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(Australian Associated Press)
Australia’s unemployment rate is expected to hit eight per cent when wage subsidies are due to end but the forecast is looking less grim as the health situation improves.
The economic shock of coronavirus was thrashed out at a Senate committee in Canberra on Tuesday.
Treasury secretary Steven Kennedy said the unemployment rate was expected to be eight per cent by September when JobKeeper is legislated to end.
“We have been steadily revising down our expectations of how high the unemployment rate will rise because of the fact the health scenario has continued to improve,” he told the committee.
Dr Kennedy expects there to be some lag in getting Australians back to work as bosses initially offer more hours before advertising jobs.
But he did concede there were complications with measuring unemployment because of wage subsidies and the economy reopening.
Almost $13 billion in JobKeeper payments have flowed to 3.3 million workers.
But 120,000 childcare staff will no longer receive the $1500 fortnightly wage subsidy from July 20, sparking speculation other sectors could be removed from the scheme early.
Treasury’s review of the program is due to be handed to the government in late June, with any changes set to be announced on July 23.
“There may well be some further adjustments made at the edges in the context of the economic statement of 23 July,” Finance Minister Mathias Cormann told the hearing.
Labor senator and committee chair Katy Gallagher questioned if the changes would mean more workers being removed from the scheme.
“Does that mean more people are going to get kicked off JobKeeper before September? Is that code?” she said.
Senator Cormann said no decisions had been made about other sectors.
Treasurer Josh Frydenberg told reporters the review would look at ways to strengthen and improve wage subsidies.
Senior bureaucrats and Senator Cormann also faced a grilling over the bungled JobKeeper projection, with the program now estimated to cost $70 billion instead of $130 billion.
Dr Kennedy took full responsibility for the revised figure.
Labor leader Anthony Albanese bristled at the department secretary taking the hit.
“The idea that Josh Frydenberg thinks it’s acceptable to have a public servant accept responsibility for a scheme that he has implemented under the Westminster system is just quite frankly pathetic,” he told reporters.
Senator Cormann denied it was an accounting error, instead preferring to describe it as an “estimates variation”.
He said the government had prudently prepared for the worst-case scenario at the height of coronavirus-induced uncertainty.
The program was re-costed after the tax office found errors overestimating the number of employees on some employers’ application forms, the committee heard.
Prime Minister Scott Morrison last week guaranteed JobKeeper would continue for the full legislated period, days before it was announced one sector would be cut off early.
Childcare workers will instead receive transitional payments, which the government argues are only slightly less than wage subsidies.