Earlier this year, the Parliamentary Budget Office (PBO) revealed that a whopping $13 billion (over 13% of the $98 billion wage subsidy) was handed to nearly 200,000 companies that received JobKeeper payments but whose profits rose:
Yesterday, the Australian Treasury released a paper defending these overpayments on the grounds that doing so would have stifled the economic recovery:
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A mechanism to claw back payments from businesses that performed better than expected was not included, reflecting a desire to avoid any disincentives for businesses to adapt and recover. The introduction of such a mechanism would likely have reduced the overall level of activity and muted the recovery.
At the time of the JobKeeper review in June 2020, it was judged appropriate to maintain JobKeeper in its current form for a further three months, even though there was evidence some businesses that were initially heavily impacted were showing signs of recovery. This judgement reflected the still heightened uncertainty surrounding both the pandemic and the economic recovery, the weak economic conditions at the time, and the role that JobKeeper was playing as part of the broader macroeconomic response…
The JobKeeper review was conducted by Treasury in May and June 2020, before being published in July 2020. The review found that JobKeeper had met its objectives…
The review recommended the scheme remain unchanged until the end of September 2020.
This analysis doesn’t pass the pub test.
The Australian Treasury 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:
As argued below by Labor’s Andrew Leigh, “a program meant to help battlers helped line the pockets of offshore billionaires. Even now, the Morrison Govt is fighting to keep secret the names of big firms that got JobKeeper”:
The Liberals admit they let billions of dollars go to firms that didn’t need support. A program meant to help battlers helped line the pockets of offshore billionaires.
Even now, the Morrison Govt is fighting to keep secret the names of big firms that got JobKeeper. #auspol
— Andrew Leigh (@ALeighMP) October 11, 2021
It would be nice to see the Australian Treasury argue as vehemently for an increase in JobSeeker from its poverty level of $44 a day, which is the lowest unemployment benefit in the developed world:
Raising JobSeeker would provide far more economic and social benefits to Australia than the billions showered on profitable businesses.
Lifting JobSeeker would remove the income shock from falling into unemployment, while also solving the scourge of poverty, which policy makers pretend to care about.