Right up until it’s completion on Sunday 28th March, JobKeeper remained to be a critical economic lifeline for 372,000 Australian businesses. New research shows that almost a quarter of Melbourne based businesses were dependent on help from the scheme during its final phase.

Businesses in regional parts of the country fared better than those in the capital cities during the final stage of the $93 billion wage subsidy scheme. Despite this, tourism hotspots such as Byron Bay and Port Douglas remained heavily reliant on the taxpayer-funded assistance right until the end.

Overall, 15 percent of Australia’s 2.4 million businesses accessed JobKeeper in January 2021. Businesses still receiving JobKeeper in January were among the most at risk of going insolvent from the medium to long-term fall out of the pandemic.

The number of businesses on JobKeeper had dropped significantly since the early months of the scheme – from 40 percent in August 2020 to 15 per cent in January 2020.

During the same period of time, Australia’s unemployment rates have improved since the pandemic peak in July 2020. This demonstrates that ultimately JobKeeper has been a success in maintaining the level of demand for goods and services.

The strict lockdown that Melbourne endured during its second wave of the pandemic meant that 46 percent of the businesses in Victoria were on JobKeeper during July and August last year. This percentage fell from 46 percent to 24 percent during the final phase of the scheme.

In January 2021 Sydney had a total of 17 percent of businesses receiving JobKeeper. 13 percent of Brisbane and Adelaide businesses were on JobKeeper and 11 percent of Perth businesses were still on the scheme during this same timeframe.

13 percent of businesses in non-metropolitan Victoria were on JobKeeper in January 2021. During same timeframe 12 percent of non-metropolitan businesses in Queensland, 11 percent of non-metropolitan businesses in New South Wales and Tasmania were also on JobKeeper during January 2021.

Whether or not the end of JobKeeper will result in a spike in unemployment and business closures will depend significantly on future the of Australia’s consumption patterns.

There are a number of factors which play when deciding whether it is possible for the final round of JobKeeper recipients to recovery and avoid insolvency. The demand for a business’s services or products may have shifted due to consumer preferences, location or operational constraints which have come about due to the covid-19 pandemic.

For example; a CBD based medical practice or dry cleaners might have in the past been considered a recession-proof business. However, this demand has changed as a result of the covid-19 pandemic now that more white-collar workers are working from home and would therefore be more likely to visit dry cleaners and medical centres which are located in the suburbs.

At the present time, one of the biggest unknowns is how many businesses which are heavily reliant on tourism can survive another six to 12 months when international borders remain closed and how many of their workers will need to be reskilled and find new employment opportunities in a different industry.

On Wednesday 24th March the ATO announced that over $64 million was paid to Australian businesses out of error under the JobKeeper wage subsidies scheme. The ATO has made it clear that it won’t be pursuing this huge amount of money as employers have claimed the money “in good faith”.  

The ATO has revealed that $283 million of the $90 billion distributed to businesses during the JobKeeper scheme was paid out of error before the ATO could stop the payments.  

$138 million of the incorrectly paid money has been recovered, $82 million is currently being pursued, and $64 million will not be clawed back due to the Commissioner’s discretion.  

The ATO has stated that it’s major reason for not clawing back the incorrect payments is because employers had relied on statements made by employees in their nomination notice and ultimately gave the payments onto employees.  

The ATO has emphasised that “The employer has claimed based on the representations of the employee- the employee has to declare that they aren’t getting JobKeeper from anybody else, they’ve got to declare they are a resident, they’ve got to declare various things and the employer might rely on that in good faith, claim the money, pass it on the employee and the employer has not benefited”.

The ATO believes that it would be unfair to penalise an employer for the mistakes of employees who have received an incorrect JobKeeper payment.

Although the ATO is aware that $64 million is a lot of money. It is possible that it could cost the ATO even more money if they were to attempt to claw back the $64 million worth of overpayments from individual employees.

The ATO has revealed that by trying to pursuing the repayment of JobKeeper is a very costly exercise. To chase down $3,000 which is a months worth of JobKeeper would actually cost more than $3000 to recover this sum of money.

The end of the JobKeeper scheme is anticipated to lead to thousands of businesses failing across the country. This will consequently lead to anywhere between 125,000 and 250,000 people left without a job.  

There are many businesses that would’ve already closed had it not been for the assistance of JobKeeper.  Since September 2020, over half a million businesses across the country have graduated from the scheme. Despite the schemes success at helping businesses survive during the pandemic there are a number of businesses struggling in industries such as aviation, tourism and the arts and recreation services.

Post Author: Craig Dangar

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