Will the federal JobKeeper Allowance become Scott Morrison’s pink-batts/school-halls’ experience? It’s starting to look that way, even at this early stage.
Just to recap, when Kevin Rudd decided to “go early, go hard, go households” in response to the looming threat of a worldwide economic collapse (aka the GFC), he followed it up with a multi-billion dollar job creation program to have every house in the country supplied with roof insulation.
On the face of it, a great idea.
In addition, he introduced the “Building the Education Revolution” (BER) program, a massive schools’ upgrade, involving the construction of school halls, basketball stadiums, libraries and classes, projects that would, over the long term, have been on their radar, anyway.
Another great idea.
However, it wasn’t long before the school halls program began attracting a great deal of political criticism from the conservative Opposition and the Murdoch media who claimed there had been wholesale rorting and cost blow-outs. For the Opposition, it was like a dream come true. They hated the whole idea of a stimulus in the first place.
Feigning concern about excessive spending and budget deficits that were the product of the GFC stimulus initiatives, the leader of the Opposition, Tony Abbott, called for a judicial hearing into the BER and claimed it, and the home insulation initiative, were failed programs and a waste of money.
Despite Primary Schools being provided with new and refurbished halls, libraries and classrooms as well as new and refurbished science laboratories and language learning centres, it was the cost of these programs that became the focal point.
Never mind the provision of new and refurbished covered outdoor learning areas, shade structures, sporting facilities and other environmental programs, all of which represented ongoing benefits to our childrens’ education, the opportunity to gain political points from a perceived rort, was too great a gift for the Opposition to ignore.
The reality was that the insulation program covered 1.2 million homes which had, by 2015, produced savings of approximately 20,000 gigawatt-hours (72,000 TJ) of electricity and 25 petajoules (6.9×109 kWh) of natural gas. But this was of little interest to the Coalition partners.
Their interest focussed on the tragic loss of life of four workers, accidentally electrocuted, while they were installing the batts. It was this tragedy that the Opposition and the media sought to magnify, purely to discredit the government and gain political advantage.
Notwithstanding the benefits to the economy, particularly in the area of employment, the ongoing reduction of greenhouse gas emissions and being able to avoid a recession, the political outcry from the Opposition and the media, over the four deaths and anecdotal evidence of rorting, was unrelenting.
The Rudd government subsequently suffered a drop in popularity and a perceived mis-management of the economy.
Since then, under intense media attack, the Labor party has been cast as responsible for all ongoing budget deficits (aka, the debt and deficit disaster), while the Liberal/National Coalition has enjoyed the confidence of the media and a deceived public, in matters of financial management, despite the reverse being the reality.
As they say in politics, that’s politics.
Now, however, it seems some comeuppance is on the horizon.
In response to the Covid-19 pandemic, the Coalition government, led by Scott Morrison, has unleashed a stimulus spending program that is five times greater than anything the Labor party did between 2007-2013.
To grasp the significance of this 2020 cash splash, one needs to remember that at the point when the Coalition became the government in 2013, the national gross debt was $278 billion. Seven years later, under Coalition management, it has ballooned out to $607 billion.
But that is just the start. Planned stimulus spending over the next two years will see it climb to, $800 billion. A large part of this spending ($130 billion), will be allocated to the JobKeeper program, an ambitious attempt to forestall a massive increase in unemployment, estimated now, to exceed 10% by the end of June.
Treasurer Josh Frydenberg has claimed that without JobKeeper, the unemployment level could be as high as 15%. And he’s probably right. It is, therefore, an alternative unemployment support program.
The JobKeeper program provides businesses who have suffered a 30% loss of turnover caused by the Covid-19 lockdown, a payment of $1500 per fortnight, per employee, so long as those businesses retain those workers in employment.
There are, however, some interesting side issues in play.
The employees are supposed to receive the $1500 even if they weren’t being paid that much in the first place. The government has already been forced to amend the rules to exclude 16 and 17 year old full-time students who were only working part time. Some, in this category have already made a killing and won’t be asked to return any money already received.
So that raises a number of questions, namely: will businesses pass on the full amount if that is more than they were paying employees? And, will businesses make up the difference between what the government gives them and whatever they were paying their staff, if it was more?
Will they continue to pay superannuation and penalty rates as required? Will their workers continue to accrue annual leave if they were stood down?
One should never underestimate the cunning of those who would see an opportunity to rort the system just as they did with the school halls program. In this case, the temptation to manufacture a few phantom staff will be, for some, irresistible. For others, just claiming the money for those who were never likely to be laid off, will be very tempting.
For a government who have grittingly put their ideology to one side, for the better good, the shock of it all might prove too much to manage. They have so far surrendered any future criticism of Labor’s spending record. They are gearing up to post a huge budget deficit for 2019/20, and worse, the biggest budget deficits in history for the fiscal years, 2020/21 and 2021/2022.
Now they face a very real rorting scenario. One senses that budget deficits will be small change compared with what history tells us is a sure bet.
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