As Australia is easing restrictions in all its states and territories, opinion seems to be solidifying the government’s JobKeeper program will need to be extended beyond September. Answering questions in the Senate Inquiry, Reserve Bank of Australia (RBA) governor Dr Philip Lowe has warned there are more job losses to come from the COVID-19 fallout.
The Morrison government quickly swung into action to introduce economic stimulus packages as the need arose, particularly the visuals on television screens of miles long queues in front of Centrelink offices. The government introduced a wage subsidy program – JobKeeper – to ensure – during the crisis people have incomes to get by.
Dr Lowe said the Morrison government’s JobKeeper program had been vital in maintaining the connection between workers and employers.
“If we’d lost all those connections between workers and their employers, the recovery, which is going to be difficult, would be even more difficult,” he told the inquiry on Thursday.
The JobKeeper program now costing the federal government only $70 billion $60 billion less than originally budgeted amount of $130 billion, will be reviewed in June. Originally forecast to cover wages of 6.5 million workers, it has come to light the program is only supporting 3.5 million.
Although the government has consistently said JobKeeper will end in September, some senior ministers have hinted at some changes (extension and expansion options included) since $60 billion underspend has come to light.
According to the RBA governor Dr Lowe the outlook for Australia’s economy remained uncertain, and September would be a critical point. Australia and Australians have managed COVID-19 fight a lot better than previously thought which gives a slightly better hope for the economic recovery’s speed, largely depending on when Australians regain confidence in their health and finances.
“With the national health outcomes better than earlier feared, it’s entirely possible the economic downturn will not be severe as earlier thought,” he said.
“Even as the recovery gets under way, as it will, there will still be a shadow cast over our economy by the pandemic.
“As a country we’ll need to turn our minds as how to best move out of that shadow.”
“If the economy is not recovered reasonably well by then, as part of that review we should be looking at, perhaps, the extension of that scheme or the modification in some way,” he told the inquiry.
Dr Lowe like many other experts expect more job losses to come in the ongoing economic fallout from COVID-19 shutdowns. That makes extension of JobKeeper program in some (modified) form more likely than Morrison’s scenario of Australia snapping back into normality.