Joe Aston: JobKeeper waste $40b, not $27b

The AFR’s Joe Aston has continued his assault against the Morrison Government’s JobKeeper waste, this time rubbishing the Australian Treasury’s paper defending JobKeeper overpayments.

Aston claims that the actual level of ‘waste’ is closer to $40 billion, not the $27 billion claimed by Treasury:

All of the major newspapers dutifully reported that between April and September 2020, $27 billion in JobKeeper was paid to recipients who didn’t experience a 30 per cent turnover decline.

If only $27 billion was all it was!

On page 40 of the report, Treasury explains that its analysis is based upon a $47.6 billion sample of the $70.3 billion paid in the first phase of JobKeeper. For reasons that are arguably flimsy and inarguably self-serving, Treasury’s analysis excluded all of the JobKeeper paid to not-for-profits like rich private schools and stadium churches and to subsidiaries of consolidated groups like Specsavers and Harvey Norman.

That means the $27 billion of JobKeeper paid to recipients who didn’t experience a 30 per cent turnover decline was actually 56.7 per cent of the $47.6 billion sample. Extrapolated to the full $70.3 billion of JobKeeper paid in the first phase, $39.9 billion of JobKeeper was paid to recipients who didn’t experience a 30 per cent turnover decline. Whether $40 billion or $27 billion, none of this excess is flattering. Why bother with the sophistry?

This is not Treasury’s finest hour…

Nowhere does this report explain the cost of “saving” these 85,000 jobs. Well, it was $469,130 per job over six months, or $938,260 annualised…

Yes, Frydenberg spent $18,043 per week, per job “saved”, despite only paying those employees $750 per week. That means the other $17,293 per week went straight down the gullets of employers. But this was not waste. Oh no, this was not waste…

So why, then, did Treasury neglect to justify its advice not to retest the turnover of JobKeeper recipients after three months instead of six, as New Zealand did? Doing so would’ve saved the Australian government $20 billion, enough to pay for two nuclear submarines, or 2500 car parks in the seat of Kooyong.

Nowhere in its contorted insights did Treasury deign to ask itself what value for money it achieved for taxpayers or to identify the mistakes it made…

Such is the abysmal product of letting such a deeply diminished public institution mark its own homework. With Frydenberg as its teacher, we can scarcely be surprised.

My biggest issue with the Australian Treasury is that it knew in June 2020 that 157,650 firms with rising turnover had received a whopping $4.61 billion in JobKeeper funds. Yet it kept JobKeeper eligibility unchanged and hosed an additional $9.2 billion of taxpayer money on companies with rising turnover over the following three months without introducing any claw back mechanism:

This is indefensible, in my view. No amount of spin can deny Treasury’s grave oversight.

Unconventional Economist

Comments

    • Maybe those private schools forecasted 30% of kiddies would be pulled out and sent to public schools because their overextended parents would be put out of work…. But obviously that didn’t come to fruition lol.

  1. It’s interesting that an LNP paper like the AFR is letting someone run so hard on this…
    I mean, it’s brilliant, and what our journos should be doing, but it’s so unexpected that it’s confusing me.

    • Similar to how Katrina Grace Kelly is the only sensible opinion writer in the Oz who knows how to spell balanced.

      Especially as she comes from a union-busting/IR profession. Also an interesting back story.

    • Joes Aston doesn’t give a F, he is great, takes on anyone.
      Agree, it is odd that his masters (including Costello) allow this.

  2. Yes, Frydenberg spent $18,043 per week, per job “saved”, despite only paying those employees $750 per week. That means the other $17,293 per week went straight down the gullets of employers. But this was not waste. Oh no, this was not waste…

    There are people out there who need shooting.

    • blacktwin997MEMBER

      If you were an economist, you’d understand how this represents outstanding value for money!

  3. WobbegongMEMBER

    Under Ken Henry the mantra was go early, go hard and go households. Under this mob the mantra was to go not so early, then go harder and go business.
    The Henry scheme was really a stimulus scheme whereas the Frydenberg scheme really didn’t know what it was. It should have been a let’s hold the line scheme with those that could afford to having to dip into their capital. As MB has said in the past it needed to be a form of universal basic income means tested and reclaimed through the tax system from those who went over a certain income threshold.
    So equity was thrown out the door as was consideration of propensity to spend. So we ended up with record Porsche sales on the one hand and some households unable to pay for food on the other.
    Yes Treasury can be blamed and should be however the buck stops with Frydenberg. The changes to NFP’s and religious institutions eligibility was extraordinary. To be sure some service providing NFP’s were under the pump with their extra Covid costs in service provision and required help however to permit religious bodies to participate for those that were non-employee who performs activities in pursuit of their vocation…as a member of a religious institution.
    The other aspect not discussed is that the state based commercial rent relief schemes provided significant benefits for business. Eligibility was generally based on receiving Jobkeeper. So it is very likely that those overseas owned retail business also received some rent relief as well.