Business Daily Media

JobKeeper delivered what was needed to save the patient

  • Written by Richard Holden, Professor of Economics, UNSW
JobKeeper delivered what was needed to save the patient

To the critics, the Treasury has just marked “its own homework[1]”.

It has produced a 60-page report entitled Insights from the first six months of JobKeeper[2].

Commonwealth Treasury, October 11, 2021[3] And it finds the A$89 billion program it designed and delivered held up pretty well last year at the time Australia needed it most. As with the Labor government’s economic rescue programs during the global financial crisis, there are critics claiming it was wasteful, this time from the Labor side of politics[4]. But they’ve exceedingly short memories. In the first week of March 2020, Australia had 93 COVID-19 cases and three deaths. The prime minister said he was “going to the footy[5]” and “looking forward to it”, at a time when medical experts were calling for people to do no such thing and a quarter of Italy was locked down. Italian tourists were coming in freely. We were sleepwalking into a calamity. The way we were On March 10[6] last year, I wrote that we needed to close our international border totally and immediately, and spend about $100 billion to support workers and business while we shut down the economy and got health measures in place. On March 20[7] the borders were closed. Treasury forecast that if we had to lock down as hard as Italy or Spain our economy (GDP) would collapse by 24%. That wouldn’t be a mere recession or even a depression. It would be economic and financial Armageddon. The government needed to plug an unimaginable hole quickly. And it did. Read more: The key to the success of JobKeeper is retrospective paid work[8] JobKeeper provided six months of financial support to businesses who expected their revenues to drop. At the time, that was almost every business in the country. It was designed to be easy to understand, and to get money onto business and household balance sheets immediately. Most importantly, it was designed to give recipients certainty in a time of calamitous uncertainty. These are facts. They are undisputed. What the critics say now From the safety of the present day, critics point out that JobKeeper excluded certain industries and workers: short-term casuals and universities among them. And they say $19.7 billion went to businesses whose revenues increased in the three months they received the payment. Read more: Quick, dirty, effective: there was no time to make JobKeeper perfect[9] It would have been better, they say, not to spend the money on businesses that turned out to have rising revenues, and it would have been good to include short-term casuals and universities. JobKeeper should have included a “clawback” provision, they say. They are right. It would have been better had it been designed in that way. But they are taking insufficient account of what things were like at the time. What things were like then The context for the development of JobKeeper was a once-in-a-century event, with a government in power whose entire political brand had been railing against “debt and deficits”. Economists were concerned the government might do too little, or nothing at all. There are the things worth noting: Treasury had to act incredibly quickly, in a matter of days. I like an academic seminar as much as the next person, but Treasury didn’t have the luxury of years of work, refinement and debate. It had to perform battlefield surgery. A key reason so many businesses were able to increase revenues after JobKeeper began was that it was so effective. A smaller scheme, with more requirements and red tape, would have meant fewer workers and business would have got support, leaving the whole economy worse off. The more carve-outs and exclusions from JobKeeper the less effective it was likely to be. Fine-tuning rules creates uncertainty. It provides scope for gaming[10] (getting around the rules). If we want public programs to have force, they need to be simple. The real choice in March 2020 was JobKeeper as it was or no JobKeeper at all. We saved the patient In early March 2020 the Australian economy was critically ill . Doctors Josh Frydenberg (Treasurer) and Steven Kennedy (Treasury Secretary) saved the patient. That’s what matters. Did they use ECG machines, blood bags, gauze and stitches? You bet. Did it cost economic resources? Probably, although had the worst had happened even more resources might have been used. Insurance can look wasteful after the fact, but that doesn’t make it unwise. Read more: The GFC provided the sauce we used to ward off the COVID recession[11] I am glad they erred on the side of too many stitches rather than too few. They provided the only thing that can really help in times of extreme uncertainty, which is certainty. References^ its own homework (www.afr.com)^ Insights from the first six months of JobKeeper (treasury.gov.au)^ Commonwealth Treasury, October 11, 2021 (treasury.gov.au)^ Labor side of politics (www.andrewleigh.com)^ going to the footy (parlinfo.aph.gov.au)^ March 10 (research.economics.unsw.edu.au)^ March 20 (www.pm.gov.au)^ The key to the success of JobKeeper is retrospective paid work (theconversation.com)^ Quick, dirty, effective: there was no time to make JobKeeper perfect (theconversation.com)^ gaming (research.economics.unsw.edu.au)^ The GFC provided the sauce we used to ward off the COVID recession (theconversation.com)Authors: Richard Holden, Professor of Economics, UNSW

Read more https://theconversation.com/vital-signs-jobkeeper-delivered-what-was-needed-to-save-the-patient-169821

Business Today

1 in 6 US kids are in families below the poverty line

The official child poverty rate is about the same today as in 1967.More Than Words Photography by Alisa Brouwer/Moment Open via Getty ImagesCC BY-NDIn the United States, children are more likely to experience poverty than people o...

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make the company one of the largest buyers of ...

What you need to know about the Defense Production Act – the 1950s law Biden invoked to try to end the baby formula shortage

Biden invoked the Defense Production Act to help end the shortage of baby formula. AP Photo/David J. PhillipU.S. President Joe Biden on May 18, 2022, announced he is invoking the Defense Production Act to help end the shortage of ...

Baby formula industry was primed for disaster long before key factory closed down

Cities are trying to address the baby formula shortage with community drives.AP Photo/David J. PhillipThe conditions that led to a shortage of baby formula were set in motion long before the February 2022 closure of the Similac fa...

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual workspace more comfortable. Employees are ...

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’s sovereign capabilities toward in-space...

Business Daily Media Business Development

the supermarket business model is too fragile to shield customers from rising food prices

Shutterstock/photocriticalFood prices, like almost everything else, are rising fast. There have recently been warnings of “apocalyptic” costs, and a declaration that the “e...

Lisa Jack, Professor of Accounting, University of Portsmouth - avatar Lisa Jack, Professor of Accounting, University of Portsmouth

How soaring inflation can be particularly harmful for young people

Shutterstock/SpeedKingzInflation rates have become almost impossible to ignore. In the UK, inflation has soared in recent months, now reaching 9% – the highest rate for 40 years. The B...

Shampa Roy-Mukherjee, Associate Professor in Economics, University of East London - avatar Shampa Roy-Mukherjee, Associate Professor in Economics, University of East London

it won't control interest rates and inequality will widen

The UK local elections in May saw gains for nationalists in Scotland and Northern Ireland, raising the prospect of increased debates over the future make-up of the country. In Scotland, Firs...

Eoin McLaughlin, Senior Lecturer in Economics, University College Cork - avatar Eoin McLaughlin, Senior Lecturer in Economics, University College Cork

Hunt and Brew launches Australia-first cold brew coffee

Australian boutique coffee maker Hunt and Brew has announced it will be sourcing the beans for its new “Australia” cold brew coffee from far north Queensland in a move that will make t...

NewsServices.com - avatar NewsServices.com

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual wo...

David Piggott, Managing Director ANZ at Jabra - avatar David Piggott, Managing Director ANZ at Jabra

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’...

Business Daily Media - avatar Business Daily Media



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion