Why JobKeeper will be axed
Treasurer Josh Frydenberg is preparing to axe the JobKeeper scheme in March shifting the focus of the government support into creating new jobs.
The budget is expected to include new 'JobMaker' subsidies to encourage employers to take on new staff as the economy reopens after government ordered shutdowns during the pandemic.
But it is also expected to confirm that the JobKeeper wage subsidy will not be extended when it ends on March 28.
Sky News is reporting this afternoon that the JobKeeper scheme will be axed next year and will not be extended a second time.
That fits neatly with the Prime Minister's plan to shift government subsidies into creating new jobs rather than providing a wage subsidy to protect them during the early months of the pandemic when entire industries were shut down.
It means that rather than provide a subsidy to businesses that are struggling, the focus will shift to helping business rebuild.
The original JobKeeper scheme was announced in March and was designed to offer eligible workers a $1500 a fortnight payment for six months.
But the Morrison Government announced earlier this year it would extend the scheme for another six months with a tighter eligibility criteria.
The current six month extension expires on March 28 and the Morrison Government has never suggested it would be extended for a third time.
Soon, the vast majority of people on JobKeeper will be Victorians who remain under lockdown and unable to leave the home for more than two hours a day.
But in the short-term, the big shock to JobKeeper recipients will be the reduced payments that come into force next week.
The $1500 payment will be reduced to $1200 for full-time workers and $750 for part-time workers.
Previously part-time workers secured $1500 - the same amount as full-time workers - as long as they have worked for a business for 12 months or longer.
Labor's treasury spokesman Jim Chalmers said the decision to slash the value of the wage subsidy next week was a mistake.
While that's bad news for thousands of workers who could have their pay cut, Labor is warning it's also another blow to the economy.
"From next Monday there will be a lot of money pulled out of the economy and that has consequences for the retail sector,'' Dr Chalmers said.
Originally published as Why JobKeeper will be axed