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Further implications
Despite discovering that early estimates of the size of the expenditure bill to which stimulus measures had committed the government, there seems to be no enthusiasm to extend these measures beyond their legislated cut-off point.
It was revealed in March 2020, that Treasury had overestimated the extent of the cost of the JobKeeper scheme by $60 billion, almost half the estimated cost of $130 billion.
However, this has not resulted in moves within the government to increase or extend the coronavirus support measures to which it is committed. On May 19 2020, the federal education minister, Dan Tehan, announced that free child care was likely to end by June 28. On June 8 it was announced that the actual cut-off point would be July 12, while the government also revealed it will stop paying the JobKeeper wage subsidy to childcare services from 20 July. This has been seen by many commentators as a mark of the government's determination to reduce its coronavirus-related expenditure as soon as possible. Critics have noted that this cessation of JobKeeper payments to childcare centres is broken promise, as JobKeeper payments were legislated to last for six months. The federal education minister, Dan Tehan, has stated, 'Repairing the budget and repairing our economy are going to be crucial going forward so we have to take all these things into consideration when we make decisions around the childcare package.'
Commentators have speculated that the same desire to reduce outlays will determine how the government responds to ending JobKeeper in other industries. It has also been noted that in this claw-back climate there is no prospect of the government seeking to retain the increased JobSeeker payment.
The government is due to hold a review of the JobSeeker and JobKeeper schemes in June and has left open some of its options, including making changes to the structure of the program to give recipients a stronger incentive to return to work.
Though there have been some reassurances given that the end dates for the Coronavirus Supplement and the JobKeeper program will not be generally brought forward, there are no guarantees of this. As state governments, partially in response to federal urging, progressively reduce restrictions of businesses and community movement the need to support the economy via subsidies may be judged to no longer exist. The sticking point for those who would like to see JobSeeker continue in its supplemented form is that the government will not need to present a new bill to the Parliament in order to end the supplement. Its end point was included in its enacting legislation.
This means there will be no further Parliamentary debate on the issue, outside questions which may be put during Question Time and there is no guarantee at this point how soon coronavirus restrictions will prevent the full operation of Parliament.
All that may impede the withdrawal of these supports is the effect of what some economic commentators are referring to as a 'fiscal cliff'. They are describing the rapid withdrawal of these two levels of supports (JobSeeker and JobKeeper) as being like pushing businesses and individuals off an economic cliff. Some commentators have suggested that the withdrawal of JobKeeper will prompt accelerated job losses forcing more people onto JobSeeker at exactly the same time as the amount of money paid to support the unemployed halves. It has been suggested that this will drive down consumer demand and put further pressure on businesses struggling to return to profitability.
If it is determined that ending JobSeeker and reducing JobSeeker has been harmful to the economy, it will be interesting to see whether the government has the policy agility and capacity to turn away from its ideological beliefs that would be necessary to reinstate these programs.
The federal government's electoral position is currently strong as it is credited with having saved Australians from the worst impacts of a global health crisis which is still causing large-scale illness and loss of life in other countries. However, if the government does not handle the economic recovery well and is seen to have inflicted hardship on businesses and individuals it may find that electors turn from it.