The Treasury supports the lack of recovery of JobKeeper | Liverpool City Champion
The Treasury Department defended the decision not to include a clawback mechanism in the JobKeeper wage subsidy, saying it could have weakened the success of the program.
JobKeeper was introduced in March 2020, at the very start of the COVID-19 pandemic, when there was great uncertainty about the economic outlook.
In a study of the benefits of the JobKeeper program during its first six months of operation, the Treasury estimates that more than 700,000 jobs were saved at the height of last year’s recession.
It also says JobKeeper saved the unemployment rate from peaking five percentage points higher than expected and prevented the rate from staying above 12% for the next two years.
“This confirms that the JobKeeper program was well targeted and very effective in maintaining jobs and supporting the economy during the biggest economic shock since the Great Depression,” Treasurer Josh Frydenberg said in a statement on Monday.
But Labor argued billions of dollars were wasted on the program, with companies not being forced to repay the subsidy if they performed better than they feared during the economic downturn.
But the Treasury maintains its decision not to have included a clawback mechanism in the design of JobKeeper.
“A mechanism to claw back payments from companies that performed better than expected was not included, reflecting the desire to avoid any disincentive for companies to adapt and recover,” the Treasury said.
“The introduction of such a mechanism would likely have reduced the overall level of activity and dampened the recovery.”
In a review of JobKeeper in June 2020, three months after its introduction, the Treasury also deemed it appropriate to maintain the grant in its original form for an additional three months.
He says this happened despite evidence that some companies that were initially heavily affected were showing signs of recovery.
“This judgment reflected the ever-increasing uncertainty surrounding both the pandemic and the economic recovery, the weak economic conditions at the time and the role JobKeeper was playing as part of the broader macroeconomic response,” the Treasury said.
JobKeeper finally came to an end in March 2021, when Mr Frydenberg said: “Australia had exceeded its pre-COVID GDP and employment levels, a better result than any of the major advanced economies.”
Associated Australian Press