JobKeeper underspend: Widespread calls for it to be broadened

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Inevitably the huge looming underspend has intensified the widespread calls for JobKeeper to be broadened, writes political columnist MICHELLE GRATTAN.

CAMPAIGNING in Eden-Monaro with just-selected Liberal candidate Fiona Kotvojs, Scott Morrison yesterday (May 24) turned folksy to present the upside of the $60 billion JobKeeper forecasting snafu.

“If you’re building a house and the contractor comes to you and says it’s going to cost you $350,000 and they come back to you several months later and say, well, things have changed and it’s only going to cost you $250,000, well, that is news that you would welcome.”

Two things happened with the JobKeeper estimate.

First, treasury made wrong assumptions about the likely numbers and cost. The about 6 million employees anticipated to access the program has shrunk to some 3.5 million, so the $130 billion cost has fallen to $70 billion.

Second, The Tax Office didn’t spot treasury’s bad forecasting for a long time because it failed to pick up that its own data was flawed due to some employers filling in their forms wrongly.

Treasury says it erred in part because things didn’t get as bad as it had expected. Also, there was the “inherent uncertainty” in estimating the take-up of a demand-driven program.

It’s notable, however, that writing in The Conversation in late April, Melbourne University economists Roger Wilkins and Jeff Borland pointed to a disparity between the drop of 2.6 million full time jobs implied by the Reserve Bank and the 6.6 million jobs their calculations suggested treasury was preparing to fund under JobKeeper.

Given this big discrepancy, one might have thought the treasury bureaucrats would have kept a careful eye on the numbers. But they were falsely reassured by the Tax Office’s incorrect figures.

Presciently, the academics wrote: “Forecasts – even those based on the most relevant and up-to-date information – can be wrong. This isn’t a criticism. Making forecasts is hard.

“But it might be that 6.6 million turns out to be an overestimate.”

They argued that “if so, it creates an opportunity.

“It would allow JobKeeper to be extended to some of the workers who at present miss out, among them casual employees in their job for less than 12 months and the temporary visa holders who are currently excluded.”

This is just what the government doesn’t want to do.

Inevitably the huge looming underspend has intensified the widespread calls for JobKeeper to be broadened.

Asked on Sunday about using the money to extend the program to more people or beyond September, Morrison replied: “If the suggestion is that we should be increasing borrowing more than would be needed to deliver the program that we’ve designed and [are] delivering, well, the answer is no.”

But Morrison also said JobKeeper was not the only programs the government had. He noted hard-pressed sectors such as tourism, the arts and media, and housing. He said: “We will continue to target our support and it will become more targeted as time goes on.”

“There are many challenges that the economy will face beyond September. We know that and there are particular sectors that will feel this for longer, particularly those who are particularly dependent on international borders. We understand that and we’ll be considering that carefully,” he said.

Morrison is leaving the way open for further assistance, but would seem to prefer not to give it via substantial changes to JobKeeper.

Still, there has been speculation about JobKeeper being phased out rather than having the proposed hard finish in late September. And there is a review of it reporting in June. So the government has wriggle room.

Whatever the mechanism, there’ll be a lot of pressure to extend more funding to the tourist industry in the context of the Eden-Monaro by-election, especially with Morrison declaring that “job-making is honestly what this byelection is going to be about”.

The windfall also puts pressure on over JobSeeker.

A poll released by The Australia Institute, a progressive think tank, found 59 per cent of Eden-Monaro voters want a permanent increase to the JobSeeker payment (all or some of the Coronavirus Supplement of $275 a week retained). The poll was done May 12 of 978 residents. At present the payment is due to snap back to the old level at the end of September – $282.85 for a single recipient without dependants, roughly half of what they are getting now.

The opposition has leapt on the massive forecasting/monitoring snafu to call for Treasurer Josh Frydenberg to appear before the Senate committee that is examining the government’s COVID measures.

But Morrison on Sunday ruled this out, and Frydenberg can’t be compelled.

While the government under the Westminster system must accept responsibility for the incorrect forecasting and poor monitoring – and Morrison did so – it is the officials that have the detailed information about how it went wrong.

Morrison said he had “a great deal of confidence in our public service and the officials”. He wouldn’t be wanting to say anything else given, as he noted, “there are many, of course, who live here in the Eden-Monaro electorate”. Indeed it has the highest proportion of government workers of any electorate outside the ACT.

The Tax Office has admitted its attention was on making the early payments and it didn’t have its eyes on the estimates of numbers.

But treasury? While it has given some reasons, there are surely more questions, in light of what seemed obvious to the academics weeks earlier.

The value of having the Senate committee is it can get quickly from the public servants a fuller explanation of what was not a black hole but a over-inflated balloon.

Michelle Grattan is a professorial fellow at the University of Canberra. This article was originally published on The Conversation. 

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Michelle Grattan
Professorial Fellow, University of Canberra, Michelle Grattan is one of Australia's most respected and awarded political journalists.

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