Wage subsidies set to become tiered system

Wage subsidies will shift from flat fortnightly payments to a tiered system under an overhaul of the JobKeeper scheme.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg will use Thursday’s economic update to announce the future of the program and the boosted JobSeeker unemployment benefit.

Both are legislated to end on September 27, six months after the coronavirus support measures started.

JobKeeper is likely to switch from $1500 fortnightly payments to a tiered structure closer to workers’ pre-coronavirus wages.

Mr Frydenberg said the initial design of the program was based on getting money out as quickly as possible.

“One of the outcomes of that is that some people under the program received more money in the form of this $1500 flat payment than they were receiving prior to the crisis,” he told Sky News on Monday.

He said aviation, tourism, arts and hospitality were sectors which would need help beyond September.

Mr Morrison said businesses would get several months to adjust to the next phase of support.

“It will be targeted, it will be temporary, it will be effective as the first round has been,” he told reporters in Sydney.

Businesses will also face tighter eligibility tests, scrutinising changes in revenue.

“If that turnover is improved sufficiently and they are opening their doors, seeing more foot traffic through their shops, then the JobKeeper program may not be applicable to them,” Mr Frydenberg said.

Under the existing scheme, companies turning over less than $1 billion with a 30 per cent fall in revenue are eligible.

Firms turning over more than $1 billion must show a 50 per cent decline.

Businesses that met the revenue test at any stage during the pandemic qualified for the payments for each employee.

Labor frontbencher Tony Burke said JobKeeper needed to be better targeted through retesting businesses and tapering payments.

“There’s been a reasonable amount of waste and lack of targeting in how the government handled it first time around,” he told ABC radio.

But the opposition is refusing to nominate a set figure for JobKeeper or JobSeeker, which has been temporarily increased to $1100 a fortnight.

Mr Burke said the dole should not return to its old rate of $560 a fortnight.

“It needs to keep people out of poverty, $40 a day is not enough to live on,” he said.

Left-leaning think tank The Australia Institute has released modelling showing more than half a million Australians would be thrown into poverty if JobSeeker is returned to its former rate.

“This will not only have serious negative social effects for decades to come, but makes terrible economic policy by effectively withdrawing much-needed stimulus,” institute executive director Ben Oquist said.

Mr Morrison said government support packages had avoided people falling into poverty.

“It is still tough, it is extremely tough out there. But at a time like this, I think all Australians will be pleased they’re in Australia and nowhere else.”

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