The Australian economy may have picked up faster than expected during the coronavirus pandemic, with 2.7 million people and 680,000 businesses now having “graduated” from JobKeeper.
But with the wage subsidy scheme officially coming to an end on Sunday, many of the 960,000 Australians and 370,000 businesses still relying on the payment face an uncertain future.
Global Ballooning Australia is one of them. When the international borders shut last March, it lost its international business – around 60 per cent of its income – overnight. Since letting 20 staff go, it has used JobKeeper to keep its remaining “essential workers” employed.
But after a long Melbourne lockdown, COVID-19 outbreaks during the Christmas break and now staring down the barrel of the slower winter season, it will be tough to pay staff wages once JobKeeper wraps up.
“The worse case scenario for Global Ballooning is that the finances that we’ve been able to inject into the company over this JobKeeper period dimmish to the point where we do have to start looking at shedding staff,” Director Kiff Saunders told SBS News.
“The end of JobKeeper is certainly going to put a lot more pressure on tourism businesses in this country for sure.”
In recent months the company has invested heavily in its domestic market, but with no date around when international borders will open, “we just have to weather the storm”, Mr Saunders said.
Treasury secretary Steven Kennedy told a Senate hearing last week that up to 150,000 people could be out of work after the support scheme wraps up.
Charities are concerned many Australians will be forced to seek help for the first time.
The St Vincent de Paul Society estimates one million children in Australia have a parent who is still relying on JobKeeper.
National President Claire Victory told SBS News the organisation is preparing for a “huge increase in demand” for its services over coming weeks, with lots of Australians expected to access Centrelink payments who have never done so before.
“At each stage when that supplement has been wound back, we’ve seen a corresponding increase in demand for our services,” Ms Victory said. “So with that JobSeeker level coming right back and JobKeeper ending at the same time, pushing so many new people onto those payments, we’re expecting a huge increase in demand for our services.
“What we are expecting is that there will be a lot of people needing to come to us for help just with food and with paying their bills each week.”
Treasurer Josh Frydenberg says “encouraging signs across all sectors” and across the country have led to the government’s decision to end JobKeeper on 28 March.
“It has achieved its objectives of supporting businesses and saving jobs, preserving employment relationships and delivering much needed income support across the economy,” he said in a statement on Sunday.
“JobKeeper was an economic lifeline which helped keep around a million businesses in business and 3.8 million Australians in a job at the height of the pandemic.”
The Reserve Bank claims the wage subsidy saved more than 700,000 jobs, with official estimates putting employment losses at between 100,000 and 150,000.
The unemployment rate sits currently at 5.8 per cent.
New figures from the Australian Taxation Office (ATO) show that 1.54 million employees collected the wage subsidy between October and December last year, down from 3.6 million between April and September.
ATO figures sector by sector are also largely positive. The number of workers on JobKeeper in retail has dropped by 68 per cent. In trade and construction reliance fell by 65 per cent, and in real estate by 71 per cent. The accommodation and food services sector saw a 52 per cent drop in reliance on the subsidy.
But transport, postal and warehousing continued to struggle, with only a 36 per cent drop in the number of people on the wage subsidy.
There is no data available for the tourism sector, because the industry encompasses such a wide range of jobs.
Prime Minister Scott Morrison says the unemployment rate will not necessarily rise after JobKeeper ends.
“In less than a year the number of people employed is now greater today than it was when the pandemic hit this country,” he told parliament during the week.
Mr Frydenberg says while the nation has not yet emerged from the pandemic, the economic recovery has been stronger than almost anywhere else in the world.
“Our Economic Recovery Plan will continue to support the economy through measures such as tax cuts, business incentives, the JobMaker Hiring Credit and a record investment in skills and training,” he said.
Head of Investment Strategy and Chief Economist at AMP Capital Shane Oliver told SBS News he believes the “timing is right” to bring JobKeeper to an end.
“We have seen pretty good recovery. If we hadn’t seen the economic recovery, then I’d be a lot more concerned,” he said.
“JobKeeper was always an emergency program to help the economy through the lockdown until we’re able to reopen again and it’s done its job. It’s protected incomes, it’s protected jobs, it’s protected businesses and now is the time to bring it to an end.”
Calls for targeted help
But Mr Oliver joins other experts in calling for more targeted assistance now JobKeeper has ceased.
“JobKeeper was a catch-all for businesses and it was appropriate a year ago and it’s done a fantastic job. But by the same token we’re now in a situation where the problem parts of the economy are specific sectors, particularly the travel sector and services, particularly in city CBDs.
“So I think these ongoing support should really be more targeted.”
The danger in continuing JobKeeper indefinitely is that it results in “zombie jobs and stops the economy recovering”, Mr Oliver said.
“The reality is a lot of the jobs have moved away from inner city areas and CBDs out to the suburbs because we’ve got more people working at home. That’s likely to be a long-term phenomenon, but if we keep subsidising jobs in the CBDs, that will stop the adjustment in the economy and stop those jobs moving out to the suburbs.”
Labor leader Anthony Albanese says while JobKeeper must come to an end at some point, it has said it is “unwise” to withdraw support from industries and businesses still impacted by the pandemic.
“While some businesses that have JobKeeper have continued to do well and have increased their profits over the last year, a range of businesses have not had that support and have seen massive downturns in their turnover,” he told the media on Sunday.
Mr Albanese says targeted support would continue to provide businesses and people the help they need.
“Two million Australians are either unemployed or want additional hours but there are many more Australians out of work than there are vacancies,” he said.
For operators like Mr Saunders at Global Ballooning Australia, his business will remain in crisis mode until the international borders are able to reopen.
He says he feels the government should “drill down into businesses” that still need help and “offer assistance in some form”.
“We have supported the Australian visitor economy and supported the Australian workforce by being able to employ people within this industry,” he said.
“The people in this industry are very passionate about what they do.
“It’s very distressing to see the pain points around people who have had to either shut up their business or move to other employment when this is the life that they have set up for themselves.”