JobKeeper is not a wage subsidy for workers

Contributed by Jim Hayes

Just what is wrong with the JobKeeper Allowance? Mostly, that it is not really a subsidy to provide income for those finding themselves out of work during the Covid-19 pandemic. JobKeeper is a subsidy to employers to cover their bottom line.

If it had been otherwise, it would have been paid straight into the bank accounts of those everyone thought it was supposed to help. It goes into the bank accounts of employers instead, and this suggests that there are other intentions.

Using the term JobKeeper, which is so close to JobSeeker, the new name for the former Newstart, looks like more than a mere coincidence, and opens the government to the accusation that this has been done to cause confusion, prevent transparency, and hide where the benefit might be going to.

Consider this. For money to be handed out, an employer must apply and have lost at least 30 percent of their revenue. The employer mus still be currently paying at least $1500 a fortnight in wages to each employee. The same amount is provided by JobKeeper, supposedly as a top up. Its primary purpose however, is as a subsidy to the employers’ wages bill. Only employees currently receiving $1500 will get the full amount. What the others will get is not yet clear.

The best that can be expected is that some will get what they should and others will not. And this doesn’t count the casualised workforce that hasn’t been with one employer for at least one year.

A business subsidy is not the problem. Most people will accept that exceptional circumstances need exceptional measures. The problem is in the fine print. For example, by technically keeping employees on the books, pay redundancy, long service and sick pay entitlements can be ignored.

Associated changes to the Fair Work Act, mean that employers are also able to change working hours and duties without consent. This means that they can be reduced and this will pull down wages, and therefore payments to those sent home.

Unions reluctantly agreed to these conditions. In hindsight, some might say foolishly. Did the government deserve so much trust?

Since handing this down on the 9 April, the Morrison government has taken it one step further. Employers has been given the right to vary enterprise agreements with just 24-hour’s notice. According to the Australian Council of Trade Unions (ACTU) Secretary, Sally McManus, this will undermine job security and pay.

Photo from the Australian: Australian Council of Trade Unions president Sally McManus

KMPG has already pressured employees to agree to a 20 percent wage cut between May and August. How many more are doing something similar?

There is concern that the Morrison government is being led by a campaign of business organisations, led by the Business Council of Australia, to use the Coronavirus threat to bring about big changes to the industrial relations system in their favour.

JobKeeper is open to rorts. The government says this will not be allowed and will be dealt with by the law. But there are enough opportunities to rort ‘within the law,’ which make the promise meaningless.

Qantas is one case that has already tried it on. They got caught trying to use the payment to subsidise penalties obligations already owed to employees. And this is no small business.

Others have reportedly been taking advantage in a their own ways, which fall short on what most people would consider legitimate.  

It cannot be denied, many businesses, especially small and medium sized ones are experiencing a hard time, face the real prospect of close their doors permanently. They do need assistance. But this should be transparent, fair and not wrapped in spin pretending to help those finding themselves out of work.

To make sure assistance to business goes to those who need it the most, there should be a kind of means tasting, below the current threshold of $1 billion turnover a year.

Those with sufficient turnover and other means to survive without the risk of going to the wall, should be excluded. This would prevent those with the networks to influence from getting the lion’s share.  

JobKeeper payments will be transferred through the Australian Tax Office (ATO) via the banks. The same banks that have an interest in encouraging businesses to take out bridging loans backed by collateral. Built in delays in the money transfer, further pushes businesses to take out these loans,at a time when there is little or no revenue coming in. This mainly effects small and medium sized businesses.

Help should be in the form of direct subsidies to overall running expenses. Supplements to wages should go directly into employee’s bank accounts.

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