21st July, 2020
The Prime Minister has announced extensions to the Government’s two income support schemes, but has made his intentions clear to wean businesses off stimulus as conditions improve.
Following the release of the Treasury’s review into the JobKeeper and JobSeeker support packages, the government has confirmed that it will be extending both programs.
The Treasury’s review stated that there was a “strong case” to extend these programs, but stricter measures needed to be introduced to keep them from disincentivising people from working.
While the revamped versions of these economic lifelines won’t come into effect until October, each of them will receive a haircut and a stricter barrier of entry.
JobKeeper has received a six-month extension, which will see the scheme finish up at the end of March 2021.
Payments will be reduced to $1,200 a fortnight for the December 2020 quarter, and then down to $1,000 for the following quarter.
Small businesses will still be required to demonstrate that their turnover dropped by at least 30 percent in order to be eligible, and the changes announced today confirmed that this test will be reapplied each quarter.
READ: GST turnover test for JobKeeper eligibility and more
This highly anticipated extension, to which the Treasurer gave a $16 billion price tag, will also introduce a second tier of payments, which will see part-time workers receive further reduced fortnightly payments of $750 for the December quarter, moving to $650 in the following quarter.
During the press conference announcing the changes on Tuesday, Prime Minister Scott Morrison expressed that the Treasury expects the number of those eligible for JobKeeper payments to gradually reduce as the program runs its course.
“We look forward to a time when no businesses need [JobKeeper],” the Prime Minster said.
Introducing a second tier of payments for part-time workers was announced with the backdrop of the Treasury report finding that one in four workers was earning more than they had been pre-COVID as a result of accessing the scheme.
According to Treasurer Frydenberg, JobKeeper 2.0 will blow the initial program’s budget out to a total $86 billion.
MYOB chief executive Greg Ellis said the announcement will be welcome news for the small business community.
“We congratulate the Treasurer and the Prime Minister on today’s announcement to extend JobKeeper,” said Ellis.
“JobKeeper has been a lifeline for small business, with MYOB’s recent Business Monitor research showing 84 percent of small business owners that were eligible for the program reported the subsidy allowed them to continue trading.”
Ellis said many of the challenges small businesses face from COVID-19 are ongoing, with some sectors hit worse than others.
“As we struggle to contain the spread of the virus, the negative economic impact continues to hurt our small businesses.
“We are still seeing impact for our customers across all sectors, most markedly in the decline in invoices issued versus a pre-COVID baseline. Last week, the number of invoices created was down 25 percent on average across all industries, the hardest hit being arts and recreation (-34 percent), healthcare and social assistance (-33 percent) and admin and support services (-32 percent).
“The extension of JobKeeper, and the sensible renewed eligibility test, will ensure small business owners have the best possible chance of success, and even more importantly will provide continued employment for many thousands of Australians.”
Changes to the JobSeeker scheme will see the program continue running until the end of the 2020 calendar year but will drop from $550 of income support down to $250 per fortnight* at the of September.
The Prime Minster announced that the changes will emphasise the “mutual understanding” that recipients will need to take strong measures to re-enter the workforce in order to continue benefiting from this support package.
Starting on 4 August, JobSeeker recipients will be expected to work with employment services to undertake four job searchers a month in order to be eligible. The PM said that the amount of job searchers required will increase in September, with additional asset tests being introduced to the program’s eligibility criteria.
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In an attempt to support the flow of credit for SMEs as the pandemic continue to impact the economy, the government has also announced the extension of its SME Guarantee Scheme, which offers businesses unsecured loans to help them with their working capital needs.
As of 1 October 2020, the loan scheme will enter a new phase, offering eligible applicants a series of enhanced terms, including:
Loans will be available until the end of the 2020 financial year.
This advice is general in nature and not intended to substitute the advice of a qualified professional. MYOB recommends any business owner who’s unsure about how to apply for JobKeeper first contact an accredited accountant or BAS agent. You can start your search for an advisor near you here.
*This article originally stated that JobSeeker would be reduced to $250 per week. This information has since been updated to the correct (fortnightly) time period.