Use of the government’s JobKeeper package has fallen sharply, with millions of businesses getting off the support as the recovery kicks into high gear.
ATO data indicated that there are now 450,000 fewer businesses and almost 2 million fewer employees on JobKeeper in October than in September, dispelling concerns of a fiscal cliff that many feared would throw the recovery into chaos.
“The lower-than-forecast take-up of the JobKeeper payment extension in October is further evidence that Australia’s recovery from this once-in-a-century pandemic is well underway,” Treasurer Josh Frydenberg said.
“Recent economic data shows that outside Victoria, employment has recovered to be less than 1 per cent below March levels with some 650,000 jobs created in the past five months nationwide.”
Mr Frydenberg told media that he didn’t expect the economy to rebound so quickly and that the preliminary figures are an improvement on the 2020-21 budget assumption of 2.2 million recipients for the December quarter. However, effective unemployment now sits somewhere in the vicinity of 7.4 per cent, and Mr Frydenberg warned that some businesses “won’t make it”.
“The unemployment rate is expected to come down next year through that period of March and beyond because in the budget we saw a whole series of measures which is now starting to take effect,” Mr Frydenberg told media.
“The tax cuts are seeing money go into people’s pockets, the immediate expensing or expanded instant asset right off is encouraging more investment, the JobMaker hiring credit to get younger people from the unemployment queues into work has passed through the Parliament.”
Meanwhile, Q3 GDP set to be unveiled on Wednesday is expected to show that while reopening has boosted the recovery, restoring Australia to strong economic growth will be an uphill slog.
“The key dynamic is that the COVID restrictions limited the movement and travel of households – thereby significantly curtailing the opportunity of consumers to spend. As the restrictions were eased, consumers were able to return to the shops in much greater numbers,” Westpac said in its prediction for the GDP numbers.
“We anticipate that output increased by 3.0 per cent in the September quarter, which would still leave it some 3.9 per cent below a year earlier and even further below the base line in the absence of COVID.”