Around 6 million Australians will be able to access replacement wages of $1,500 a fortnight as the Australian government spends billions to keep the Australian economy alive and households afloat.
The ‘JobKeeper’ scheme is part of a huge $130 billion package announced by the government on Monday, and takes national spending to $320 billion in just three weeks. The last annual federal budget was worth $500 billion.
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The $130 billion scheme will run for six months, Prime Minister Scott Morrison said on Monday afternoon. He estimates the scheme may go to as many as 6 million workers.
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Workers will receive the replacement wage through their employer, whether they have been stood down or continue to be engaged with the business.
“We will pay employers to pay their employees, and make sure they do to keep them in the businesses that employ them and to ensure they can get ready together to bounce back on the other side,” Morrison said.
“This plan is about keeping those businesses together.”
Previously, workers who were stood down were required to apply for Centrelink benefits, including the Jobseeker Allowance and new coronavirus economic one-off support payments of $750.
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Labor leader Anthony Albanese has repeatedly called for a wage subsidy similar to the 80 per cent subsidies employed in the UK, which allows workers to access up to 80 per cent of their regular wages.
Under the UK scheme, the government covers up to 80 per cent of workers’ wages, provided the companies keep the staff on the books. The subsidies are then delivered to the companies, which then pay the staff. This scheme is designed to keep the economy warm, so that when the Covid-19 crisis eases up, it’s easier to get the economy off the ground again.
The UK scheme sees payments capped at £2500 ($5000) per month, per employee, and sees payments backdated to March 1.
Morrison had previously ruled out such a scheme, claiming it would lead to inequalities in welfare as Australians in higher-paying jobs would receive more support.
How will it work?
Treasurer Josh Frydenberg said the scheme is the equivalent of around 70 per cent of the median wage and is available to full and part-time workers, sole traders and casual workers who have been with their employer for at least 12 months.
Businesses will receive the funds, provided they meet the eligibility requirements, and will then pay the staff the $1,500 a fortnight.
In order to receive the funds, businesses and sole traders will need to apply to the Australian Tax Office, with payments flowing from May. However, employers can begin making the payments, with the government to reimburse payments from today.
Who will benefit?
Small and medium-sized businesses and not-for-profit groups are also included in the scheme, along with sole traders, and all employed workers.
New Zealanders in Australia on 444 Visas will also be eligible.
On top of that, permanent residents are also eligible.
However, in order for a business to qualify, its turnover must have fallen by at least 30 per cent.
Companies turning over more than $1 billion must have taken a 50 per cent hit in order to be eligible.
As an employee, you cannot claim JobSeeker benefits in addition to the new JobKeeper payments.
How long will it run for?
The scheme will run for six months, with employers able to backdate the payments to today. Employers will then be reimbursed in the coming months by the government.
What if I earned less than this before?
Good news, you’ll receive the full $1,500.
Do I get super on this?
You will not receive superannuation on this payment.
What’s it capped at?
Employees will receive $1,500 a fortnight regardless of their previous wage. Employers who continue to pay wages will pay those on top of the $1,500.
Do I pay tax on this payment?
Eligible Australians will receive the $1,500 before tax. As such, you will be required to pay tax on the payment based on your overall income.
How will I know if I’m receiving the payment?
Your employer will tell you. Morrison suggested those who want the payment call their bosses.
What if I have more than one employer?
If you have more than one boss, you need to tell your primary employer in order to receive the payment.
What if I was laid off after 1 March?
If you were employed on 1 March, were then made redundant and have since been re-engaged by the same employer, you should receive the $1,500 payment.
Changed partner test
The government last week introduced the Coronavirus Supplement scheme which will deliver an extra $550 a fortnight to those receiving welfare, bringing it to $1,100. However, critics claimed the scheme wasn’t enough and warned rules surrounding partner income also made it difficult for unemployed Australians to access it.
When the scheme was introduced, unemployed or stood-down Australians were unable to access the payments if their partner earned more than $1,850 a fortnight, or $48,100 a year. The government on Monday changed the test to allow those whose partners earned up to $79,000 a year to access the supplement.
More to come.
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