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Money / Financial management

The changes to JobKeeper in plain english

In response to the effects on the economy of the stage 4 lockdowns in Melbourne, the government has eased the criteria around the eligibility test for JobKeeper.

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The major change: Treasurer Josh Frydenberg has announced businesses will now only have to show their turnover has fallen in the last quarter to qualify for the extension to the wage subsidy.

The JobKeeper program was initially slated to wrap up on September 28, with the government announcing an extension to the scheme last month.  Previously, to be eligible for this extension, a business had to show their turnover was down over the June and September quarter compared with their 2019 earnings.

Under the new criteria, businesses will only have to show turnover has fallen in the September quarter, compared to the corresponding quarter in 2019, to be eligible for the wage subsidy after September 28.

The eased eligibility test is predicted to add an extra $15.6 billion of support for businesses.

Frydenberg says this means businesses that may have been ticking over as business began to open up again will likely now be eligible for the scheme.

“We’re now saying that you need to be just down in the September quarter. This will take into account those businesses that were doing OK through April, May and June but have obviously been subject to lockdown now,” Frydenberg said.

The criteria around eligible employees has also eased – with employees who joined a business by July 1, now eligible for the subsidy.

“Again, this change means more people can access the program because as businesses were starting to open up, as progress was made on the health front, more employees were coming on the books of businesses. Now, of course, they’re being subject to lockdown. So this will allow the JobKeeper program to cover them,” Frydenberg told ABC Breakfast this morning.

Frydenberg said the government was ‘deeply concerned’ about the economic blow of the Victorian shutdowns on the economy.

“The reality is, as Treasury have forecast, it will hit the economy by between $10-12 billion in the September quarter and we’ll see between 250,000 and 400,000 Victorian employees either stood down or – stood down to zero hours or who lose their job as a result of these stage 4 restrictions. This is a really difficult time for Victorian families and Victorian businesses.”

Frydenberg said it is expected that around $13 billion of the $15.6 billion of the expanded JobKeeper program will go to prop up Victorian businesses. He said the new subsidy would also support 100s 0f 1000s more employees.

The extra $15.6 billion in funding will push the costs of the total JobKeeper package to $102 billion. BUT it’s important to note the government originally forecast the scheme to cost $130 billion dollars, making this ‘additional’ funding well within budget projections.

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