For critics, the Treasury just marked “its own homework”.
This has produced a 60-page report called Insights from the first six months of JobKeeper.
And it finds the A$89 billion program Australia needed it most last year.
Like the Labor government’s economic rescue programs during the global financial crisis, critics claim it was useless, this time from the Labor side of politics.
But they have very short memories.
In the first week of March 2020, there were 93 COVID-19 cases and three deaths in Australia.
The prime minister said he was “getting on foot” and “looking forward to it”, at a time when medical experts were calling on people not to do anything like this and a quarter of Italy was locked down.
Tourists from Italy were coming freely. We were sleeping in a disaster.
the way we were
On March 10 last year, I wrote that we needed to close our international border completely and immediately, and put about $100 billion to support workers and business while shutting down the economy and implementing health measures. Dollars need to be spent.
The borders were closed on 20 March. The Treasury estimates that our economy (GDP) would collapse by 24% if we had to impose a strict lockdown like in Italy or Spain.
It won’t just be a recession or depression. This will be economic and financial armageddon. The government needs to close an unimaginable hole at the earliest. And it did.
Read more: Retrospective paid work is the key to jobkeeper success
JobKeeper provided six months of financial support to businesses that expected their revenues to decline. At that time, it was almost every business in the country.
It was designed to be easy to understand and get money on business and household balance sheets instantly.
Most importantly, it was designed to give recipients certainty in times of catastrophic uncertainty.
These are facts. They are indisputable.
what critics say now
From present-day security, critics point out that JobKeeper excluded certain industries and workers: among them short-term casual and universities.
And they say $19.7 billion went to businesses whose revenues paid them off in the three months.
Read more: Quick, dirty, effective: Jobkeeper didn’t have time to perfect
He says it would have been better not to spend the money on businesses that had increased revenue, and would have been good to include short-term contingencies and universities.
JobKeeper should have included a “clawback” provision, he says.
They are right. It would have been better if it was designed this way. But they are taking inadequate account of how things were at that time.
what were things then
The context of JobKeeper’s development was a once-in-a-century event with a government in power whose entire political brand was railing against “debt and deficit”.
Economists were concerned that the government could do little or nothing.
Things to note are:
The Treasury had to work incredibly quickly in just a few days. I love one academic seminar as much as the next one, but didn’t have the luxury of years of work, refinement, and debate at the Treasury. It had to do battlefield surgery.
A major reason why so many businesses were able to raise revenue after JobKeeper started was that it was so effective. A smaller plan with more requirements and red tape would mean fewer workers and businesses to be supported, crippling the entire economy.
The more exclusions and exclusions from JobKeeper, the less likely it is to happen. Fine-tuning rules create uncertainty. It provides scope for gaming (getting around the rules). If we want public programs to be empowered, they need to be simple.
In March 2020 the real choice was JobKeeper because it was JobKeeper or not.
we saved the patient
The Australian economy was seriously ill in early March 2020.
Doctors Josh Frydenberg (Treasurer) and Steven Kennedy (Treasury Secretary) rescue the patient. that’s what matters.
Did they use ECG machine, blood bag, gauze and stitches? Absolutely.
Did it cost financial resources? Perhaps, although the worst had happened, even more resources could have been used.
Insurance may seem worthless after the fact, but that doesn’t make it unwise.
Read more: GFC Provides the Sauce We Used to Survive the COVID Meltdown
I’m glad he put on a lot of stitches instead of too few.
He provided the only thing that can really help in times of extreme uncertainty, which is certain.