Treasury suddenly announced a ‘reporting error’ which means JobKeeper will cost Australia a massive $60 billion less than expected

• A reporting error has led Treasury to overestimate the cost of the JobKeeper wage subsidy program by $60 billion.

• On Friday, the department issued a statement revealing the program was only supporting 3.5 million workers instead of the 6.5 it had originally reported.

• The error is believed to have been made by businesses signing up who mistakely overstated the number of employees they had.

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One of the largest accounting errors in Australian history has just been made.

The federal government on Friday revealed that an error saw it incorrectly cost its flagship JobKeeper program at almost double what it will actually cost.

It had previously claimed the wage subsidy was supporting 6.5 million Australians but has now revised that figure down to just 3.5 million, according to a statement from Treasury.

"The enrolment forms completed by 910,055 businesses who have self‑assessed as eligible under the scheme had indicated that this program would cover around 6.5 million eligible employees. The ATO’s review of these forms has found that around 1,000 of those businesses appear to have made significant errors when reporting the estimate of eligible employees on their enrolment form," Treasury said.

According to its update, the most common mistake saw more than 500 businesses with just a single employee report they had 1,500 employees in their application, mistaking it for the fortnightly JobKeeper subsidy of $1,500 they expected to receive.

It means that rather than costing the taxpayer $130 billion as the government originally reported, the price tag of the six-month program will be $70 billion – a little over half.

In explaining the enormous discrepancy, the Treasury said it the figures provided to it had not been a focus of scrutiny before.

"It was not picked up by the ATO earlier as their primary focus in the first fortnight of JobKeeper payments was on ensuring that JobKeeper payments were paid promptly to those eligible for them, and not paid to those who were ineligible. These initial estimates from businesses of employees covered are not linked to payments, and so were not as carefully analysed," the department said.

Importantly, however, it emphasised that these mistakes had not affected those payments already made, nor did it change Treasury's grim view on the economy.

"It remains the case that in the absence of the JobKeeper program, Treasury expects the unemployment rate would have been around 5[%] higher. Treasury continues to expect the unemployment rate to reach around 10%, although as indicated by last week’s Labour Force survey, the measured level of the unemployment is highly uncertain given the impact of social distancing restrictions on the participation rate," Treasury said.

With rumblings in recent weeks from the Morrison government about the sustainability of such an expensive public policy and the suggestion it may soon have to wind it back, it appears its fiscal complaints may have been a little premature.

Instead, it's basically found $60 billion it didn't know it had hidden under the lounge cushions at Parliament House.