Just before the jobs figures were announced, Scott Morrison was speaking to the media at BlueScope Steel at Port Kembla.
The prime minister was sticking with his position that the jobkeeper wage subsidy needed to be tapered because “keeping the Australian economy on life support” was not sustainable. But he added that the government would use next month’s budget to announce “a lot of new plans, a lot of new initiatives, that will see us grow out of this Covid recession”.
Asked if we would see a truer representation of joblessness in Australia once the government ended jobkeeper, Morrison said he had always said the unemployment figure the country should be watching was not the measured rate of unemployment.
“The measured rate of unemployment is one thing but we know it’s much higher than that. We know the effective rate of unemployment is well over 10% and can peak a lot higher than that … Treasury advises it’s going to stay up around that 14% mark, and we know that, and we want to see that come down, and it was falling before the Victorian wave hit us, and with Victoria opening up again we would expect to see that fall again. But you can’t keep the Australian economy on jobkeeper forever, that is not the way to do things. Currently it is costing about $11bn a month, there are a lot of other things we need to invest in for Australia’s growth.”
Morrison mounted a broader defence of the government’s approach to Covid-19. He said Australia’s GDP was down, regrettably, by 7% in the June quarter, whereas New Zealand’s economy had shrunk by 12% in the same quarter.
“New Zealand shut their industry down. We did not. I think we’ve made difficult but balanced decisions which means on health and on jobs and the economy we’re doing better than almost every other developed economy in the world.”
Some 111,000 more people are in work, a 0.9% increase in the seasonally adjusted employment rate, according to Australian Bureau of Statistics labour force stats just released. Between July and August hours worked also rose 0.1%.
Bjorn Jarvis, head of labour statistics at the ABS, said: “Employment rose almost 1 per cent but hours worked rose by a more modest 0.1 per cent. Hours fell by 4.8 per cent in Victoria, compared to a 1.8 per cent increase across the rest of Australia.”
“The weaker increase in hours worked has also been reflected in the strength of the increase in part-time employment between May and August, which has been almost eight times greater than the increase in full-time employment.”
Employment growth was stronger for females (67,000 people or 1.1%) than males (44,000 or 0.7%). Hours worked also increased for females (0.2%), with no change for males, and remained around 4.7% and 5.9 per cent below March respectively.
- Unemployment decreased by 87,000 people including 55,000 women
- Participation increased by just 0.1%
- The unemployment rate went down by 0.7% to 6.8%
- The underemployment rate remained at 11.2%, 2.4% above March.
- The underutilisation rate, which combines the unemployment and underemployment rates, fell 0.7% to 18.0%, but remained 4.7% higher than March.
Treasury’s Jenny Wilkinson has explained why companies that receive jobkeeper can still pay dividends and bonuses:
Jobkeeper is a very large macro program, designed to provide support to large a number of businesses …We had to design it quickly and with integrity by drawing upon existing definitions, rules and processes. There was a decision taken when it was established that because of the nature of pandemic, and significant hit to confidence it was important to provide a degree of confidence that businesses would get support.
That once you established eligibility – you were eligible for 6 months …There may be some businesses extremely impacted in the first month or two that have recovered …Our judgment is and remains that if we were to try to develop a criteria that included a measure of profitability or linked payments to dividends, or bonuses that would significantly increase complexity of the program.
If it were an ongoing program [such criteria] would make sense. But for a time limited program, our judgment was the benefit of allowing them to know they’re eligible for full first 6 months rather than reassess month by month [was greater].”
Speaking of jobkeeper:
Treasury officials are up at the Covid-19 committee, outlining coronavirus stimulus programs.
Jenny Wilkinson, deputy secretary of the fiscal group, said so far $100bn has gone out the door and the government has committed $179bn, including:
- $12.3bn on the coronavirus supplement (up to 11 September); and
- $54.8bn paid out on jobkeeper (up to 14 September).
Labor wants month by month figures, and is hunting for a concession that tapering jobkeeper and cutting the rate of the coronavirus supplement will hurt the economy.
Luke Yeaman, deputy secretary of the macroeconomic group said:
“It is the case that if you look at it in isolation the tapering will take some income out of the income, that is undisputed. There are a range of factors at play with respect to the aggregate economic outlook. One point I’d make is across large parts of the country [with the exception of Victoria] there is a continued upward trend of improvement in economic indicators, including some parts of the labour market.”
Yeaman notes there “are other supports” and the savings rate shot up in the June quarter, meaning that some of the jobkeeper and jobseeker payments have been banked and will “continue to provide support” even after they’re tapered.
Wilkinson agreed: “A reduction would result in less economic activity if you look at just that factor. “
Unemployment rate falls to 6.8%