A drop in the number of Australians receiving JobKeeper has helped improve the budget’s bottom line, and reduce the forecasted deficit, now that more businesses are no longer eligible for or in need of the wage subsidy.
The Morrison government delivered its Mid-Year Economic and Fiscal Outlook (MYEFO) today to update Australians on fresh budget figures and unemployment rates, as well as announce $1 billion for aged care.
The update shows that the difference between the cost of the projected uptake of JobKeeper in the October budget, compared to today’s figures, has contributed to a $15.9 billion improvement in the budget deficit.
These savings will bring the deficit for this financial year to an expected $197.7 billion, or 9.9% of GDP.
The Morrison government used the MYEFO to provide an update on the last federal budget, which was released in October, rather than announce a suite of new support measures.
While the aged care sector will receive funding for another 10,000 home care packages, small business groups did not receive any stimulus.
JobKeeper figures for October already signalled an improvement on the 2020-21 budget assumption that there would be 2.2 million Australians receiving JobKeeper in December.
ATO data showed there were about 1.6 million employees across 500,000 businesses receiving JobKeeper in October, which was 2 million fewer workers compared to September.
According to the MYEFO, the number of organisations receiving JobKeeper peaked in August at about 960,000 before falling in September.
The lower-than-expected uptake of JobKeeper has made a significant contribution to the budget’s bottom line. The budgeted cost of JobKeeper for 12 months is now expected to be closer to $90 billion instead of $101 billion, according to the Australian Financial Review.
Announcing the MYEFO today, Treasurer Josh Frydenberg said the new figures “are encouraging and better than what was expected at budget just 10 weeks ago”.
Brighter unemployment rates
The MYEFO shows a change in the forecast unemployment rate, which was first predicted in the October budget to peak at 8% in December.
The unemployment rate is now predicted to peak at 7.5% in March 2021, before falling to 6.25% in June 2022.
“There remains a long way to go until the economy fully recovers and the unemployment rate is brought down comfortably below 6%,” Frydenberg said.
Younger workers have been disproportionately affected by the pandemic with the employment of 15-to-34-year-olds 4.2% lower than it was in March. For the rest of the population, unemployment is 0.1% lower than it was in March.
The unemployment rate is expected to recover to pre-COVID-19 levels in about four years.