Deloitte Access Economics calls for "JobTweaker"
11 May 2020, Written by Business News Australia
Deloitte Access Economics has applauded the Federal Government's $130 billion JobKeeper package, describing it as an economic lifeline that chose speed over elegance but "got the balance right for most people".
After the package was announced the consultancy reduced its forecast FY21 unemployment rate from 12 per cent to a peak of 8.5 per cent, implying the saving of more than half a million jobs.
However, Deloitte does not expect unemployment to return to pre-coronavirus levels of around 5 per cent until 2024. Bringing down the number of jobless while phasing out the wage subsidy will be a key policy challenge for the government.
"While Treasury is no doubt working up options to put on the table, we recommend that the federal government should opt for what we call 'JobTweaker' - tweaking JobKeeper to shore up a strong recovery," the group said.
"The aim is to save more jobs that can be saved, while recognising that there will be some we cannot save. Australians cannot keep a job that won't earn its keep, but we can keep more if we tweak JobKeeper.
"For JobKeeper to stop abruptly, all it would have done is have kicked the unemployment can down the road."
Deloitte notes there is a good chance the original $130 billion cost of JobKeeper won't be fully spent, as its costing was put together at a time when the outlook was at its bleakest.
"The more successful the measure has been the cheaper it has become, and many businesses - and people - thought that they qualified for JobKeeper when they didn't," the group said.
"This means a JobTweaker approach could potentially have a minimal impact on the budget bottom line. Every taxpayer dollar is vital. And so, it is vital that we make sure the $130 billion this nation is spending gets maximum bang for buck."
The consultancy proposes making JobKeeper "smaller, but for longer".
"JobKeeper eventually needs to go - it costs a lot, it may cause competitive problems between firms, and its relationship with JobSeeker with respect to incentives to work is complicated," Deloitte Access Economics said.
In designing the phase-out, the group considers that:
Deloitte Access Economics proposes the following ideas for considerations in the government's review in mid-June:
Prime Minister Scott Morrison has today dismissed any speculation JobKeeper would be wound back before its September end date as "very premature".
"We are six weeks into a six-month program. And the impact of the virus, how it will impact on Australia in the months ahead with a reopening economy is very much a work in progress," he said.
"In early March, I said we had to have programs that were targeted. We had to have programs that used existing distribution mechanisms within the government.
"Now, how that program can be adjusted to better support over that period or if there are sectors that come under greater strain over a longer period of time, these are all things that the government is fully aware of."
Updated at 4:21pm AEST on 11 May 2020.
Author: Business News Australia