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Daniel McCulloch and Colin Brinsden
(Australian Associated Press)
Australians have been offered JobSeeker and JobKeeper payments during the coronavirus crisis.
So what’s next, JobTweaker perhaps?
Chris Richardson from Deloitte Access Economics has issued a fresh warning about withdrawing pandemic supports too soon.
Mr Richardson specifically argued for JobSeeker unemployment benefits to remain above their pre-coronavirus rates.
Victoria was poised to cop the biggest economic hit from the coronavirus pandemic even before a dramatic spike in infections forced renewed shutdowns across large parts of Melbourne.
The state is now bracing for another devastating blow as its border with NSW is closed.
Mr Richardson 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,” he 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.”
Treasurer Josh Frydenberg will reveal the outcomes of a review into JobKeeper and JobSeeker payments on July 23.
He is not giving much detail away before then.
“We’re going to continue to provide the support that is necessary for those sectors and for those people who need it,” Mr Frydenberg told reporters in Canberra.
“We’ll continue to look for sector-specific support as well as economy-wide support.”
Mr Richardson believes wage subsidies will be needed beyond the September expiry date.
He suggested limiting the payments to a smaller range of businesses – such as those tied to international borders – and reducing the amount of the benefit, labelling his proposal as “JobTweaker”.
He also argues for keeping the JobSeeker unemployment benefit “stronger for longer”.
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 passed 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.”
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.