Businesses that have suffered sharp downturn are eligible for wage subsidies of $1,500 a fortnight per employee for up to six months

This article is more than 5 months old

This article is more than 5 months old

The Australian government has earmarked $130bn towards wage subsidies over the next six months in an extraordinary bid to stave off further job losses as the economy faces a sharp downtown during the coronavirus pandemic.

Up to 6m workers could be eligible for wage subsidies of $1,500 per fortnight, which the Australian Tax Office will pay directly to businesses that have suffered sharp drops in turnover. Such businesses will required to pay at least that amount to workers – including those who have been stood down since 1 March.

Scott Morrison described the measure as an “economic lifeline” at a time when the nation was fighting twin battles “against a virus and against the economic ruin that it can threaten”.

Coronavirus Australia live news: Scott Morrison announces $1,500 a fortnight 'job keeper' payment to employers worth $130bn – latest Read more

The prime minister warned that the disruption caused by the pandemic was such that many countries would see their economies collapse in the months ahead.

“We could see countries themselves fall into chaos – this will not be Australia,” Morrison told reporters in Canberra on Monday. “We will get Australians through this, with uniquely Australian solutions to deal with the unique Australian challenges we face here.”

Morrison confirmed parliament would have to be recalled to pass the legislation, possibly as soon as next week.

The announcement came as officials confirmed that Tasmania and ACT had experienced their first Covid-19 related deaths.

As of Monday afternoon, there have been 4,245 confirmed cases of the illness across Australia with 18 deaths.

The deputy chief medical officer, professor Paul Kelly, said while there had been a decrease in the daily growth in cases, it was “not a time to take the foot off the brake” as attempts must continue to slow the spread of the virus. He said 55 people remained in intensive care units at present. Kelly also committed to release more detail about the modelling that underpins the government’s health measures, after growing calls for the rationale to be explained at length.

Morrison was due to have another teleconference with state and territory leaders on Monday evening, just a day after the national cabinet agreed to tougher restrictions on social interactions, including limiting gatherings with others outside the household to two people.

The new $1,500 JobKeeper payment is an about-face for the Morrison government, which resisted union calls for a wage subsidy until employer groups joined the push last week, warning that the previous economic stimulus packages were not enough to support Australians’ jobs.

The new wages subsidy aims to help employers maintain relationships with employees, even as increasingly strict restrictions force more and more businesses – particularly retail and hospitality - to shut their doors.

Affected businesses are those that suffer a drop in turnover of at least 30% - or at least 50% in the case of large employers with more than $1bn of turnover.

The government says the flat payment of $1,500 per fortnight will be available for full and part time workers, sole traders, and casuals who have been with an employer for 12 months or more.

Coronavirus Australia latest: at a glance Read more

“We want to keep the engine of our economy running through this crisis,” Morrison said. “It may run on idle for a time but it must continue to run.”

The treasurer, Josh Frydenberg, said the wages subsidy built on other economic stimulus and support measures announced over the past month.

“At a cost of $130bn over the next six months, we are providing support to the Australian worker like never before,” he said. “Extraordinary times call for extraordinary measures.”

As the coronavirus crisis has led to tighter and tighter restrictions, including forced shutdowns of certain businesses, the government has had to dramatically ratchet up the level of support to prop up the economy and support laid-off workers.

Just over one week ago, the government announced an effective doubling of the jobseeker payment, previously known as Newstart, over the next six months, which prompted long queues to form outside Centrelink offices across the country.

On Monday the secretary of the Australian Council of Trade Unions, Sally McManus, revealed that the union body believed 1m workers had been stood down or laid off since the start of the crisis, while the Centre for Future Work estimated the figure could rise to more than 2m within weeks, pushing unemployment to 20%.

The OECD has estimated that Covid-19 shutdowns could see 22% of Australia’s economic activity directly lost due to shutdowns.

It assumed a full shutdown in the arts, entertainment, recreation, transport manufacturing and other personal service sectors; declines of three-quarters of activity in hotels, restaurants, air travel, retail and wholesale trade; and declines of one half in construction and professional service activities.

McManus told reporters a $1,500 fortnightly payment was “highly inadequate”. The ACTU has lobbied for workers to receive a subsidy of 80% of their former wage, up to a cap of 80% of the median wage, or $1,375 a week.

McManus also took aim at the “simply bad communication by governments, state and federal, that led to panic” among employers.

The Morrison government had suggested employers “could let people go and they’d be looked after by the social security system” while state governments had suggested that some employers were not essential, she said.

“[It] was a bit bungled really ... and we woke up to a whole lot of workplaces standing down or just sacking their employees.”

On Monday the shadow treasurer, Jim Chalmers, promised Labor would support “any additional measures which will get more help to more Australians more quickly” - but warned while it would be constructive it would not be “silent”.

“Where there are obvious gaps or where there are obvious flaws or where there is a lack of urgency, we will make those points as well,” he said.

Chalmers said wage subsidies had been delayed because the Coalition had dismissed “sometimes ridiculing, the good ideas that Labor and others in our community, the unions, have put forward”.

The government also confirmed on Monday that it would temporarily ease the partner income test that applies to the JobSeeker Payment. It will now be available to eligible people so long as their partner earns less than $79,762 a year. Previously it was set around $48,000, meaning that many recently laid-off workers would have missed out on the payment.