Research from the Australian National University suggests that the federal government’s JobKeeper wage subsidy scheme saved 812,000 jobs. The scheme cost $89 billion in total, which equates to about $112,819 for each job that it saved. The working paper notes that JobKeeper may have been introduced slightly too late and could have been wound back earlier, given that the labour market recovered more quickly than expected.
Previous research in 2021 had estimated that JobKeeper had saved 700,000 jobs at an average cost of $107,900 per job.
Some 812,000 jobs were saved out of the 3.6 million workers who qualified for the wage subsidy, estimated Timothy Watson, Juha Tervala and Tristram Sainsbury.
Following criticisms about businesses using the subsidy to increase profits, the analysis found that about 60 per cent of the wage subsidy went to wages…
Workers received about $1.1 billion a week more, or $55 billion extra in total…
“Program effects are persistent, suggesting cumulative benefits will be larger over time,” the economists noted.
I have two major issues with the way JobKeeper was administered by the Morrison Government.
First, 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:
This alone is inexcusable. After acknowledging a major flaw in the scheme, why didn’t the Australian Treasury or Morrison Government seek to fix it?
Second, and related to the above, why wasn’t there any sort of claw back mechanism implemented – if not at the beginning, after the three month review? This would have prevented many billions being wasted on firms with rising turnover.
Claw back mechanisms are common practice for welfare – just ask any Centrelink client. So why not businesses too?
While JobKeeper worked to stave off job losses, it should have been far more efficient and cost effective.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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