Morrison Government in Australia Announces $130 billion Job keeper Payment Relief Amidst COVID-19

• Reading Time: 6 Minutes
• Published: April 1, 2020
• Last Updated: January 31, 2025

Introduction

COVID-19, the deadly virus that came into news a few months back originating from China has now clasped over two-third of world’s population with its deadly aftermaths. The Coronavirus infection has affected more than a million people in 175+ countries and the count has been constantly increasing since its commencement. Governments and health authorities across the globe are worried and bringing in measures to keep human casualties to the minimum. Due to the pandemic, the economies have been experiencing a sharp downswing as most of the countries are on lockdown to stop the spread of this fatal virus. It has become a grave challenge for individuals to meet ends meet during these times of crisis.

However, a good news showed up for Australian employees amidst these bleak times. The Australian Government announced job keeper payment worth $130 billion dollars in order to help survive, businesses and keep the Australian population employed. This is one of the most significant decisions that came amidst the pandemic to support the business as well as local individuals. The government’s relief package for coronavirus is intended to ensure that each employee held on in a business that has lost customers receives at least $1500 fortnightly for a period of six months.

The government announced relief measures for businesses amid coronavirus outbreak to support its working population. This relief package is worth 12 percent of the budget planned for the upcoming six months. Here are some of the features of the bill, which came into effect March 30th 2020.

• The Morrison Government will provide a historic wage subsidy to around 6 million workers who will receive a flat payment of $1,500 per fortnight through their employer, before tax.
• The $130 billion Job Keeper payment will help keep Australians in jobs as they tackle the significant economic impact from the coronavirus.
• The payment will be open to eligible businesses that receive a significant financial hit caused by the coronavirus.
• The payment will provide the equivalent of around 70 per cent of the national median wage.
• For workers in the accommodation, hospitality, and retail sectors it will equate to a full median replacement wage.
• The payment will ensure eligible employers and employees stay connected while some businesses move into hibernation.
• 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 the GDP.
• “We will give millions of eligible businesses and their workers a lifeline to not only get through this crisis, but bounce back together on the other side,” the Prime Minister 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 up to six months and 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 Job Keeper payment.”

Job Keeper Payment

• The Job Keeper Payment is a subsidy to businesses, which will keep more Australians in jobs through the course of the coronavirus outbreak.
• The payment will be paid to employers, for up to six months, for each eligible employee that was on their books on 1st of March 2020 and is retained or continues to be engaged by that employer.
• Employers will receive a payment of $1,500 per fortnight per eligible employee. Every eligible employee must receive at least $1,500 per fortnight from this business, before tax.
• The program will commence on 30 March 2020, with the first payments to be received by eligible businesses in the first week of May as monthly arrears from the Australian Taxation Office. Eligible businesses can begin distributing the Job Keeper payment immediately and will be reimbursed from the first week of May.
• Eligible employers will be those with annual turnover of less than $1 billion who self-assess that they will have a reduction in revenue of 30 per cent or more, since 1 March 2020 over a minimum of 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. Businesses subject to the Major Bank Levy will not be eligible.
• Eligible employers include businesses structured through companies, partnerships, trusts and sole traders. Not for profit entities, including charities, will also be eligible.
• Full time and part time employees, including stood down employees, would be eligible to receive the Job Keeper Payment.  Where a casual employee has been with their employer for at least the previous 12 months they will also be eligible for the Payment.  An employee will only be eligible to receive this payment from one employer.
• Eligible employees include Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa, and migrants who are eligible for Job seeker Payment or Youth Allowance (Other).
• Self-employed individuals are also eligible to receive the Job Keeper Payment.
• Eligible businesses can apply for the payment online and are able to register their interest via ato.gov.au

Income support partner pay income test

• Over the next six months the Government is temporarily expanding access to income support payments and establishing a Coronavirus Supplement of $550 per fortnight.
• Job seeker Payment is subject to a partner income test, an eligible person can receive the Job seeker Payment, and associated Coronavirus Supplement, providing their partner earns less than $3,068 per fortnight i.e. around $79,762 per annum.
• The personal income test for individuals on Job seeker Payment will still apply.
• Every arm of government and industry is working to keep Australians in jobs and businesses in business, and to build a bridge to recovery on the other side.
• The Government will continue to do what it takes to ensure that Australia bounces back stronger.

Conclusion

This is an appreciable step by the government that will help many businesses survive and remain to be an employer to their employees, which is crucial to a speedy comeback.

Targeting only companies suffering a revenue losing margins profiteering, the businesses doing well won’t be provided nonessential assistance. The government’s relief package provides aid to all part-time, full-time, and long-term informal employees and it requires all participating companies to compensate employees at least the $1,500 subsidy fortnightly.

However, several threats are always associated with this kind of subsidy package. For instance, it might motivate companies to restrict sales to pull the revenue below the turnover margin. This might lead to wasting currency on jobs that would have been generated anyway or replacing one kind of employee for another.

The relief package scheme will primarily target employees who are at or near the minimum salary. It is done because the compensation is put near to the minimum salary.

As a consequence, companies can rehire or continue with minimum-wage employees for free. The government’s relief measure will also lead to hardships for companies who are in desperate need of employees (like supermarkets) to employ new staff from presently struggling businesses.

Bringing in the temporary subsidy package, and limiting it to companies dealing with a 30% decline in revenue (50% for big firms) curtails these threats to an extent. The government needs to have a check alongside in order to ensure the optimal utilization of this relief package. It is praiseworthy though that the government offset the declining economic course of businesses instantly given the worsening circumstances.

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