- More than 90,000 people have come off government support since the JobKeeper scheme ended in March of this year, signalling Australia’s economic recovery is translating to the job market.
- The country’s jobless rate also fell to 5.6% in March, well below the expected 7.5%.
- The news comes as analytics firm Deloitte Access Economics predicts in a new report that next Tuesday’s budget will reveal a $100 billion boost to the bottom line thanks to Australia’s economic recovery.
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Almost 90,000 Australians have come off government since the Government’s wage subsidy scheme, JobKeeper, came to an end at the end of March, going some way to resolving fears its withdrawal would have catastrophic effects on the nation’s unemployment rate.
The new figures revoke previous Treasury predictions that said the end of JobKeeper would lead to between 100,000 and 150,000 people ending up on unemployment queues.
In fact the results show there 650,000 fewer people on JobKeeper in the March quarter than previously estimated, representing about 200,000 more people in work than was predicted four months ago.
The continued drop suggests the labour market has not only remained resilient but has strengthened since the end of the government’s wage subsidy program.
Its recovery has been stronger than predicted, with the jobless rate falling to 5.6% in March, vastly more positive compared with Treasury estimates projecting it would hit around 7.5%.
The results also mean JobKeeper will cost the government $12.5 billion less than anticipated, with last October’s budget estimating JobKeeper would cost $101.3 billion. The drop in people needing the wage subsidies means the scheme will ultimately cost $88.8 billion.
The strengthening jobs figures come as Deloitte Access Economics suggests in its new report that the country’s “red hot recovery is helping the budget get better” and that next Tuesday’s budget will reveal a $1000 boost to the bottom line, while also cautioning that a “daunting budget repair task” was to come.
Deloitte partner Chris Richardson told The Australian that the pandemic had still left the government’s finances in a deep hole, though the economy was still significantly better than was expected even a few months ago.
“As an example, the deficit is an eye-waveringly $95 billion larger than the matching projections for 2021-22 that Treasury issued in late 2019,” he said.
The report found that jobs have returned faster than expected, and that household spending is up, with some $5 billion added to spending this financial year, followed by $2 billion next.
Additionally, it said that the fastest and smartest way to repair the budget was to “avoid attempts at budget repair” until unemployment is comfortably under 5%, as opposed to the current target of under 6%.
Richardson said that while repairing the economy would do “the vast bulk of the heavy lifting”, the analysis showed the federal government would eventually need to find the equivalent of $40 billion in annual savings in order to balance the budget.
The hit to migration through the pandemic, slower expected inflation and wage growth, and a higher interest bill than would have been the case if the pandemic had not occurred would leave a significant budget repair task, he said.
“Australians do need to realise that there’s an eventual bill to pay — it isn’t nearly as large as many seem to fear, but nor is it nothing,” Richardson said.
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