The Morrison government will pay businesses up to $200 a week to hire young Australians as part of a $4bn budget measure that aims to reverse an increase in youth unemployment during the recession.
The new incentive will go to firms that employ young workers who had previously been receiving jobseeker – the unemployment benefit formerly known as Newstart.
It follows Sunday’s announcement of expanded training subsidies, with the government pledging to cover half the wages of 100,000 new apprenticeships and traineeships.
Both moves are part of the government’s answer to the question of what will replace the jobkeeper wage subsidy and elevated jobseeker payments, which the government is tapering down despite criticism about the potential economic and social impact.
In question time on Tuesday, Scott Morrison brushed off claims from the Labor leader, Anthony Albanese, that “the Morrison recession” would be longer and deeper because of the prime minister’s cuts to jobkeeper and jobseeker.
“Young people can look at this budget tonight and know that this government has got their backs to get them into a job, not for them to spend a life on welfare,” Morrison said.
The jobmaker hiring credit
The budget papers show the government is earmarking $4bn over three years to encourage organisations to take on additional employees aged 35 or younger.
The key test is that the new employee received the jobseeker payment, youth allowance (other) or parenting payment for at least one month out of the three months before being hired.
The employer will also have to prove the overall number of employees has increased, and that the new employee works for at least 20 hours a week, averaged over a quarter.
The hiring credit will be paid at the rate of $200 a week for hiring people aged 16 to 29, or at $100 a week for 30- to 35-year-olds. Employees can receive this hiring credit for 12 months. The scheme begins on Wednesday, the day after the budget.
The treasurer, Josh Frydenberg, said the budget was “all about jobs” and all businesses except for the major banks would be eligible for this new scheme.
“Treasury estimates that this will support around 450,000 jobs for young people,” he told parliament as he delivered the budget on Tuesday evening.
“Having a job means more than earning an income. It means economic security. It means independence. It means opportunity. We can’t let this Covid recession take that away.”
Apprentice and trainee wage subsidies
Frydenberg also pointed to the government’s plan to create 100,000 new apprenticeships and traineeships, covered by a 50% government wage subsidy. This will come at a cost to the federal government of $1.2bn over four years.
The aim is to “build a pipeline of skilled workers” to support the economic recovery, according to the budget papers.
Businesses will be reimbursed up to half of the cost of an apprentice or a trainee’s wages up to $7,000 a quarter. But rather than being demand driven, the scheme is capped at 100,000 places – a constraint that has already drawn criticism from Labor and others.
The subsidy will be available to businesses of any size between 5 October 2020 and 30 September 2021, and it applies to apprentices or trainees who start during this period.
“The wage subsidy will support school leavers and workers displaced by the Covid-19 related downturn to secure sustainable employment,” the budget papers say.
The government has revealed, however, that it will delay the beginning of a previously announced apprenticeship incentives program by six months to July 2021 to “minimise disruption”.
The budget also earmarks $263m over four years to reform the vocational education and training system.
Jobkeeper and jobseeker future
The government has been under pressure to spell out what fills the void of the jobkeeper and elevated jobseeker programs, given that the economy remains still very much in crisis.
The budget papers update the forecast total cost of the jobkeeper wage subsidy: $101.3bn, or $15.6bn more than was reported in the July economic and fiscal update. The government points to the impact of eligibility changes and increased demand as a result of stricter restrictions in Victoria.
Jobkeeper is set to continue through to 28 March 2021, but it was cut from the $1,500 fortnightly rate at the end of September. Now, full-time employees of eligible businesses get $1,200 a fortnight and people working less than 20 hours a fortnight get $750. From 4 January the payment will be reduced again, going to $1,000 for full-timers and $650 for part-timers.
The budget allocates an extra $306m in funding to the Australian Taxation Office to help it deliver the next phase of jobkeeper along with the new jobmaker hiring credit.
But there is no clarity about the future of jobseeker payment rates after Christmas.
The government cut the coronavirus supplement that tops up jobseeker (and a range of other payments) from $550 to $250 a fortnight in late September.
As it stands the supplement is due to expire on 31 December, but Morrison has previously told reporters he was inclined to extend the supplement into 2021. The government has delayed making a decision on this until closer to the date, meaning jobseekers will remain in limbo. If the government ends up extending it further, it will further blow out the budget bottom line.
The chief executive of the Australian Council of Social Service, Cassandra Goldie, said while the budget provided “some glimmer of hope” for young people, it was “a crushing let-down for many others” without paid work.
“It leaves more than 2 million people receiving higher income support uncertain about their future beyond the end of the year, when rates will go to their pre-Covid levels, which for jobseeker is $40 a day,” she said.
