Daily Commentary BY THE CURVE TEAM –

Jobkeeper Cliff Postponed

21st of July, 2020

Changes set to be announced by the Prime Minister today will delay the impending September Jobkeeper Cliff.

Despite expectations we would hear these announcements from the Treasurer in Thursday’s “mini-budget”, reports in the major mastheads today indicated the Prime Minister will hand down the changes today. The reports indicate that we will see a reduction of the Jobkeeper payments to around the $1200 a fortnight with an extension of the September Fiscal cliff until March 2021.

In what should provide further stability for the economy amidst Covid-19 outbreaks along the eastern seaboard, the reduction in payments is aimed to extend the government’s metaphoric bridge and their capacity to fund it. The government’s argument appears to be that workers receiving the Jobkeeper and Jobseeker payments were receiving more than they would in the workforce, which could act as a disincentive to undertake work over the next few months.

Immediately after the reports hit the presses there were quotations from several industry players outlining the impact of this announcement. The CEO of the heavily impacted business Flight Centre was quoted as saying this reduction will lead to some hard decisions. Workers able to be maintained on payrolls with the $1500 payment may not be sustainable at $1200 if businesses are required to provide the difference. The reality remains that given this current economic climate these hard discussions and decisions are inevitable and the government may very well be of the opinion these need to occur sooner rather than later.

Additionally today, RBA Governor Lowe will speak before the annual Annika Foundation luncheon, this year conducted as a webcast. Governor Lowe’s Speech “COVID 19, the Labour Market and Public-sector Balance Sheets” should tie in nicely with the Prime Minister who has undoubtably been in close coordination with the Reserve Bank and Treasury about the programs.

Matthew Dunshea

Client Relationship Manager