31 Mar 2020
Words Trudy Crooks

Government Announces $130b Wage Subsidy Package

“Our economy may run on idle, but it must continue to run.” – PM Scott Morrison

We were all expecting the latest stimulus announcement to be big, but even analysts were surprised at the scale of this one.
The third tranche of stimulus comes in at $130 billion, taking the total economic value to $320 billion in three weeks. By way of context, last year’s federal budget for total spending in Australia for a full 12 months was $500 billion.

So how will this new “JobKeeper” package work?

Businesses will receive a fortnightly wage subsidy of up to $1,500 per employee as part of a Federal Government bid to prevent millions of people from losing their jobs due to the coronavirus pandemic.

The subsidy is the central plank in a $130 billion economic stimulus package, the third and largest package the Government has announced in response to the coronavirus.
Prime Minister Scott Morrison said he expected 6 million Australians would access the so-called JobKeeper payment for the next six months.

He said there would be a legal obligation on employers to ensure they passed the full wage subsidy onto employees.

The Prime Minister also announced changes to the income test for people on the JobSeeker payment, meaning their partners could earn almost $80,000 a year before they were ineligible for the payment.

The Government last week doubled the JobSeeker payment, previously called Newstart, to $1,100 a fortnight.

This new wage subsidy will include not-for-profit employees and New Zealanders who work in Australia but are typically unable to access welfare programs.
Treasurer Josh Frydenberg said the JobKeeper payment would benefit the hardest-hit sectors, including the accommodation sector.

This $1,500 payment is a flat payment and is the equivalent of around 70 per cent of the median wage. It will be paid out through the ATO. The Government has promised it will be a relatively simple process for employers to register and claim.

It will apply to businesses who have suffered a drop in revenue of 30%. For businesses with turnover in excess of $1 billion, they need to show a revenue decline of 50%. The money will move on May 1 and will be backdated to March 30.

The flat fee is for any permanent part time or full-time staff member that you had on your books at 1 March. It also applies to any casual staff member that had been receiving pay regularly for 12 months preceeding 1 March.

The $1,500 fortnightly wage subsidy is valid from today for six months. There is no Super Guarantee attached to these payments.

If a staff member is stood down, they can come back in a different capacity, for example, three days a week as opposed to five.

As the Government will not give you the money until May, you will need to cover this cash flow from now through to May.

The Government ruled out a UK-style subsidy, which involved paying up to 80 per cent of a person's wage, arguing it would be inequitable and difficult to administer within Australia's social security system.

We’ll keep you posted with any news and developments that affect you directly and if we find out further key information on the JobKeeper program, we’ll let you know.

Stay safe, and good luck.