With parts of Australia facing a second wave of COVID-19 (coronavirus) cases and returning to lockdowns, the Federal Government has announced an extension to its economic support measures.
The changes to the JobKeeper wage subsidy payment and the JobSeeker unemployment supplement are designed to protect the economy and livelihoods as Australia faces its first recession in 30 years.
We explain the changes below and also discuss the extension of Early Access to Super.
Current JobKeeper payment
So far, the government says more than $30 billion in JobKeeper payments have been paid to 3.5 million employees and 960,000 businesses1.
The JobKeeper wage subsidy payment will continue in its current format of a $1,500 fortnightly payment until the original end-date of 27 September 2020.2
The JobKeeper payment is paid to employers as a subsidy for income paid to eligible workers, providing the employer can demonstrate a specified reduction in turnover, depending on the size and nature of the business, due to COVID-19.3
Changes to JobKeeper from 28 September 2020
From 28 September 2020 until 3 January 2021, the JobKeeper payment will reduce to:
- $1,200 per fortnight for all eligible employees who, in the four weeks before 1 March 2020, were working in the business for at least 20 hours a week on average – and for business participants who were actively engaged in the business for more than 20 hours per week, and
- $750 for employees who worked less than 20 hours per week on average in the four weeks before 1 March 2020.
From 28 September 2020, organisations seeking to claim JobKeeper payments will be required to reassess their eligibility for the JobKeeper extension with reference to their actual turnover in the June and September quarters 2020.
Organisations will need to demonstrate that they have met the relevant continuing decline in turnover test in both of those quarters to be eligible for JobKeeper Payment from 28 September 2020 to 3 January 2021. For further information, please see the JobKeeper Payment Factsheet.
Changes to JobKeeper from 4 January 2021
From 4 January 2021 to 28 March 2021, the payment will reduce further, to:
- $1,000 per fortnight for all eligible employees who in the four weeks before 1 March 2020, were working for at least 20 hours a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week, and
- $650 per fortnight for employees who were working for less than 20 hours a week on average and business participants who were actively engaged in the business for less than 20 hours per week in the same period.
In January 2021, organisations will then need to reassess their eligibility for the period from 4 January to 28 March 2021. Organisations will need to demonstrate that they have met the relevant continuing decline in turnover test in each of the previous three quarters to remain eligible for the March 2021 quarter. For further information, please see the JobKeeper Payment Factsheet.
Summary of JobKeeper payment changes
|Until 27 September 2020||28 September 2020 to 3 January 2021||4 January 2021 to 28 March 2021|
|Full time employees||$1,500 fortnightly
|$1,200 per fortnight||$1,000 per fortnight|
|Worked <20 hours per week in February 2020||$750 per fortnight||$650 per fortnight|
Source: Australian Treasury, Economic Response to the Coronavirus - JobKeeper Extension
To understand if you’re eligible for JobKeeper, please visit the ATO website
Current coronavirus supplement
The $550 per fortnight coronavirus supplement (paid to recipients of the JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit) will continue until its original end-date of 24 September 2020.4
But from 4 August, people looking for work must be willing to accept any offer of suitable paid work and penalties will apply for unreasonable refusal.
Changes to the coronavirus supplement from 25 September 2020
The current amount of $550 per fortnight will continue to be paid to eligible recipients until 24 September 2020. From then until 31 December 2020, the Coronavirus supplement will reduce to $250 per fortnight and will cease from 31 December 2020.
However, the government has indicated it may make further announcements about possibly extending the coronavirus supplement into 2021 when it announces the delayed Federal Budget on 6 October.
‘JobSeekers’ will also be required to undertake a higher number of job searches from 25 September 2020. From that date however, the income-free threshold will be increased, meaning people can earn up to $300 a fortnight without their payment being affected.
Summary of coronavirus supplement changes
|Until 24 September 2020||25 September 2020 to 31 December 2020||From 1 January 2021
|JobSeeker||$565 per fortnight||$565 per fortnight|| Further announcements
on 6 October 2020
|$550 per fortnight||$250 per fortnight|
Source: Australian Treasury, Economic Response to the Coronavirus —Extension of additional income support for individuals
Temporary early access to super
Eligible Australian and New Zealand citizens and permanent residents were able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020, and a further $10,000 from 1 July 2020 until 24 September.
For more information visit the ATO website or our information pages about early access to super.
Impact on the Australian economy
AMP Capital chief economist Dr Shane Oliver says the extension of both payments makes sense given that many of the jobs affected by COVID-19 will not have recovered by the end of September.
“We estimate that the effective unemployment rate is now 11.3%, which is well above the official rate of 7.4%,” Dr Oliver says.
“This has fallen from 14.8% in April, thanks to the reopening of the economy, but with the threat to recovery posed by the second wave of cases effective unemployment may only fall to around 10% by September, so continued income support is essential.”
This difference between the effective and official employment rate is largely attributable to ‘zombie businesses’ where people and businesses are being solely sustained by government subsidies during this difficult period which impacts how the data is captured.
Other financial support
Other COVID-19 support for retirees remain unchanged.
1. Abc news, JobKeeper and JobSeeker extended for months but rates cut and eligibility tightened
2. Australian Treasury, Economic Response to the Coronavirus JobKeeper Extension
3. Australian Tax Office, JobKeeper Payment, Eligible employers
4. Australian Treasury, Economic Response to the Coronavirus Extension of additional income support for individuals
5. Australian Treasury, Early access to superannuation
COVID-19: How long may your super savings take to recover?10 July 2020 | Grow my wealth As investment market volatility continues, what does this mean for Australians’ retirement savings? Find out more with AMP. Read more
Taking control of your personal finances in a COVID-19 world29 July 2020 | COVID-19 Australians are becoming more engaged with their personal finances. Read more
Oliver’s Insights – RBA holds – but more stimulus likely as Victorian lockdown to knock at least $12bn from national GDP05 August 2020 | Grow my wealth AMP Capital Chief Economist Shane Oliver analyses what the latest monetary and fiscal policy decisions mean for the Australian economy Read more
This information is provided by AWM Services Pty Ltd (ABN 15 139 353 496), is general and factual in nature only and hasn’t taken your circumstances into account. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant product disclosure statement or terms and conditions available from AMP at amp.com.au or by calling 131 267.
All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability for any resulting loss or damage of the reader or any other person.
Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive relating to products and services provided to you. All information on this website is subject to change without notice. AWM Services is a part of AMP group.