Will the $60 billion JobKeeper error affect you?
The estimated total cost of the government’s JobKeeper scheme was originally $130 billion but this amount was almost halved to $70 billion in May, leaving many worried that their payments would be reduced or stopped.
The original estimate seems to have been a calculation error. The governmental stimulus, which offers employers eligible for payments a wage subsidy of $1,500 per fortnight for each employee, was originally said to be worth $130 billion in total. Apparently, however, this figure was a reporting error and the actual total cost of the scheme is $70 billion, just over half of the initial figure.
Does this error mean you’ll lose some or all of your JobKeeper payments?
No, in a word. The cost of $130 billion was an inaccurate estimate of the total cost of the scheme, rather than the number of recipients or the amount each recipient will receive each fortnight.
If you’re receiving JobKeeper payments for your employees then nothing will change. You’ll carry on receiving the wage subsidies for each eligible employee until the scheme ends next March.
If you’re one of the 3.5 million employees getting the $1,500 each fortnight from your employer, nothing will change for you either. You won’t lose a cent and you won’t need to reapply for your payments. Your employer won’t need to reapply for the allowance either.
What happened to cause this error or miscalculation?
It seems that this huge discrepancy was caused by a significant number of businesses making a similar mistake when they applied for help from the scheme, according to the ATO.
Instead of entering the number of employees the business believed would be eligible for the JobKeeper payments, some enterprises entered the number 1,500. They’d confused the number of employees with the dollar amount of money that the employee would receive each fortnight. It’s easy to see how just a few businesses making this mistake would bump up the estimated total cost of the scheme.
The ATO was focussed on getting the money to where it needed to go
The Australian Treasury reports that this form–filling error wasn’t identified and rectified by the ATO soon after it happened as it was – quite rightly – more concerned with getting the payments out to the employers and employees in need.
Are there any wider or long–term implications of the error?
The reporting error isn’t going to have any wider or long–term consequences. The $130 billion estimate was just that – an estimate to help the government prepare to help workers in need. In some ways, this overestimate can be seen as a worst–case scenario that didn’t come to pass. The government was planning to support 6.5 million employees when it actually only needs to support 3.5 million.
What about the extra $60 billion?
When the error was uncovered, unions and industry bodies asked for it to be distributed among casual workers. There were also calls for the scheme to be extended beyond September 27 2020(the original end–date) and the government has listened to these pleas, it seems.
The JobKeeper scheme has been extended to March 2021
On July 21 2020, the government announced that it was to extend the JobKeeper scheme until March 28 2021, with some changes.
From September 28 2020, the JobKeeper scheme’s eligibility will be assessed on the company’s turnover for the assessment period and payments will be reduced and paid at two different rates.
How will JobKeeper change?
From September 28 2020, businesses and not–for–profit organisations will have to reassess their eligibility for the extension payments using their actual turnover for the June to September 2020 quarters. These organisations must show a continued turnover decline large enough to pass the government’s test in these quarters in order to be eligible for Jobkeeper from September 28 2020 to January 3 2021.
In January 2021, businesses and not–for–profits will have to perform a further reassessment and demonstrate another eligible decline in turnover. This assessment will decide if they are eligible for JobKeeper payments from January 4 2021 to March 28 2021.
The JobKeeper payment rate will change
The JobKeeper payment will be reduced and paid at two different rates.
From September 28 2020 to January 3 2021, the JobKeeper payment rate will be reduced to $1,200 per fortnight. This payment will be made for all eligible employees who were, for the four weeks before March 1 2021, working for the organisation for at least 20 hours a week on average. This same payment will be made to business participants who were engaged with the business for at least 20 hours a week during the same period.
A payment of $750 per fortnight will go to employees who were working for less than 20 hours a week on average and to business participants actively engaged for less than 20 hours a week.
A further reduction from January 4 2021
From January 4 2021 to March 28 2021, the JobKeeper payment will be reduced to $1,000 a fortnight to all eligible employees and business participants who were working for or engaged with the business for at least 20 hours a week in the four weeks before March 1 2020.
A payment of $650 per fortnight will go to employees and business participants with the qualifying hours of less than 20 a week in the four weeks before March 1 2020.
More information for employers and employees can be found at the JobKeeper extension fact sheet here.