporate Australia without any strings attached nor transparency surrounding which companies received what.

So while unemployed Australians are routinely subjected to crushing mutual obligations to receive stingy amounts of income support, Australia’s corporate sector was handed a giant free lunch.

Unconventional Economist

Comments

  1. thomickersMEMBER

    I know a FX trader on $600k pa + bonus at one of the banks. wife qualified for full jobkeeper because they worked 4 hours/week at at a paid charity, which qualified for jobkeeper.

    • Better than renovatingMEMBER

      Reminder to self – Must change career to FX trader.
      Finally there’s a job thats even better than renovate and flip houses. No doubt they renovate a big place on weekends still in the great Aussie tradition

      The scheme wasn’t well designed – many ongoing jobs just had a delay and got it – e.g. Accountants had BAS postponed a month by clients in lockdown, and so got it, but lost no business over the year. They should have just given Jobseeker to most people. .

  2. TailorTrashMEMBER

    I wish the ATO showed the same lack of interest when that want to collect a few shillings from me or the memshaib ….not its red threatening letters pronto

  3. RobotSenseiMEMBER

    $118k/job.
    And who says the LNP are against socialism? Works great if you’re a corporation.

  4. Typical LNP, lets the big end of town keep the money but chases poor people on welfare.

    There are 2,000 suicides now associated with Robodebt. People who were already struggling and felt unworthy because they couldn’t get a job, then got hit with a non existent debt.

    Yet JobKeeper gets paid out in executive bonuses. It is so wrong on so many levels – especially when it comes to the entitled rich, like Gerry Harvey.

    • happy valleyMEMBER

      A truly despicable government, now throwing taxpayer money at women’s affairs to fix LNP evil.

    • How many suicides associated with Covid?
      How many white Australian (born or newly minted) male (divorced – cleaned out by ex claiming single mum, parenting rights & access reduced or removed by ‘family’ court) suicides?

        • Oh you mean the Milton Friedman trust in perpetuity for the ideological preservation of property society sans the society thingy ….

  5. Take out the papers and the trash
    Or you don’t get no spendin’ cash
    If you don’t scrub that kitchen floor
    You ain’t gonna rock and roll no more
    Yakety yak (don’t talk back)

  6. David Jonstone

    The numbers being thrown around by the Government are entirely false. Generally you will see something like
    “between 100,000 to 150,000 people will lose their job when job keeper ends” – this is implying their employer will no longer keep them on.

    However there were 1.5 Million people on Job Keeper in February alone – thats how many will lose their INCOME as job keeper is removed – entirely different from just losing their jobs, because although self employed etc – they wont lose their job.

    Sneaky, sharmy little ….

    https://www.abc.net.au/news/2021-02-14/number-of-australians-on-jobkeeper-falling-ahead-of-scheme-end/13154186

  7. Its not the government that is the issue … its the monkey goo rolling around in the Gresham levels of Meritocratic Lamarckism that skews policy distribution vectors.

  8. “Lamarckism, also known as Lamarckian inheritance or neo-Lamarckism, is the notion that an organism can pass on to its offspring physical characteristics that the parent organism acquired through use or disuse during its lifetime.”

    Eeee-yip!

    • I chortle at the thought of time travailing Spencer into the here and now and show him the plight of the Meritocratic [Aristocratic] Trustafarian struggling to come to grips with heraldic superiority of birth whilst the unwashed get their art dirty ….