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Thinktank validates that JobKeeper and JobSeeker cuts are lethal

Unemployment figures for the month of August may look good on the surface, but when the impending cuts to JobKeeper and JobSeeker hit at the end of September, that will present a perilous impact to the Australian economy that may very well nullify any small inroads to recovery, the Australian Council of Trade Unions (ACTU) said on Thursday.

According to the Australian Bureau of Statistics (ABS), the nation’s unemployment rate dipped 0.7 per cent over the last month, from 7.5 to 6.8 per cent – however, the under-employment rate remained virtually the same with 1.5 million workers classified as casuals or part-time workers working less than 20 hours per week, and 3.5 million workers still reliant on the JobKeeper subsidy.

And as the Morrison government’s treasurer Josh Frydenberg even confesses that the “real” rate of unemployment exists between 13 or 14 per cent, Michele O’Neil, the ACTU president, maintains that it is a dire error of judgement for Frydenberg, Morrison, and other federal cabinet members to agree to make cuts to JobKeeper and JobSeeker at this juncture of the nation’s pandemic response and in the middle of its economic recession as well.

“Working people need the Morrison Government to continue the stimulus, and provide certainty about what comes next,” O’Neil said on Thursday upon the release of the updated unemployment figures.

“We are still in the middle of this crisis and the Morrison Government is already trying to cut vital supports for working people and the unemployed. If you don’t protect working people they cannot protect the economy,” O’Neil added.

The ACTU further cites findings from the McKell Institute, a progressive institution for research dedicated towards providing innovative solutions for public policy challenges, that forecasts with $300 per fortnight being slashed from any single worker’s JobKeeper subsidy as of September 28th, the damage to the Australian economy could run as high as $760 million per week, or $1.52 billion.

“JobKeeper cannot continue forever. Beyond its expense, it also injects genuine distortions into the labour market, dissuading labour mobility and enabling potentially unviable enterprises to continue,” concluded Edward Cavanough, the director of policy at the McKell Institute, in the institute’s research paper “Crossing The Fiscal Cliff”, a text which delves deeper into the impact of the impending JobKeeper cuts.

“In good economic times, these distortions would ensure the program would never be enacted – but these are not good economic times.

“Unfortunately, the significance of the COVID-19 recession is such that any premature withdrawal of fiscal support is likely to further delay the road to recovery for the Australian economy,” added Cavanough.

From a state-by-state analysis via the ABS, unemployment figures dipped in every Australian state and territory bar Victoria – where Stage 4 restrictions in Melbourne and Stage 3 restrictions in the state’s regional areas were cited as causes for higher unemployment – and New South Wales.

Cavanough and the McKell Institute concur, further forecasting that based on the JobKeeper cuts to over a million employees receiving the subsidy, the Victorian economy stands to be hit to the rate of over $440 million alone by virtue of those receiving the payments once the cuts take effect.

In New South Wales and the ACT, where over 1.3 million workers are receiving JobKeeper, its recipients will be over $580 million worse off collectively.

“Vulnerable workers, already struggling through this pandemic, should not have to take a massive hit to their take-home pay,” Tony Burke, the shadow minister for industrial relations and manager of opposition business, said at the end of August when Labor was attempting to fight the government’s JobKeeper and JobSeeker cuts with legislative action which ultimately failed.

“Low paid workers deserve better than to have their wages cut at a time that business is recovering,” Burke added.

Another Labor frontbencher, Brendan O’Connor, the shadow minister for employment, puts a different perspective on the current unemployment numbers.

Instead of looking at them on a month-to-month basis like the Morrison government and the ABS have done, O’Connor sums up the numbers as what has happened as of March, when the COVID-19 pandemic

In that time, over 400,000 jobs have been lost, contributing to the current status of 923,000 persons in Australia out of work.

And O’Connor says that the government has failed in its duties to stimulate growth in the economy by tackling the unemployment crisis to a greater extent than what has been exhibited so far.

“Instead of a jobs plan, Scott Morrison and Josh Frydenberg want to wind back JobKeeper, cut super, cut wages, freeze the pension, point the finger and shift the blame,” O’Connor said on Thursday.

“Australians need and deserve a plan from the Morrison Government to promote growth, protect and create jobs, support business and set us all up for the recovery,” added O’Connor.

The ACTU has – on numerous occasions – offered a jobs-based plan to the government via its National Economic Reconstruction Plan (NERP) blueprint to stimulate the economy, but has been knocked back at every hurdle.

But from its advocacy position, the ACTU persists to offer the NERP up to the government, even for consideration of inclusion in the Federal Budget in a few weeks’ time, strong in its collective convictions that it represents the best foot forward.

“We cannot slump back into the same spiral of insecure work and low wage growth. This recovery is an opportunity to improve the quality and security of jobs,” O’Neil said.

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  1. DrakeN

    All these ” ***Keeper” thingummies are likely to slow the process of the existing wealthy from sucking up more from the nation’s prosperity.

  2. ajogrady

    Under their masterful dereliction of duty and their corrupt guiding influence the L/NP, with their usual ability to disregard any practical use of due diligence or forward planning, has Australia destined to become a major economic backwater and an internationally recognised pariah state.
    If how Morrison in particular and his ministers handled the diplomatic crisis with China is an indication of how they will handle the massive recession that is about to engulf the Australian economy then Australia is in for a long, hard and painful recession that can be laid squarely at the feet of the corrupt and incompetent L/NP.

  3. totaram

    “..painful recession that can be laid squarely at the feet of the corrupt and incompetent L/NP.” – all true except the last part where it is laid squarely.
    See how the mass-media manages to lay it at the feet of the State governments which are Labor, while showing the heroic efforts to stave off the recession by ScoMo and the Coalition state governments.

  4. ajogrady


    The stenographers masquerading as journalists will never utter the truth. Truth is beyond their compression or understanding but in particular they have lost sight of the privilaged position they hold in a democracy. They are ment to question and hold governments and oppositions to account. The corporate main stream media are acting as a proxy arm of government. Democracy and the freedoms that come with that are then in peril of being abandoned. Eternal vigilance is the price of freedom. Lest we forget, because the main stream media has definitely forgotten.

  5. TuffGuy

    This government will not be satisfied until the streets of Australia’s major cities are lined with the tents/boxes/etc of the unemployed and homeless, just like in Los Angeles.

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