Aussies could soon be stripped of the life support of JobKeeper, with plans to force companies to face a new test to determine if they still qualify.
Aussies could soon be stripped of the life support of JobKeeper, with plans to force companies to face a new test to determine if they still qualify.

Test to cut off ‘zombie’ businesses from JobKeeper

Companies could face a new turnover test to qualify for JobKeeper with employers "retested" to ensure those that have bounced back from COVID-19 are stripped of the "life support" of the wage subsidy.

News.com.au has confirmed a Treasury review of the JobKeeper scheme is closely examining the option of retesting turnover.

Companies currently need to prove turnover is down by 30 per cent but only need to prove it once. That means a company that was hit hard in April but bounced back to normal trading in June is still eligible for the $1500 a fortnight payment for each employee.

The new monthly testing options for JobKeeper under consideration could be applied to the current program to wean companies off the subsidy or used to tighten eligibility for the scheme going forward for a smaller number of companies after September such as Qantas.

While companies only needed to prove turnover is down 30 per cent once to qualify for six months of JobKeeper payments, they are required to submit monthly updates on turnover to the Australian Tax Office.

This would make it easy to "flick the switch" and scrap JobKeeper for companies that no longer needed it.

Prime Minister Scott Morrison has repeatedly promised JobKeeper will stick around until September. Picture: Matt Blyth/Getty Images
Prime Minister Scott Morrison has repeatedly promised JobKeeper will stick around until September. Picture: Matt Blyth/Getty Images

Professor Robert Breunig the director of the Tax and Transfer Policy Institute at the Australian National University said monthly testing of revenue was a good option.

"The turnover test for JobKeeper eligibility only needs to be satisfied once between March 30 and September 27 for a business to receive JobKeeper subsidies for the remainder of the JobKeeper period,'' Professor Robert Breunig said.

"One way to reduce the cost of the program while preserving employment as much as possible would be to retest business turnover on a monthly basis. As physical restrictions are eased, and the economy returns to normal, it would be expected that fewer businesses would satisfy a monthly turnover test.

"This would also be a useful way to target JobKeeper towards more heavily affected industries and gradually phase out the Program over time helping avoid a 'fiscal cliff' scenario in October."

Some Aussies could find themselves cut off from JobKeeper ‘life support’. Picture: Supplied
Some Aussies could find themselves cut off from JobKeeper ‘life support’. Picture: Supplied

As three million workers relying on JobKeeper await the findings of the report, the Treasury review into the scheme is nearing completion.

Professor Breunig said changing the rules before September might prove tricky but it was a balancing act to ensure taxpayers are not propping up 'zombie' firms that will not survive without JobKeeper. It was in the long term interests of those workers to be released to find work elsewhere he said.

"Changing the rules between July and September just seems like a lot of work. If they are going to extend it the battle is really over limiting it to a small number of industries and not to keep zombie firms alive,'' he said.

"I think the cost of the program is really pretty large. If businesses are not viable it's probably better we find out sooner rather than later."

News.com.au has previously reported that review is also seeking data on how many casual workers are being 'overpaid' as a result of JobKeeper and earning more under the wage subsidy than the usual hours they worked.

 

The JobKeeper review is being led by Australian Treasury Regulatory Reform Taskforce head Mark Cully.

Prime Minister Scott Morrison told 2GB radio today that he was committed to JobKeeper remaining in place until September but it could be extended for some hard hit industries or an alternative rescue package announced.

The Morrison Government has already moved to strip the childcare industry of JobKeeper payments and announced a $250 million arts package including loans and grants.

But he's left the door open to extending JobKeeper for Qantas workers.

"Now, we've got the review of JobKeeper. It hasn't hit my desk as yet, but we've been working hard on those issues together with all the budget Ministers, and we'll be able to make a decision soon,'' he said.

"But what I've said to (Qantas CEO) Alan Joyce and what I've said to everyone is we understand the need for further support.

"I think people shouldn't rush to conclusions about what the government is going to do post-September. We understand what's going on out there. We're very closely connected to that and we're going to keep ensuring we have policies to support people just like we did back in March, just like we moved effectively and significantly. We understand the need. But we've got to make the decisions and we've got to get them right and we've got to calibrate them correctly. We've got to get the design right."

Originally published as Test to cut off 'zombie' businesses


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