A $130 billion wage subsidy scheme (JobKeeper) has been announced by federal government to support businesses during the COVID-19 pandemic.
The plan to subside wages, known as the JobKeeper payment, is historic, with Treasurer Josh Frydenberg stating to Sky News this morning that Australia has “never seen income support like this.”
Prime Minister Scott Morrison said the JobKeeper payment would bring the Government’s total economic support for the economy to $320 billion or 16.4 per cent of GDP.
What does the wage subsidy actually mean?
The JobKeeper Payment is a subsidy to businesses, which will keep more Australians in jobs through the course of the COVID-19 outbreak.
Employees will receive a flat-rate payment of $1500 per fortnight through their employers in a bid to lessen the economic blow caused by the virus.
The $1500 per fortnight payment amounts to about 70 per cent of the median wage.
For workers in the accommodation, hospitality and retail sectors it will equate to a full median replacement wage.
The subsidies will last for six months.
Which employees and businesses are eligible?
The payment will be open to eligible businesses that receive a significant financial hit caused by the coronavirus.
Eligible employers will be those with an annual turnover of less than $1 billion who self-assess that they have had a reduction in revenue of 30 per cent or more, since 1 March 2020 over a minimum one-month period.
Employers with an annual turnover of $1 billion or more would be required to demonstrate a reduction in revenue of 50 per cent or more to be eligible.
Employers that can access the JobKeeper payment include businesses structured through companies, partnerships, trusts and sole traders. Not for profit entities, including charities, are included also.
Businesses subject to the Major Bank Levy will not be eligible.
It applies to full and part-time workers, sole traders, as well as casuals who have been on the books for at least 12 months.
Workers stood down since March 1 are also able to access backdated payments.
New Zealanders on temporary working 444 visas and migrants eligible for welfare are included.
When can you get the wage subsidy (JobKeeper payment)?
Wage subsidies will flow to businesses in the first week of May.
Eligible businesses can begin distributing the JobKeeper payment immediately and will be reimbursed from the first week of May.
How to register your interest for the JobKeeper payment
Businesses can apply for the payment online and are able to register their interest via ato.gov.au
Almost 60,000 businesses signed up for the scheme within hours of it being announced yesterday afternoon.
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The economic impact
Mr Frydenberg said it would take years to pay off the debt generated, but the government had to do what was needed.
“Businesses will close and people will lose their jobs. That is why we have doubled the welfare safety net,” the Treasurer said.
“However, today we are going even further. Australians know that their government has their back.”
Finance Minister Mathias Cormann said the government had committed the equivalent of 16.4 per cent of Australia’s GDP to keeping the economy on deck.
“It’s an eye watering amount … It is a very, very significant investment,” he said.
Scott Morrison said some countries would face economic collapse or hollowing out in coming months as the disease spreads globally.
“In the very worst of circumstances, we could see countries themselves fall into chaos – this will not be Australia,” he said.
“This is about keeping the connection between the employer and the employee and keeping people in their jobs even though the business they work for may go into hibernation and close down for six months.
“When the economy comes back, these businesses will be able to start again and their workforce will be ready to go because they will remain attached to the business through our JobKeeper payment.”