As JobKeeper tapers, so Feds look to boost hiring
As the JobKeeper and JobSeeker programs are starting to wind down, so Scott Morrison is looking for ways to accelerate the post Covid-19 recovery process. And, according to reports in The Australian, the Oct 6th budget plans to help things along with incentives for companies that rehire, or make new hires.
Josh Frydenberg’s budget is expected to be record setting – by having a deficit of over $200 billion – the 2019-2020 shock budget deficit was $85.8 billion following the arrival of Covid.
The new hiring incentives are expected to be focused on small to medium size enterprises, and to be a government allowance towards new hires. The PM told the ABC that the aim was to get workers away from the government’s $11 billion a month JobKeeper payments, and back into the workforce. “What Treasury says is that we need to boost aggregate demand in our economy and the full suite of measures you have as a government need to do that job and that’s what the budget will do”
“And so you don’t have to hold on to every measure forever. There are other measures that come in and pick up from where others left off. We are transitioning JobKeeper — it’s important to do that. We always said it was not something that would be around forever.”
“But there are other programs and the Treasurer will go into greater detail about that obviously in the budget, which are dealing with the here and now, but rebuilding our economy and then building it for the future so we can go into a decade of prosperity.”
Recent analysis from a number of economists have predicted that unemployment will start to rise sharply as present government incentives start to drop away, with UBS predicting an unemployment peak of up to 9% in 2021.
The budget is also widely expected to bring forward income tax cuts that had been scheduled for 2022, although the move has come under fire from a number of former Reserve Bank officials and senior bureaucrats who say social spending would be a better use of the money . Stage one of the government’s tax cuts were implemented last year, saving around $1080 a year for the average wage earner. The next stage of cuts were expected to cut rates for those earning between $90,000 and $120,000, with the final stage cutting in during 2024 for those earning under $200,000 and ensuring that their top tax rate would be 30%.
"If you're going to do it anyway, in a couple of years' time, there's an argument that it does less damage to the budget in the long run if you do it now, rather than wait two years," Michael Keating told the ABC.
"But on the other hand, I don't think they'll achieve much out of it, in terms of their immediate objective, which is to increase demand and create jobs."
Frydenberg has remained relatively tight-lipped about his exact intentions, telling Australians to find out on October 6th what the exact details were. "But certainly we are focusing on lowering the tax burden for Australians," the Treasurer told reporters.
