Australians have been offered JobSeeker and JobKeeper payments during the coronavirus crisis.
So what’s next, JobTweaker perhaps?
Chris Richardson from Deloitte Access Economics believes government support will be needed for quite some time, as the country recovers from the worst downturn since the Great Depression.
“More dollars are needed,” Mr Richardson said on Monday.
“How much more depends on our success against the virus and in opening up. But the recession is changing shape fast, so the nature, timing and dollars of support needs to change fast.”
Deloitte’s quarterly business outlook estimates Australia’s economy will shrink by three per cent this year.
Victoria is expected to be the hardest hit state.
This could have broad implications given Victoria makes up one quarter of the nation’s economy.
Treasurer Josh Frydenberg says Victoria’s spike in cases shows the need to be vigilant.
“We will continue to do all that is necessary to ensure Australia bounces back stronger on the other side,” he said.
Mr Richardson believes some sort of wage subsidy like JobKeeper will be needed beyond its September expiry date.
He suggested limiting the payment to a smaller range of businesses – such as those tied to international borders – and reducing the amount of the benefit.
The quick-witted economist labelled his proposal JobTweaker.
He also argues for keeping the JobSeeker unemployment benefit “stronger for longer” as the country recovers from the pandemic.
Shadow treasurer Jim Chalmers says millions of workers and thousands of businesses are anxious about being left behind in Australia’s first recession in three decades.
Mr Richardson says Australia’s relative success in fighting the virus gives it more flexibility to open up the economy.
He said many of Australia’s key trading partners also battled the virus well, while it looks like being a “corker of a year” for farmers too.
“So the recession may well have already past its worst,” he said.
“Even so, families are struggling with the toxic trio of high debt, high unemployment and low confidence. The ranks of the unemployed will be badly swollen for a while.”
Government spending is expected to hold up the economy in the short term.
Prime Minister Scott Morrison announced an extra $525 million for Victorian road and rail projects on Monday, after detailing similar packages for other states in recent weeks.
Deloitte expects the unemployment rate to be 8.2 per cent for the 2020/21 financial year, the equivalent of over 1.1 million people being out of work.
The advisory group does not expect the rate to return to pre-coronavirus levels until 2023/24.
Wage growth is expected to lag behind inflation out to 2024/25, while full-time employment will grow slower than part-time jobs.