$400 million in government funding for Hollywood, but only scraps for Australian film

Marvel Studios

Jo Caust, University of Melbourne

On July 17, Prime Minister Scott Morrison announced an additional A$400 million to attract film and television productions to Australia until 2027.

In a press release, Morrison argued Australia is an attractive destination due to our relative success in managing COVID-19. The idea is that this financial expansion of the “location incentive” program will attract international filmmakers in production limbo to come to Australia.

What does the Australian film industry get out of this incentive? There is no doubt more film production here will ensure the employment of production staff, technical crews and support actors, many of whom have been badly economically affected by the stoppage in film making. As Morrison notes:

Behind these projects are thousands of workers that build and light the stages, that feed, house and cater for the huge cast and crew and that bring the productions to life. This is backing thousands of Australians who make their living working in front of the camera and behind the scenes in the creative economy.

The existing location offset provides a tax rebate of 16.5% of production expenses spent in Australia, while the location incentive – which this $400 million will go towards – provides grants of up to 13.5% of qualifying expenses.

This new input is predicted by the government to attract around $3 billion in foreign expenditure to Australia and up to 8,000 new jobs annually.

This is not a fund to make Australian films, but an incentive for foreign filmmakers to make films in Australia.

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Global incentives

Many countries offer similar incentives.

The UK offers up to a 25% cash rebate of qualifying expenditure; Ireland offers 32% tax credit on eligible production, post-production and/or VFX expenses for local and international cast and crew, and goods and services.

Singapore is even more generous, offering up to 50% of qualifying expenses. But as a condition of receiving the money, the filmmakers must portray Singapore in a “positive light”.

There are usually caveats: a minimum spend of the film’s budget in the country providing the incentive; a minimum employment of local practitioners on the crew; and in some cases a “cultural test”.

In the UK, productions can earn points towards this cultural test by filming in English, contributing to local employment, and creating films “reflecting British creativity, heritage and diversity”.

Aquaman was filmed on the Gold Coast.
Warner Bros

Does Australia apply any similar conditions? The location tax offset requires the company to be operating with an Australian Business Number, and have a minimum qualifying spend in Australia of $15 million, while the location incentive is for “eligible international footloose productions”, that is international films being produced in Australia.

Delights, and concerns

The Australian and New Zealand Screen Association — whose members include Universal, Walt Disney, Sony, Netflix, Warner Brothers and Paramount — commissioned a research report on Australian location incentives in 2018.

The report argued other countries have been more generous in their provision of location offsetting, thereby resulting in a loss of international production in Australia. The association is delighted about this latest announcement.

But how do local filmmakers feel about this funding? Screen Producers Australia, whose members include local producers and production businesses, has said this funding may help to support around 20% of the local workforce, but is concerned about the lack of support for Australian filmmakers making Australian films.

The Great Gatsby was filmed in Sydney.
Warner Bros

This new funding will certainly not help the production and development of locally made films and television. As Screen Producers Australia asserts, foreign made films and producers can now access more government funding in Australia than Australian made films and producers.

A sector in crisis

On June 24, the federal government announced new funding packages to support the “creative economy”. This included $50 million for a Temporary Interruption Fund to help film and television producers who are unable to access insurance due to COVID-19 to secure finance and restart production.

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This $50 million is the only support the government has specifically targeted towards the local film sector under coronavirus. Nearly a month on, no details have been released on how filmmakers will be able to access this support.

Since April 2020, free-to-air and subscription television services have been exempt from the need to adhere to the Australian content stipulations, significantly reducing the amount of Australian television content produced into the foreseeable future.

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This was further compounded by an announcement by the ABC in mid-June they would be reducing their commitment to local content production, given ongoing budget cuts.

The capacity of the Australian film and television sector to continue to make Australian stories that reflect our culture is seriously impacted.

While the government is showing support and generosity to foreign filmmakers and commercial television interests, it seems less inclined to demonstrate similar largesse to its own creators.

Some film workers are now likely to be employed, but the sector overall will not be assisted. If our own stories are not being made for our audiences, the on-going loss to the nation will be significant.

Jo Caust, Associate Professor and Principal Fellow (Hon), School of Culture and Communication, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Government announces $2.5 billion package to support training and apprenticeships

Mick Tsikas/AAP

Michelle Grattan, University of Canberra

The Morrison government has announced $2 billion – to be augmented by another $500 million from the states – for a skills package to boost training and job creation.

A $1 billion JobTrainer program will provide training or re-skilling for up to 340,700 school leavers and job seekers. Places for courses will be available from September.

This is to be funded on a 50-50 basis with the states. The government says there has been early support from most states after Scott Morrison raised the plan at national cabinet last week.

To get the JobTrainer funding the states will need to sign up to an agreement to reform their vocational education and training systems. Morrison has previously said the VET system needs to be simplified and better attuned to the skills employers are seeking.

The start of the courses would come just before with the scaling back of government COVID support measures. Not only are a huge number of unemployed in the job market but school leavers looking for jobs will find it extremely difficult.

The package also includes an extra $1.5 billion to expand and extend the wage subsidy for apprentices and trainees. This follows $1.3 billion announced in March.

The subsidy now supports 47,000 employers with 81,000 apprentices and trainees – the expansion will take this to nearly 90,000 businesses and 180,000 apprentices.

Eligibility will be widened from small businesses to medium-sized businesses with 199 or fewer employees. The subsidised apprentices will have had to be in place from July 1.

The program will also be extended by six months to the end of March.

The subsidy covers half the apprentice’s wages up to $7,000 a quarter.

Already $365 million has been paid out under the program.

The JobTrainer courses will be free or low cost and aimed at areas of need. These areas will be identified by the National Skills Commission in consultation with the states.

Morrison said: “COVID-19 is unprecedented but I want Australians to be ready for the sorts of jobs that will come as we build back and recover. The jobs and skills we’ll need as we come out of the crisis are not likely to be the same as those that were lost.”

Current sectors looking to expand their workforces include health care and social assistance; transport, postal and warehousing; manufacturing; and retail and wholesale trade.

The courses will be delivered by public, private and not-for-profit providers.

Speaking on Melbourne radio on Wednesday, Morrison again made it clear the government will avoid a hard cut off of assistance at the end of September. He said it would continue to provide income support to those who needed it.

“And obviously in Melbourne in particular, that demand is going to be very great now for some period of time.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The government will spend $48 million to safeguard mental health. Extending JobKeeper would safeguard it even more

Anthony Jorm, University of Melbourne

Federal health minister Greg Hunt has unveiled a A$48.1 million COVID-19 mental health plan, featuring A$7.3 million for research and data collection, A$29.5 million for outreach to vulnerable people, and A$11.3 million for communication and other outreach programs.

This is on top of the A$1.1 billion Medicare package to tackle mental health and domestic violence, announced in March, which included funding for telehealth mental health services by GPs and mental health practitioners.

Is the funding needed?

Mental health experts have warned of a “second curve” of mental ill-health in the wake of the COVID-19 epidemic. This will result from widespread anxiety and depression, both about the disease itself and the knock-on social and economic effects of the lockdown.

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Modelling has predicted that suicides could increase by 25-50% per year for up to five years, if urgent action is not taken.

It is hard to rely on any prediction with confidence, given this situation is unprecedented. Recent research from the Australian Bureau of Statistics indicates that the mental health effects of the pandemic are not dramatic so far. The graph below shows data from a national survey of symptoms carried out in April 2020, compared with earlier national survey data collected in 2017-18.

Author provided

There has been a significant increase in feeling “restless or fidgety” and a trend towards more people feeling “nervous”. This probably reflects the confinement of the lockdown and anxiety about infection. Increases in anxiety are not necessarily a bad thing, as they motivate people to protect themselves against infection. Fortunately, the more serious symptoms of depression did not increase; in fact, there has been a signficant decrease in the number of people who report feeling “depressed”.

Similarly, early data indicate there has not been an increase in suicides in Australia, and Japan has actually reported a decline in suicides. This seems paradoxical, given the surge in unemployment and financial uncertainty.

Yet it has long been recognised that suicides can decrease during times of war if there is a greater sense of purpose and social cohesion. Whether our national response to the COVID-19 pandemic will also produce these protective effects is unclear, but the potential is there and should be encouraged.

While the early effects on mental ill-health have not been dire, it is very early days, and the predicted adverse consequences of the pandemic and lockdown may yet be seen. Given the uncertainties, the government’s planned investment in gathering better data seems wise.

Will it make a difference?

The biggest slice of the government’s new and previous funding packages will go towards extra Medicare services. But although this seems an obvious response, past experience indicates it is unlikely to have a major impact.

Over the past two decades Australia has had hugely increased the provision of mental health services, but there has been no detectable improvement in the mental health of the population. One likely reason is that the extra services are not of sufficient quality to make a difference, with people not getting enough treatment, or services not being targeted to those most in need.

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What seems more likely to have a beneficial effect is the funding put into the JobKeeper and JobSeeker schemes. The evidence is clear that mental ill-health is associated with job loss and low income. These schemes are keeping people in employment and providing incomes, which means they are directly tackling key risk factors for mental ill-health.

If this preventive benefit is to be maintained, it will be necessary to extend these schemes beyond the planned six months. Now that would be a real investment in the nation’s mental health.

Anthony Jorm, Professor emeritus, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coronavirus TV ‘support’ package leaves screen writers and directors even less certain than before

Worst Year of My Life, Again!
IMDB

Kay Nankervis, Charles Sturt University

Federal Communications Minister Paul Fletcher announced three measures last week to help commercial TV broadcasters deal with COVID-19 financial stress.

First, the spectrum tax broadcasters pay the government for access to audiences will be waived for 12 months.

Second, the government has released an options paper on how to make Australian storytelling on our screens fair across new and old platforms.

But it’s the third measure that is a shock: for the rest of 2020, all quotas requiring commercial TV networks to make Australian drama, documentary and children’s television have been shelved. Fletcher said networks can’t create the content because COVID-19 constraints have stalled most production.

But arts, screen directing and screenwriting bodies disagree. They say the quota pause across two financial years will cost jobs. And they’re worried this measure signals how the government will act on regulation options in the paper released at the same time.

4 ways forward

The paper from Screen Australia and the Australian Communications and Media Authority (ACMA) explores two issues: firstly, how to promote Australian drama, documentary and children’s television across all home screen platforms; secondly, how to level the regulatory playing field across those platforms.

Commercial TV broadcasters have had to meet a 55% Australian content quota for decades – including sub-quotas of drama, documentary and children’s programs. Meanwhile, the global streaming services Australian audiences are flooding to, such as Netflix and Stan, do not have to meet any quotas. Nor do other digital platforms in Australia.

The Screen Australia/ACMA paper presents four possible ways forward:

1. keep the status quo: leave commercial networks as the only platform bound to content quotas
2. minimal change: ask streaming services to invest voluntarily in Australian content and revise what commercial networks have to produce (maybe axing children’s TV quotas)
3. establish a “platform-neutral” system to compel and encourage Australian content-making across all of commercial television, digital platforms and global streaming services
4. deregulation: no one – including commercial networks – would have to meet any content quota requirements.

There is still time for industry bodies to respond to these choices. But option 3, cross-platform incentives and Australian content rules for all, would appeal most to the arts sector. It is the only option of the four which genuinely promotes Australian storytelling on our screens and the jobs that go with it.

Streaming services such as Netflix and Stan will hate that proposition. They and other digital platforms will resist having to follow content rules.

Would hit kids’ show Bluey have been made without content quotas?
ABC

Levelling the field or throwing away the rules?

Commercial networks have long sought a level playing field – and the platform-neutral option offers that. But what they really want is the freedom the other platforms have now: to make and deliver whatever content they think audiences will watch. That’s option 4: total deregulation and all content obligations removed.

Deregulation would hurt Australian creative production jobs. A PricewaterhouseCoopers (PwC) study quoted in the Screen Australia/ACMA paper predicts that if quotas were dropped from commercial television, children’s TV production there would end, drama production would fall 90% and documentary making would halve.

Enter the government’s Relief for Australian media during COVID-19: commercial networks still have to broadcast 55% Australia content in 2020. But they don’t have to make drama, documentary or children’s content as part of that quota.

The Australian Writers Guild (AWG) – representing drama and documentary screen writers – has slammed the quotas pause. They say the government has abandoned creative workers to help a handful of media companies. They’re worried this trial deregulation will change the production landscape forever. And they accuse networks of using COVID-19 as “the excuse they need in their quest to end the quota system once and for all”.

The Directors Guild, Screen Producers Australia and the Media Entertainment and Arts Alliance are also anxious about screen jobs – and where the federal government will go on the quotas issue.

That’s understandable.

We’ve just seen the government dismiss Australian content quotas as “red tape”. We can only guess where its sympathy for corona-stressed TV networks will take us next.

Kay Nankervis, Lecturer in Theatre, Media and Creative Practice., Charles Sturt University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

For most universities, there’s little point to the government’s COVID-19 assistance package

Shutterstock

Andrew Norton, Australian National University

COVID-19 has hit the higher education sector hard – with an up to A$4.6 billion estimated loss of revenue from international students.

The government will not compensate universities for international student losses. But on Easter Sunday Education Minister Dan Tehan announced limited financial assistance for higher education, aimed primarily at domestic students.

Under the plan, the government will guarantee funding for universities at their current levels of enrolment for the rest of 2020 – meaning if enrolments drop, the funding won’t. It will also “slash” student fees for short, online courses in national priority areas such as nursing and IT.

Universities Australia says the package is a first step. This is true when it comes to the funding guarantee, but the premature policy on short courses is a wrong step.

Domestic student funding, in detail …

The university financial crisis was triggered by fewer-than-expected international students. But in some universities, weak domestic demand has exacerbated the problem.

The University of Sydney announced last week it had 5% fewer domestic students than it expected. Other universities, such as La Trobe in Victoria, have also revealed domestic student shortfalls.

Normally, universities lose money for enrolling fewer domestic students than they anticipated. Under the higher education funding legislation, total government payments for each year cannot exceed the number of students actually enrolled multiplied by the relevant discipline-based tuition subsidy. Usually, the fortnightly payments universities receive from the government are adjusted down if enrolments are lower than expected.

But under this plan, universities will receive their previously-expected 2020 funding amounts, probably based on levels announced in December 2019. This will require some legal changes the government will make during 2020.

Only a minority of universities are likely to be suffering from low domestic demand. But for these institutions this additional funding will be helpful.

HELP payments guaranteed, but have to be paid back

HELP student loan payments to universities on behalf of students – HECS-HELP for government-supported students, FEE-HELP for full-fee students – will also continue according to December 2019 forecasts, even if enrolments fall short of previous predictions.

If higher education providers – the private higher education sector as well as public universities using FEE-HELP – take advantage of this option, they will need to repay any excess HELP loans between 2022 and 2029.

As the funding legislation gives the government significant discretion in debt recovery this policy does not need any legal change.

Short courses with new certificates

The most newsworthy part of the Easter Sunday announcement was that the government would fund additional short courses at discount fees. These are aimed at people seeking new skills for the post-COVID-19 economy. Tehan said:

This plan will help Australians who have lost their job or are looking to retrain to use their time studying nursing, teaching, counselling, allied health or other areas considered national priorities.

These short courses will be up to four subjects already taught as part of an existing qualification. They can start from May 1, 2020 and must be finished by December 1, 2020.

The existing qualification could be anything from a higher education diploma to a masters degree by coursework, but it is likely universities would focus on graduate certificates and graduate diplomas, which usually take full-time students between six months and a year.

Students can continue on to the full course if it is longer than four subjects, but they will not get discount fees for subsequent subjects.

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Students who finish six months of study will receive what the education department calls a “higher education certificate” and the minister has sometimes called a “diploma certificate”.

Student contributions will be $1,250 for six months study in nursing, teaching, psychology, English, maths, foreign languages or agriculture. They will be $2,500 in allied and other health, IT, architecture and building, science engineering, medical science and environmental studies. In most cases, this is about half what students would normally be charged.

The government says these courses must be online and are only available to new students. There is a strong implication these courses will be restricted to workers displaced by the COVID-19 crisis.

This has legal problems

This idea faces significant legal obstacles.

The government has no current legal power to fund a “higher education certificate” or a “diploma certificate”. So to facilitate funding, the government requires universities to enrol students in a course leading to an existing higher education qualification, even if the student has no plan to finish it.

Encouraging students to leave without a proper qualification goes against the legislation’s policy intent.

Higher education providers have another potential legal problem. The rules around admitting students require course applicants have no “known limitations” that would impede completion. A university marketing made-up certificates that encourage early departure from courses that would otherwise lead to legally-recognised qualifications strikes me as recruiting students with a potential “known limitation”.

Universities should check with the quality regulator before admitting students on this basis.

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The government’s other legal problem is it has no power to cut student contributions. Under the funding legislation, universities set student contributions up to the statutory maximum. So for the cost of the short courses to be “slashed”, the government needs universities to charge less than usual.

Universities will receive the normal tuition subsidy for each student, so this may mean they can still make money from this program. Adding an additional student to an existing online course would usually cost them less than the total funding rate.

But agreeing to a lower student contribution sets a bad precedent, and undermines the program as a way of assisting financially-stricken universities.

Making matters worse, tuition subsidies for diploma certificate students would be offset against the 2020 funding guarantee amounts. Universities with fewer domestic students than expected in December 2019 should not participate in this program, and take the funding guarantee money instead.

There are existing short courses

The short course policy should be postponed. It isn’t going to make a big financial difference to universities. We should think more carefully about whether funding short courses is necessary or desirable, and we should not lightly sanction policies that go against the intent of existing law. If the scheme is worth pursuing, it can be properly legislated later in the year.

If people want to sit out the COVID-19 recession at their study desk they have many options. There are no limits on student numbers in FEE-HELP funded postgraduate courses. There is also already a large market for online short courses. Many of these have the added advantage of costing less than $1,250 or $2,500.

Andrew Norton, Professor in the Practice of Higher Education Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coronavirus Update: Australia

Morrison has rescued childcare from COVID-19 collapse – but the details are still murky

Shutterstock

Jen Jackson, Victoria University

Prime Minister Scott Morrison has announced free childcare for more than one million families, with a funding boost that aims to keep more than 13,000 childcare services across Australia open.

In doing so, the government has backed its earlier recognition of early childhood education and care being an essential service.

Estimates suggest about 650 early childhood education and care services have already closed in Australia due to falling enrolments.

The government plans to pay 50% of the sector’s revenue up to the existing hourly rate cap, based on the enrolment numbers before parents started withdrawing their children because of the COVID-19 pandemic.

It will only do this so long as services remain open and do not charge families for care.

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The funding will apply from April 6 based on the number of children who were in care during the fortnight leading into March 2, whether or not they are attending services.

The plan will cost A$1.6 billion over the coming three months.

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What this means

Today’s announcement is a much needed lifeline for the early education and care sector, which was on the brink of collapse.

By last week, drops in occupancy at childcare centres were estimated to be between 15% and 50%.

Normally, the childcare subsidy is paid directly to early childhood services, which then pass it on to families as a fee reduction. Today’s announcement effectively increases the fee reduction to result in zero fees.

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Last month, the government also increased the time families can stay away from childcare without losing their access to subsidies, from 42 days to 62 days. The new plan waives gap fees, so families don’t face costs for keeping children at home.

Previously, families would face fees even when their child was absent from childcare, so services could keep operating. While this made sense in the pre-COVID world, many families discontinued enrolment when they were not sure when their children would return to care.

Federal education minister Dan Tehan said families that discontinued their enrolment since February 17 were encouraged to re-enrol their child:

Re-starting your enrolment will not require you to send your child to child care and it certainly won’t require you to pay a gap fee. Re-starting your enrolment will, however, hold your place for that point in time when things start to normalise, and you are ready to take your child back to their centre.

Finding a place in quality childcare remains a struggle for many Australian families, so support to stay enrolled is a significant benefit.

The funding boost means many centres can stay open and early childhood educators (including the 72% who are part-time or casual workers) will be able to keep working.

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JobKeeper payments will be available for those who cannot keep working. This is welcome respect from government for the importance of these workers, who are risking their health to give children continuity of care.

Where are the gaps?

The announcement caused initial confusion about whether free childcare would apply to all families. Education minister Dan Tehan asked that services prioritise vulnerable families and those who can’t care for their children safely at home.

The Prime Minister said “working parents” would be prioritised, not just those working in the most critical jobs.

Tehan later clarified that the support applies to all families who have an existing relationship with a childcare centre.

While families struggling to care for young children while working from home will welcome this announcement, it still leaves uncertainty about how “prioritisation” will occur.

It is also not clear whether the call for prioritisation was expected to limit the number of families using childcare services, to allow educators to implement strategies like extra cleaning and physical distancing to protect children and staff from infection.

Benefits for children’s learning are also largely missing in the political spin. The Prime Minister is right that “children need as much familiarity and continuity as we can help provide”, but early childhood services do more than provide familiar spaces for children.

When it comes to school education, the global focus has remained on keeping children learning, even for those not at school. But research shows learning is even more important in the early years, so governments also need a plan to support educators and families to keep early education going.

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Another glitch is that Goodstart Early Learning, Australia’s largest early childhood service provider, is technically ineligible for the government support announced so far. The company’s annual revenue is just above the A$1 billion eligibility limit for access to the new package.

Goodstart itself was born from the last major crisis in Australian childcare, when ABC Learning went bankrupt, placing more than 1,000 services at risk of closure. Goodstart, a not-for-profit social enterprise, was created from a consortium of community organisations and government support, to provide a new model of childcare that prioritised learning over profit.

It would be a cruel twist of fate if the solution to the last childcare crisis was left out of the solution to the current one.

Beyond the band-aid

Education minister Dan Tehan has described today’s reforms as “turning off the old system” of childcare funding. When Australia reaches the other side of the crisis, governments will face tough decisions about whether the clunky pre-COVID system – with childcare funding pieced together from a complex mix of government funding and vastly variable fees – should ever be turned back on.

A broken system will crumble to pieces at the first sign of crisis. Australia has seen childcare come close to the brink of collapse twice now in just over a decade. Governments owe it to children and families to never let it happen again.

Jen Jackson, Education Policy Lead, Mitchell Institute, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Free child care to help nearly one million families, especially workers in essential services

Michelle Grattan, University of Canberra

The government will provide free child care in a move aimed at ensuring parents, especially in essential services, are able to keep working.

More than 945,000 families with 1.3 million children will benefit.

The new arrangement will scrap, after Sunday, the present funding system – including the means test and the activity test – and instead the government will pay half the sector’s revenue up to the existing hourly rate cap.

CC BY-ND

The plan will cost the government $1.6 billion over three months – compared with $1.3 billion if current revenues and subsidies had continued, based on the existing system and the big reductions in enrolments that have taken place.

The funding will be paid direct to the centres, with the condition they remain open, so parents do not have the disruption of having to seek out another provider. There are some 13,000 childcare and early leaning services. The new arrangements will also extend to after school and school holiday services.

Priorities will be set for access, with the first in line being working parents, vulnerable and disadvantaged children, and parents with existing enrolments.

Centres should “re-engage with those parents who have taken their children out of care, to see whether they can be accommodated as necessary as well,” Education Minister Dan Tehan said.

“But there is a clear priority list that we want centres to take into account, and the most important of those are those essential workers and the vulnerable children.”

Scott Morrison said: “In this ‘new normal’ that we’re living in, it’s no longer about entitlement. It’s about need.

“And we’re calling on all Australians to think about what they need, and to think about the needs of their fellow Australians who may have a greater need when it comes to calling on the many things that are being provided.”

For parents who have removed their children from childcare, centres can waive the gap fee, dating back to March 23.

The payment to centres will start to be made in a week’s time, and will run initially for three months, after which it may be extended.

Morrison and Tehan said in a statement the plan would provide “planning certainty to early childhood education and care services at a time where enrolments and attendance are highly unpredictable”.

Childcare centres can also get assistance under the JobKeeper program announced this week and the cash and loan schemes also available for businesses.

The Australian Childcare Alliance, the peak body for early learning services, welcomed the announcement as “extraordinary”. It said an overnight survey it had done had shown 30% of providers “faced closure this week due to as massive, shock withdrawal of families – either from fear or unemployment – and another 25% were not sure they could ever recover, even once the virus crisis has passed”.

But with the new financial measures , plus the JobKeeper payment and other existing support mechanism the early learning sector should be able to continue to play its essential role, ACA said.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The key to the success of the $130 billion wage subsidy is retrospective paid work

Peter Martin, Crawford School of Public Policy, Australian National University

The secret sauce in the government’s A$130 billion JobKeeper payment is that it will be retrospective, in the best possible way.

It’ll not only go to employers who have suffered losses and had employees on their books tonight, March 30, but to employers who have suffered losses and had workers on their books as far back as March 1.

This means that employers who have sacked (“let go”) of workers at any time in the past month can travel back in time, pay them as if they hadn’t been sacked, and nab the A$1,500 per employee per fortnight payment.

As the official fact sheet puts it, “the JobKeeper Payment will support employers to maintain their connection to their employees”.

This retrospective connection will add new meaning to the term “revision” when the March unemployment numbers are released.

Not only will the March numbers be liable to being revised a month later as is normal in the light of extra information, but many Australians who were unemployed in March will retrospectively turn out not to have been unemployed.

They will have been retrospectively in paid work.

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(And if they have applied for the Centrelink payment of Newstart plus $550 per fortnight, they’ll have to un-apply to avoid what the prime minister referred to as “double counting” rather than the more loaded “double dipping”.)

It gets better. If you have been part-time, or for some other reason on less than $1,500 per fortnight, “your employer must pay you, at a minimum, $1,500 per fortnight, before tax”.

This means you’ll get a pay rise, for the six months the scheme lasts.

The Conversation, CC BY-ND

If you’ve been let go and then retrospectively un-sacked, you are also guaranteed to get at least $1,500 per fortnight, which in that case might be less than you were being paid, but will be more than the $1,115 you would have got on Newstart (which has been renamed JobSeeker Payment).

If you remain employed, and are on more than $1,500 per fortnight, the employer will have to pay you your full regular wage. Employers won’t be able to cut it to $1,500 per fortnight.

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To get it, most employers will have to have suffered a 30% decline in their turnover relative to a comparable period a year ago. Big employers (turnover of $1 billion or more) will have to have suffered a 50% decline. Big banks won’t be eligible.

Self-employed Australians will also be eligible where they have suffered or
expect to suffer a 30% decline in turnover. Among these will be musicians and performers out of work because large gatherings have been cancelled.

Half the Australian workforce

The payment isn’t perfect. It will only be paid in respect of wages from March 30, and the money won’t be handed over until the start of May – the Tax Office systems can’t work any faster – but it will provide more support than almost anyone expected.

It’s scope is apparent when you consider the size of Australia’s workforce.

Before the coronavirus hit in February, 13 million of Australia’s 25 million residents were in jobs. This payment will go to six million of them.

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Read more:
Coronavirus supplement: your guide to the Australian payments that will go to the extra million on welfare

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Without putting too fine a point on it, for the next six months, the government will be the paymaster to almost half the Australian workforce.

Announcing the payment, Prime Minister Scott Morrison said unprecedented times called for unprecedented action. He said the payment was more generous than New Zealand’s, broader than Britain’s, and more comprehensive than Canada’s, claims about which there is dispute.

But for Australia, it is completely without precedent.

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

$1500 a fortnight JobKeeper wage subsidy in massive $130 billion program

Michelle Grattan, University of Canberra

The Morrison government will provide a flat $1,500 a fortnight JobKeeper payment per employee for businesses to retain or rehire nearly six million workers, in a massive $130 billion six-month wage subsidy scheme to limit the economic devastation caused by the coronavirus.

Describing the initiative as “unprecedented action” for “unprecedented times”, Prime Minister Scott Morrison said this was a “uniquely Australian” solution to keep enterprises and their workers connected through to “the other side” of the crisis.

He said no Australian government had never made such a decision “and I hope and pray they never have to again.”

The Conversation, CC BY-ND

The payment, made through the tax system, applies for workers of large, medium and small enterprises, and not-for-profits. It will start flowing from May 1, but will be backdated to March 30.

Workers who have already lost their jobs will be eligible if they were on the enterprise’s books on March 1, and are re-engaged.

It will be a flat rate for all those eligible, who include full-time, part-time, and casual workers (provided they have been with their employer for a year). Self-employed individuals will also be eligible.

The payment is about 70% of the national median wage. For workers in the accommodation, hospitality and retail sectors – sectors hardest hit by the crisis – it will equate to a full median replacement wage.

To be eligible, enterprises with an annual turnover of less than $1 billion must have lost at least 30% of their revenue after March 1 over a minimum of a month-long period.

For businesses with turnovers of more than $1 billion the reduction in revenue has to be at least 50%.

Where workers have already lost their jobs, they can be rehired by their employer, provided they were attached to the enterprise on March 1.

This will mean some people who have applied for a Centrelink payment will reconnect with their firm and will move to the JobKeeper payment.

Morrison and Treasurer Josh Frydenberg announced the scheme at 4 pm and almost 8000 businesses had registered by 5 pm.

The $1,500 a fortnight will be paid whether the employee is working (in the case of an enterprise still operating) or not (if the business is not trading).

Businesses that keep operating will have to pay each employee at least the $1,500, but there will be discretion about what’s paid above that.

The $130 billion JobKeeper scheme is the third tranche of emergency assistance the government has unveiled since March 12.

“This is about keeping the connection between the employer and the employee and keeping people in their jobs even though the business they work for may go into hibernation and close down for six months,” Morrison said.

“We will give millions of eligible businesses and their workers a lifeline to not only get through this crisis, but bounce back together on the other side,” he said.

The latest initiative brings the total support made available in the crisis to $320 billion, including $90 billion assistance from the Reserve Bank. The total amounts to the equivalent of 16.4% of GDP.

Frydenberg said Australia was “about the go through one of the toughest times in its history”. The government had doubled the welfare safety net and now had gone even further, he said.

Business welcomed the scheme. The Australian Chamber of Commerce and Industry said it was a “game changer”.

The Business Council of Australia said the government had “made the right choice to work through the systems we already have in place to get assistance where it is needed as soon as possible.”

But ACTU secretary, Sally McManus, expressed concern that $1500 a fornight might not be enough. She said the full median wage of $1,375 a week “is what is needed”.

The government is also temporarily liberalising access to income support. The JobSeeker payment has been subject to a partner income test of about $48,000. This is being temporarily relaxed so an eligible person can receive the JobSeeker payment and the associated new Coronavirus supplement of $550 a fortnight provided their partner earns less than $79,762 a year

In other coronavirus developments on Monday, Victoria announced it had moved to “stage 3” of the response to the crisis, with the two-person restriction on gatherings to become legally enforceable.

The two-person rule was announced by Morrison on Sunday but it was left up to the states to decide whether to make it enforceable.

Victorian Premier Daniel Andrews said: “If you are having friends over for dinner or friends over for drinks that are not members of your household, then you are breaking the law”.

“You face an on-the-spot fine of more than $1,600”.

NSW is also announced it will enforce the rule.

Queensland, which has closed its border, is toughening border controls.

Federal Deputy Chief Medical Officer Paul Kelly flagged modelling the government is using in its response will be made available later this week. Morrison has faced pressure for the modelling’s release.

Kelly told a news conference he had asked his staff “to organise a meeting later this week where the modelling and the epidemiology and the public health response will be unlocked, and people will be able to ask questions about that.

“I think we have been quite open with components of the modelling, but I respect that there is a large number of ways that modelling can be done, and so we need to be more transparent, and we will be.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.