The inclusion of a clawback mechanism for JobKeeper payments “would likely have reduced the overall level of activity and muted the recovery” according to a new Treasury report.
Treasury said that the six month-timeframe for JobKeeper “was designed to provide certainty to businesses” and “was based on health advice on the potential length of restrictions”.
“A mechanism to claw back payments from businesses that performed better than expected was not included, reflecting a desire to avoid any disincentives for businesses to adapt and recover,” Treasury said.
It was “understood” that some businesses may not require support for the full six-month period, the report acknowledged.
Figures released by the Parliamentary Budget Office in August revealed that $13 billion in JobKeeper payment were directed to profitable companies.
Treasury’s analysis of turnover data found that $11.4 billion was paid to businesses in the June quarter whose turnover did not decline by 30 per cent (or 50 per cent for larger business) and $15.6 billion was paid in the September quarter.
“Around $6.8 billion and $6.4 billion in the June and September quarters was paid to businesses whose turnover fell, but not by 30 per cent (or 50 per cent), and $4.6 billion and $9.2 billion, respectively, was paid to businesses with a turnover increase compared with a year earlier,” Treasury said.
Treasury noted that its analysis did not indicate whether businesses were adversely affected by restrictions, and also noted that the majority of businesses which did not experience their projected turnover decline had still been “significantly negatively impacted”.
In its first six months to the end of September 2020, Treasury said that JobKeeper had kept employers and employees connected and had supported productivity and business recovery during a period of significant uncertainty.
Treasurer Josh Frydenberg said the report confirmed JobKeeper was “well-targeted and highly effective in maintaining employment and supporting the economy during the biggest economic shock since the Great Depression”.
“Without the government’s significant fiscal support, including JobKeeper, Treasury has estimated that the unemployment rate would have peaked at least 5 percentage points higher, and remained above 12 per cent for two years,” Mr Frydenberg said.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
