Independent Evaluation of the JobKeeper Payment: Final Report (presented to the Treasury by Nigel Ray)
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The Final Report of the Independent Evaluation of the JobKeeper Payment, dated 28 September 2023 and published by the Commonwealth of Australia (ISBN 978-1-925832-85-3) under a Creative Commons Attribution 3.0 Australia licence. A covering letter of the same date from Nigel Ray to Dr Steven Kennedy PSM, Secretary to the Treasury, presents the report in accordance with the terms of reference. Ray thanks those who discussed JobKeeper with the evaluation secretariat, led by Thomas Williamson, and refers to the list of formal submitters at Attachment A. The report carries an executive summary and key findings, then a main report opening with the terms of reference and evaluation approach. Its bibliography at Attachment B ranges from ETUI work on European job retention schemes to Australian studies of JobKeeper as a short-time work program and wage subsidy.
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“Independent Evaluation of the JobKeeper Payment: Final Report (presented to the Treasury by Nigel Ray).”
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Independent Evaluation of
the JobKeeper Payment
Final Report
28 September 2023
© Commonwealth of Australia 2023
ISBN: 978-1-925832-85-3
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The Independent Evaluation of the JobKeeper Payment acknowledges the Traditional Custodians of country
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past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples today.
28 September 2023
Dr Steven Kennedy PSM
Secretary to the Treasury
Department of the Treasury
Langton Crescent
PARKES ACT 2600
Dear Dr Kennedy
In accordance with the terms of reference, I am pleased to present the final report of the
Independent Evaluation of the JobKeeper Payment.
I thank all the individuals that gave time to discuss JobKeeper with the evaluation secretariat team
and me, and those who made research available to us. A list of the individuals and organisations that
made formal submissions is at Attachment A to the report.
I particularly want to record my thanks to the secretariat team, ably led by Thomas Williamson.
Yours sincerely
Nigel Ray
Table of contents
Abbreviations and acronyms ............................................................................................. vi
Glossary........................................................................................................................... vii
Executive summary and key findings ..................................................................................1
Main Report ......................................................................................................................9
1 Introduction..................................................................................................................................9
1.1 Terms of reference ...................................................................................................................9
1.2 Evaluation approach ...............................................................................................................10
1.3 Policy context in early 2020 ...................................................................................................14
1.4 Introduction of JobKeeper: objectives and design .................................................................15
2 Coverage of JobKeeper...............................................................................................................18
2.1 Individual characteristics ........................................................................................................18
2.2 Business characteristics ..........................................................................................................19
2.3 Coverage by industry ..............................................................................................................20
2.4 Coverage by geography ..........................................................................................................21
3 Economic effects of JobKeeper ..................................................................................................23
3.1 Early economic impacts of the COVID-19 pandemic..............................................................23
3.2 Short-term effects of JobKeeper ............................................................................................26
3.3 Medium and longer-term effects of JobKeeper .....................................................................33
3.4 JobKeeper and labour scarring ...............................................................................................35
4 JobKeeper design features .........................................................................................................38
4.1 Timing and flexibility ..............................................................................................................38
4.2 Payment rate structure ..........................................................................................................45
4.3 Eligibility criteria .....................................................................................................................50
5 Integrity and implementation ....................................................................................................56
5.1 Program delivery and integrity ...............................................................................................56
5.2 Transparency ..........................................................................................................................60
5.3 Communication strategy ........................................................................................................66
6 Value for money .........................................................................................................................68
6.1 Approach to assessing value for money of JobKeeper...........................................................69
6.2 Benefits of the JobKeeper Payment .......................................................................................69
6.3 Cost of JobKeeper...................................................................................................................70
7 Suitability of JobKeeper in future circumstances .......................................................................73
7.1 Why was JobKeeper an appropriate policy in the pandemic? ...............................................73
7.2 A JobKeeper-type wage subsidy should be reserved for a macroeconomic crisis .................74
7.3 A JobKeeper-type wage subsidy is not suitable for managing the business cycle .................74
7.4 Short-time work schemes ......................................................................................................75
Attachment A: List of submissions.................................................................................... 76
Attachment B: Bibliography ............................................................................................. 77
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List of boxes, figures and tables
Box 1: The effects of job retention scheme generosity ..........................................................................30
Box 2: Literature on labour scarring .......................................................................................................36
Box 3: International comparisons of payment rate structures ...............................................................46
Box 4: dnata case study ..........................................................................................................................55
Box 5: ATO gap analysis methodology ....................................................................................................58
Box 6: Voluntary disclosures and repayments ........................................................................................62
Box 7: Transparency mechanisms in pandemic job retention schemes abroad .....................................64
Box 8: Costing policy in a crisis: managing uncertainty...........................................................................72
Figure 1: JobKeeper individuals by sex and age ..................................................................................... 19
Figure 2: JobKeeper coverage by industry ............................................................................................. 21
Figure 3: JobKeeper coverage by state .................................................................................................. 22
Figure 4: Discretionary travel and mobility ............................................................................................ 24
Figure 5: Weekly transaction volumes growth ...................................................................................... 24
Figure 6: ASX200 and S&P500 ............................................................................................................... 25
Figure 7: Job separations (indexed) by JobKeeper status ...................................................................... 26
Figure 8: Consumer and business confidence ....................................................................................... 27
Figure 9: Changes in payroll jobs (indexed) ........................................................................................... 28
Figure 10: Paid jobs in JobKeeper-eligible firms in 2020........................................................................ 29
Figure 11: Income source as share of March income, by quintile ......................................................... 32
Figure 12: Labour mobility ..................................................................................................................... 34
Figure 13: Unemployment rate in Australia during economic slowdowns ............................................ 37
Figure 14: Income support flow for individuals on the first phase of JobKeeper................................... 39
Figure 15: Separations and jobs by JobKeeper status and turnover ...................................................... 40
Figure 16: JobKeeper income compared to usual pay ........................................................................... 48
Figure 17: Change in employment and turnover, by firm temporary migrant reliance ......................... 54
Table 1: JobKeeper Payment program logic .......................................................................................... 11
Table 2: Key releases by government departments on JobKeeper ........................................................ 12
Table 3: JobKeeper payment rates ........................................................................................................ 17
Table 4: JobKeeper payments by business size ...................................................................................... 20
Table 5: Treatment of Temporary visa holders and non-residents ........................................................ 53
Table 6: Some reports on JobKeeper implementation and program management............................... 57
Table 7: JobKeeper payment gap ........................................................................................................... 58
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Abbreviations and acronyms
Term Definition
ABS Australian Bureau of Statistics
ACCI Australian Chamber of Commerce and Industry
ACE Australian Centre for Evaluation
ACNC Australian Charities and Not-for-profits Commission
ACTU Australian Council of Trade Unions
ANAO Australian National Audit Office
AOFM Australian Office of Financial Management
APRA Australian Prudential Regulatory Authority
ASBFEO Australian Small Business and Family Enterprise Ombudsman
ASIC Australian Securities and Investments Commission
ASX Australian Securities Exchange
ATO Australian Taxation Office
BAC Boosting Apprenticeship Commencements
BCA Business Council of Australia
CEWS Canada Emergency Wage Subsidy
CJRS Coronavirus Job Retention Scheme (United Kingdom)
ERS Employment Retention Subsidy (Republic of Korea).
GFC Global Financial Crisis
HILDA Household, Income and Labour Dynamics in Australia
IGTO Inspector General of Taxation and Taxation Ombudsman
ILO International Labour Organization
IMF International Monetary Fund
JSS Job Support Scheme (Singapore)
NAVA National Association for the Visual Arts
NEET Not in employment, education or training
NOW Temporary Emergency Measure for the Preservation of Jobs (Netherlands)
OECD Organisation for Economic Co-operation and Development
PMI Purchasing Managers’ Index
RBA Reserve Bank of Australia
STP Single Touch Payroll
STW Short-Time Work scheme
TWSS Temporary COVID-19 Wage Subsidy Scheme (Ireland)
WHO World Health Organization
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Glossary
Aggregated annual turnover
Annual turnover, plus the annual turnovers of any business entities that are affiliates or connected.
Business
Businesses include all companies, partnerships, trusts, plus individuals with business income (sole
traders).
Business Activity Statement (BAS)
Businesses registered for Goods and Services Tax (GST) are required to lodge a BAS with the ATO to
report their tax obligations. A BAS is a form filled out by businesses between one and 12 times a year,
depending on the business size. It includes details such as turnover and calculates the amount of GST
a business must pay to the ATO.
Business failure
A business ceasing operations owing to its inability to make a profit.
Cashflow boost
Officially known as Boosting Cashflow for Employers program. Tax-free payments made by the
Australian Government to eligible businesses and not-for-profit organisations to ease financial
pressure arising from the COVID-19 downturn. The cashflow flow boost was announced on
12 March 2020 as part of the first stimulus package in response to COVID-19.
Casual employees
Employees without certain paid leave entitlements, guaranteed hours of work, and whose
employment can end without notice unless notice is required by a registered agreement, award or
employment contract.
Coronavirus Supplement
Additional financial support for people who received certain income support payments, such as the
JobSeeker Payment. Those eligible received a fortnightly supplement of $550.
COVID-19
COVID-19 is an infectious disease caused by a newly discovered coronavirus. Cases were confirmed in
Australia from late January 2020.
COVID-19 Disaster Payment
A lump sum payment paid to those who had lost work or income as a result of a COVID-19 lockdown.
Instant asset write-off
A business can claim an immediate deduction for the business portion of the cost of an asset in the
year the asset is first used or installed ready for use.
JobKeeper-nominated workers
Workers who have been nominated by their employer for JobKeeper payments.
Major Bank Levy
A levy applied to Australian banks with more than $100 million in total liabilities. This covers
Australia’s 5 largest banks – Commonwealth Bank, ANZ, Westpac, National Australia Bank and
Macquarie.
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Independent Evaluation of the JobKeeper Payment
Not-for-profit
Not-for-profit (NFP) organisations are organisations that provide services to the community and do
not operate to make a profit for members (or shareholders, if applicable).
Pandemic
A widespread occurrence of an infectious disease over a whole country or the world at a particular
time.
Pandemic Leave Disaster Payment
A support payment for those who had to self-isolate or quarantine due to COVID-19, and for those
caring for someone who had to self-isolate or quarantine.
Public registry
An official list of names or businesses which under law is required to be made available to the public.
Registered charity
An organisation registered with the Australian Government, which is run for the public benefit, is
not-for-profit, does not have a disqualifying purpose, and is not an individual or a political party. To
receive charity status charities must be registered with the Australian Charities and Not-for-profits
Commission.
Short-time work scheme (STW)
A payment scheme that allows firms experiencing economic difficulties to temporarily reduce the
hours worked of employees while providing them with income support from the Government for
hours not worked. STW schemes are popular in Europe. Australia does not have a STW scheme.
Short-term casual and long-term casual
In the context of JobKeeper, short term casuals are casual workers who have been employed in their
job for less than 12 months. Long term casuals are casual workers who have been employed in their
job for more than 12 months.
Single Touch Payroll (STP)
STP data are provided to the ATO by businesses with STP-enabled payroll or accounting software
each time the business runs its payroll. STP data include both business and job-level tax and
superannuation information.
Tax gap
An estimate of the difference between the amount of tax the ATO collects and what the ATO would
have collected if every taxpayer was fully compliant with tax law.
Temporary migrant
A person who comes to Australia for a temporary stay for a range of purposes. In relation to
JobKeeper, temporary migrants refer principally to temporary migrants with work rights – including
those on Student visas, Working Holiday Maker visas, and Temporary Resident (Skill Employment)
visas.
Turnover test
A test to determine business eligibility for JobKeeper support. In most cases, a business which was
eligible for JobKeeper support had, or expected to have, a reduction in GST turnover of 30 per cent
(50 per cent for a business with aggregated turnover of $1 billion or more).
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Independent Evaluation of the JobKeeper Payment
Executive summary and key findings
The COVID-19 pandemic had extraordinary health and economic implications globally and in
Australia. It evolved rapidly and was characterised by enormous uncertainty, particularly in the early
months of 2020. Modelling of health outcomes at this time suggested Australia could experience as
many as 150,000 deaths. As in many other countries, authorities in Australia introduced social
distancing and other measures in mid to late March to curb the spread of COVID-19. Alongside the
virus itself, the measures significantly affected the ability of many workers and businesses to
participate in the labour market and economy.
Early in March 2020, the Managing Director of the International Monetary Fund (IMF), Kristalina
Georgieva, stated that the biggest challenge presented by the early stage of the pandemic was
handling uncertainty.1She noted that it was difficult to predict the extent and duration of the
expected fall in global growth. As opposed to regular downturns in the business cycle, the early
period of the pandemic presented a crisis characterised by unquantifiable risks. These stemmed from
unknowns around the path of the virus, the structure and functioning of the economy under
quarantine, and the nature of shocks to goods, labour and financial markets. This environment
necessitated a robust policy response.
JobKeeper was a central pillar of the policy response in Australia. It was a wage subsidy and income
support program announced on 30 March 2020. It was the third instalment in a series of economic
support packages introduced in the space of 3 weeks during March 2020 as the crisis was unfolding
rapidly. JobKeeper provided support to around 4 million individuals – around one-third of
pre-pandemic employment – and one million businesses.
JobKeeper had 3 objectives: to support business and job survival; to keep employees connected to
their employers; and to provide income support to individuals. It enabled eligible workers at eligible
firms to receive a payment from the government through their employer. For stood down workers,
the payment was an income support payment; for others, it was a wage subsidy. JobKeeper
remained in place until 28 March 2021. Modifications to policy design, including changes to eligibility
criteria and the payment rate and structure, were made following a three-month review.
The Independent Evaluation of the JobKeeper Payment (the evaluation) considers both the impact
and processes of JobKeeper. The scope for the evaluation includes the entire JobKeeper Payment. In
line with its terms of reference, the evaluation assesses the effectiveness of JobKeeper in achieving
its objectives. It also records lessons learned from the design and implementation of JobKeeper, with
a view to informing future policy responses.
The evaluation draws on evidence from a range of sources and data. These include submissions
provided to the evaluation, previous assessments and analyses of JobKeeper undertaken by the
Treasury and the Australian National Audit Office (ANAO), academic research, and internal Treasury
research. The evaluation also draws on international evidence and interviews with stakeholders,
academics and senior public servants in Australia and other countries.
Key findings of the evaluation are set out below, with contextual information and supporting
evidence presented in the main report.
1 Georgieva (4 March 2020) Joint Press Conference on Covid-19 by IMF Managing Director and World Bank
Group President.
Executive summary and key findings | 1
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Key findings
1. JobKeeper helped to stabilise the Australian economy during a crisis. It played a critical role
in addressing the extraordinary and unquantifiable uncertainty at the time of its
introduction and averting the worst economic tail risks of the pandemic.
• JobKeeper provided certainty during a crisis. At the time, the IMF warned the pandemic
presented a crisis like no other with the worst economic fallout since the Great Depression.
Around two-thirds of total economic losses associated with the pandemic were expected to
stem from uncertainty.
• The behaviour of consumers and businesses changed drastically from early March 2020.
Physical movement declined sharply. Retail transaction volumes fell, initially for
discretionary purchases but also for essential purchases by late March. Business and
consumer confidence fell at an unprecedented speed to record lows. Job separations
increased and applications for income support spiked sharply in late March.
• The announcement of JobKeeper on 30 March 2020 had an immediate effect. Business and
consumer sentiment partially reversed their declines. Job separations fell sharply and
within weeks were below pre-pandemic levels. Applications for income support peaked in
the week JobKeeper was announced.
• JobKeeper laid the foundation for a speedy recovery. It preserved employee-employer
relationships and prevented the failure of otherwise productive firms. It also boosted
income and provided stimulus to underpin a broad economic recovery.
2. JobKeeper was effective in achieving its stated objectives. It preserved employment,
supported incomes and prevented large scale business failures during the pandemic.
• Take-up of JobKeeper was high. It provided support to around 4 million employees – almost
one third of pre-pandemic employment – and around one million businesses. Credible
estimates suggest that JobKeeper preserved between roughly 300,000 and 800,000 jobs or
around 2½ to 6 per cent of pre-pandemic employment.
• JobKeeper reduced the risk of labour scarring. This was achieved by maintaining
employee-employer relationships and providing broader stimulus that contributed to a
faster and stronger labour market recovery. In addition to direct economic benefits, the
preservation of employment had benefits to individuals’ well-being associated with
avoiding the uncertainty and stigma associated with becoming unemployed.
• Businesses that received JobKeeper suffered a median turnover decline of 28 per cent in
the June quarter 2020 and 23 per cent in the September quarter 2020. Total company
insolvencies during the initial months of the pandemic were lower compared with a year
earlier and compared with previous economic downturns, though this likely reflected the
effect of other policy support as well as JobKeeper.
• This finding is consistent with international evidence. The Organisation for Economic
Co-operation and Development (OECD) found that job retention schemes supported
around 50 million jobs across OECD countries by May 2020, preventing a surge in
unemployment and supporting aggregate demand. Recently published evaluations in the
United Kingdom and New Zealand similarly concluded that their wage subsidy programs
prevented job losses and business closures.
Executive summary and key findings | 2
Independent Evaluation of the JobKeeper Payment
3. While there were important benefits associated with JobKeeper, there were also significant
costs. The fiscal cost of JobKeeper was significantly frontloaded in the first 6 months. The
economic cost, while relatively small, became more significant in the later stages of the
program.
• JobKeeper had a relatively small and short-lived economic cost associated with inhibiting
productivity enhancing labour reallocation. In the initial phase, JobKeeper had a positive
impact on productivity as it was more likely to support highly productive, but liquidity
constrained firms. In contrast, the extension phases of JobKeeper generally supported less
productive firms and weighed on productivity growth.
• JobKeeper also had a large fiscal cost which reflected expectations about the scale of the
economic crisis at the onset of the pandemic and the size of program needed to cushion its
impact. With a total cost of $88.8 billion, JobKeeper was the one of the largest fiscal and
labour market interventions in Australia’s history. The initial 6 months of the program cost
approximately $70 billion. The first and second three-month extensions cost around
$13 billion and $6 billion respectively.
4. Overall, JobKeeper provided value for money through its broad social benefits and the role it
played in addressing extraordinary and unquantifiable uncertainty and averting the worst
economic tail risks of the pandemic.
• The evaluation uses a qualitative approach to analysing the social value of JobKeeper. This
approach recognises that the unquantifiable risks present in the early stage of the
pandemic, along with the difficulty of disentangling the effects of one policy measure from
those of the broader stimulus package, make attempting to quantify the macroeconomic
benefits of JobKeeper inherently unreliable.
• The social benefits of JobKeeper were significant. JobKeeper helped to preserve the
capacity of the economy by avoiding the destruction of firms and employee employer
relationships that were otherwise viable and productive. The program flattened the
distribution of wages and enhanced the well-being of recipients.
• For policy evaluation purposes, the fiscal cost of JobKeeper is treated as a transfer payment
from one group in society to another. The upper bound to the social cost of JobKeeper is
estimated to be $22.4 billion (25 per cent of the gross fiscal cost of the program plus its
administration cost). Other relatively small costs relate to temporarily impeding
productivity-enhancing labour reallocation.
• The lessons identified in Finding 7 would potentially help maximise social benefits and
minimise costs should a future JobKeeper-type policy be required.
Executive summary and key findings | 3
Independent Evaluation of the JobKeeper Payment
5. JobKeeper was implemented with incredible speed and was well managed. In the
circumstances, implementation struck an appropriate balance between rapidly deploying
support and managing risks of error and fraud.
• Use of established tax system concepts and the Australian Taxation Office (ATO) were
appropriate and enabled efficient implementation of JobKeeper. It also relieved pressure
on Services Australia which was experiencing rapid increases in applications for assistance
at the time.
• Once announced, JobKeeper was implemented with speed and appropriate recognition of
the urgency of rolling out support to manage the crisis. Simplicity in policy design and
utilising Single Touch Payroll (STP) technology was critical to the speed of implementation
while also managing risks.
• The Australian National Audit Office (ANAO) concluded that the ATO’s administration of
JobKeeper was effective and that its arrangements were fit for purpose to protect the
integrity of JobKeeper payments. Monitoring and reporting on the operational performance
of JobKeeper was effective.
• The incidence of fraud was low. The estimated payment gap for JobKeeper was 2.4 per cent
– smaller than other ATO-administered programs and taxes such as the Cashflow Boost,
GST tax receipts and large corporate groups income tax.
6. Cross-agency collaboration and leveraging of pre-existing relationships was a strength of the
design and delivery of JobKeeper. There would be benefit in establishing an emergency
committee of key government agencies that could be activated to coordinate economic
policy during an economic crisis.
• The development of JobKeeper represented a significant effort by the officials involved,
many of whom worked in extraordinary circumstances. Stakeholders noted that
government agencies worked together constructively and flexibly to establish JobKeeper
quickly in the early stages of the pandemic.
• The collaboration that occurred across government agencies depended on strong
pre-existing relationships between senior public servants. While this was effective for the
introduction of JobKeeper, there would be benefit in adopting a more structured approach
for the purpose of co ordinating economic policy during a crisis.
• Establishing an emergency committee of key government economic agencies that could be
activated quickly at the onset of an economic crisis would serve this purpose. Arrangements
around the composition and modalities of the committee could be pre-determined such
that it was ready to be stood up quickly when required. At a minimum, membership should
include officials from the Treasury, the Reserve Bank of Australia, the Australian Office of
Financial Management, the ATO and Services Australia.
7. While JobKeeper was effective, there are lessons that could improve outcomes and value for
money should a similar scheme be required in future.
a) In a rapidly evolving crisis, a policy design that more readily adapted to changing
conditions – similar in concept to an automatic stabiliser – could reduce costs without
compromising effectiveness.
Executive summary and key findings | 4
Independent Evaluation of the JobKeeper Payment
• When JobKeeper was announced, a commitment was made to keep it in place for 6 months
with extension beyond September 2020 subject to a three-month review.
• The commitment reflected an assumption that health restrictions would be in place for at
least 6 months and a desire to provide certainty to employers and employees about the
nature and duration of policy assistance. As it turned out, nation-wide restrictions and
shutdowns were shorter-lived than expected.
• A more flexible policy design during the first phase of JobKeeper would have enabled an
earlier move from prospective to retrospective eligibility thresholds, for example after
3 months. This would have allowed better targeting of payments beyond the initial
3 months and lowered the cost of the program.
• Many OECD countries introduced or had existing policies in place that could adapt more
readily to emerging health and economic developments compared with JobKeeper. Short
term work schemes, popular in European countries including Switzerland and Germany,
responded to the number of furloughed workers. New Zealand’s wage subsidy was tied
more directly to the timing of lockdowns.
• International evidence suggests that policy objectives such as reducing uncertainty and
underpinning confidence can be achieved through a more flexible upfront policy
commitment that is contingent upon unfolding developments.
b) An earlier commitment to JobKeeper more closely aligned with the introduction of social
distancing and other pandemic related restrictions could have increased its efficacy.
• JobKeeper was announced on 30 March 2020, later than job retention schemes in
comparable countries and after the introduction of widespread restrictions in Australia to
manage the pandemic from mid-March.
• Speed and timeliness are critical to policy effectiveness during a crisis. Evidence suggests
that an earlier commitment to JobKeeper that was better aligned with changes in consumer
and business behaviour and the announcement of restrictions would have increased its
effectiveness.
• There was a dramatic increase in net flows onto income support in the second half of
March 2020. Job separations also spiked sharply during this period particularly among
workers that later received JobKeeper. Both job separations and flows of individuals onto
income support fell sharply immediately following the announcement of JobKeeper.
• An earlier commitment to JobKeeper could have avoided the well-being cost to many
individuals stemming from the uncertainty and stigma associated with becoming
unemployed.
c) A tiered payment structure, or one that is proportionate to previous earnings, is better
targeted than a flat payment. Authorities should consider the investment required to
enable a payment that is proportionate to earnings.
• The flat payment of $1,500 per fortnight during the first phase of JobKeeper provided
certainty, simplicity, and clarity for both employees and employers. It also reduced risks
associated with the speedy implementation of JobKeeper.
• Some stakeholders argued that the flat payment was unfair in the sense that those who
previously worked very few hours received the same payment as full-time workers.
Executive summary and key findings | 5
Independent Evaluation of the JobKeeper Payment
• The flat payment was also inefficient. It resulted in around 11 per cent of recipients
receiving higher payments through JobKeeper than their pre-pandemic earnings. This may
have disincentivised returning to work or increasing work hours during the economic
recovery.
• A two-tiered payment was introduced in the extension phase of JobKeeper such that those
working less than 20 hours per week received a lower payment than others. The change
recognised and partially addressed the issues with the flat payment. It also reflected
improved confidence in the system and data used to administer JobKeeper.
• The structure of payments under JobKeeper was unusual. Other OECD countries with a
wage subsidy program typically provided support proportionate to an employee’s normal
wage up to a certain ceiling.
• The introduction of STP was critical to facilitate JobKeeper but there were limitations
around the data collected that precluded Australia from adopting a proportionate payment
in the design of JobKeeper. Authorities should consider the investment required to provide
the option of a proportionate payment in future.
d) Narrow recipient eligibility and exclusions reduced the effectiveness of JobKeeper and
had negative economic consequences.
• JobKeeper excluded some employees and employers. Exclusions included casuals who had
been in their job for less than a year, temporary migrants, foreign governments and their
agencies and local government entities.
• Exclusions based on employee characteristics such as being a short-term casual or
temporary migrant compromised the efficacy of JobKeeper and led to worse outcomes. In
particular, the exclusion of short-term migrants from JobKeeper likely reduced the
productive capacity of the Australian economy and constrained recovery in some sectors.
The exclusion of entities owned by foreign governments resulted in some otherwise eligible
Australian workers missing out on JobKeeper support which was not in keeping with the
objectives of the policy.
• Exclusions of significantly funded government sectors, such as public schools and
universities and many childcare providers, was appropriate. In principle, sector-focussed
policies tailored to the specific challenges and needs of these organisations would have
been more appropriate forms of support than JobKeeper. In many cases, sector-specific
support was available. The appropriateness and effectiveness or otherwise of these
packages is beyond the scope of the evaluation.
e) Transparency requirements should be built into policy design to build public trust and
enable appropriate scrutiny of public expenditures.
• JobKeeper did not include in its design a public registry or disclosure requirement for
entities that received the payment. Some information became available over time, but
disclosures were restricted to listed companies which comprised a small proportion of total
JobKeeper entities (around 593 out of about one million) and payments ($4.3 billion out of
a total of $88.8 billion).
• The decision not to include a public register in JobKeeper reflected concerns about privacy
and publicly identifying firms that may have been in a precarious financial position owing to
Executive summary and key findings | 6
Independent Evaluation of the JobKeeper Payment
the pandemic. This could in turn have affected firms’ willingness to utilise the policy, hence
reducing its effectiveness.
• In terms of transparency arrangements, JobKeeper was an outlier compared with job
retention schemes in other countries. The United Kingdom, Canada, Ireland and New
Zealand had public registers or other disclosure requirements that enabled the public to
know which businesses were claiming wage subsidies. In some cases, for example in the
United Kingdom, public awareness of wage subsidy recipients was considered a mechanism
to reduce the likelihood of fraud. The experience of other countries does not suggest
transparency requirements had a negative effect on take-up.
• Transparency and openness in public policy builds public confidence and trust. It also
enables appropriate scrutiny of public expenditures. Should a similar program be required
in future, disclosure requirements for businesses receiving the payments should be part of
the initial policy design.
8. Clear communication from policy makers is critical, particularly when speedy
implementation necessarily requires that some details are decided after the initial policy
announcement.
• Stakeholders reported that key institutions involved in designing and implementing
JobKeeper were appropriately responsive and efficient in engaging with industry under
difficult circumstances. Treasury and the ATO were generally collaborative and
communicated well, resolving issues quickly as they arose.
• Some stakeholders submitted that the communication of key policy details and changes by
decision-makers could have been clearer and more structured. A more considered and
consistent approach to communicating policy decisions would have improved clarity and
reduced uncertainty among businesses receiving JobKeeper.
9. Availability of timely and granular data – and the ability to analyse it effectively – is essential
for effective policy design and monitoring during a crisis.
• Stakeholders highlighted the importance of timely and granular data to formulate policy at
speed during a crisis and monitor its effectiveness. Other countries have also recognised
the importance of data availability – particularly tax microdata – in responding to the
pandemic.
• STP and Business Activity Statement (BAS) data were essential to the development and
monitoring of JobKeeper. Other novel data initiatives during the pandemic also provided
valuable insight. The release by the Australian Bureau of Statistics (ABS) of Weekly Payroll
Jobs and Wages in Australia, Business impacts of COVID 19 and Household Impacts of
COVID-19 early in the pandemic greatly assisted policy makers.
• There is scope for further investment to improve access to timely and granular data and
associated analytical capacity to better equip policymakers to respond in future crises.
10. Communication of policy costings during a crisis should emphasise the uncertainty around
producing cost estimates in such an environment and be clear about assumptions. This could
be achieved by using a range rather than a point estimate or including a sensitivity analysis.
Executive summary and key findings | 7
Independent Evaluation of the JobKeeper Payment
• The cost for the first 6 months of JobKeeper was initially estimated to be $130 billion. This
figure was later revised to $70 billion. The 12-month program ultimately cost $88.8 billion.
• The JobKeeper costing relied on assumptions about the length of shutdowns and other
restrictions that were highly uncertain. As noted above, nation-wide restrictions were
shorter lived than expected.
• Public perceptions of institutional credibility can be critical to policy effectiveness during a
crisis. Publishing a range or sensitivity analysis that sets out clearly the assumptions
underpinning a costing in similar circumstances rather than a point estimate would
appropriately acknowledge the inherent uncertainty associated with formulating policy in
such an environment while also protecting perceptions of Treasury’s credibility.
• The 2020–21 Budget was postponed because of pandemic-related uncertainty. The same
rationale could be extended to postpone point estimates of policy costings.
11. JobKeeper was a policy designed for an extraordinary situation. While it was justified during
the pandemic, such a policy should be considered only where there is an exogenous and
temporary shock with substantial economy wide implications.
• JobKeeper effectively froze a large portion of the labour market during the most
economically destructive period of the pandemic. As noted above, there were significant
fiscal and economic costs associated with the policy. These costs can be justified by the role
JobKeeper played in addressing the extraordinary and unquantifiable macroeconomic
uncertainty at the time of its introduction and averting the worst economic tail risks of the
pandemic. At its peak, the pandemic threatened to reduce the capacity of the economy by
destroying firms and employee employer relationships that were otherwise viable and
productive.
• A national wage subsidy policy such as JobKeeper is not appropriate for managing
aggregate demand or fluctuations in the business cycle typically associated with recessions.
These circumstances are characterised by quantifiable risk and require firm level and labour
market adjustment. A wage subsidy would inhibit necessary adjustment at significant cost.
• A JobKeeper-type wage subsidy should be reserved for a macroeconomic crisis and is not
appropriate for industry- or region-specific shocks or downturns in Australia. Some of the
key benefits of JobKeeper identified in this evaluation, including economy-wide stabilisation
and reducing macroeconomic uncertainty, are not relevant in these circumstances. Other
policies beyond the scope of this evaluation may be more appropriate.
• A short-time work (STW) scheme like that used in Germany, Switzerland and other
European countries is not appropriate for Australia. Operationally, STW schemes typically
operate alongside unemployment insurance systems which are not a feature of Australia’s
current institutional arrangements. Beyond operational limitations, OECD analysis suggests
the efficacy of a STW scheme may be limited in an Australian context. Australian firms face
relatively low layoff costs which, alongside the administrative costs typically associated with
STW schemes, may weaken firms’ incentive to participate. More generally, the OECD notes
that firms face weaker incentives to maintain active employment and reengage employees
in the recovery period under STW schemes.
Executive summary and key findings | 8
Independent Evaluation of the JobKeeper Payment
Main Report
1 Introduction
1.1 Terms of reference
The evaluation should consider the effectiveness of JobKeeper in achieving its objectives by
measuring its policy outcomes using relevant quantitative and qualitative data and drawing
conclusions from this analysis. Beyond the stated JobKeeper objectives, other conclusions should
also be drawn on the value for money and the broader outcomes of JobKeeper.
The evaluation will record lessons learned from the design and implementation of JobKeeper, with a
view to informing future policy responses. The evaluation could also signal areas for potential further
research into the medium- or longer-term effects of JobKeeper.
The scope for this evaluation includes the entire JobKeeper Payment which commenced
30 March 2020 and ran to 28 March 2021 (including the initial six-month program and the
2 subsequent three-month extensions).
The evaluation will include examination of:
• The economic and policy context, and how this influenced the design features and
implementation of JobKeeper.
• The effect of the JobKeeper Payment on:
– individuals and businesses who received JobKeeper (compared, where possible, to what
would have happened had they not received JobKeeper); and
– the labour market and the broader economy.
• The effectiveness and appropriateness of the JobKeeper Payment’s key design features
(payment to business, rate, eligibility criteria, delivery mechanism and duration) in achieving
the policy objectives.
• The costs, benefits, and value for money of the JobKeeper Payment.
• International comparisons of similar labour market policies adopted in other advanced
economies.
• How Treasury and other agencies responded to payment delivery, program implementation
and integrity challenges across the program.
• Lessons learned from the design and implementation of JobKeeper.
• Suitability of the JobKeeper Payment for responding to different economic circumstances and
challenges.
The evaluation will draw on a range of data, including JobKeeper Payment program data and publicly
available economic and labour market data, and be informed by external engagement and
consultation.
Main Report | 9
Independent Evaluation of the JobKeeper Payment
1.2 Evaluation approach
The evaluation has taken a broad approach in line with its terms of reference. It was designed in a
manner consistent with the Commonwealth Evaluation Policy. In particular, it conforms to the
relevant aspects of the 5 principles in the Policy that require that evaluations are: fit for purpose;
useful; robust, ethical and culturally appropriate; credible; and transparent where appropriate. The
evaluation was designed and undertaken while the Australian Centre for Evaluation (ACE) was still
being established. Members of the ACE were consulted during the process.
The evaluation of JobKeeper is different in some regards to many other policy evaluations. JobKeeper
was a response to a health and economic crisis. Its size was unprecedented and its economic and
social effects were broad and far-reaching. Some of the key benefits and costs of JobKeeper
stemmed from its macroeconomic impacts and are challenging to quantify with any degree of
accuracy. For these reasons, the evaluation does not attempt to undertake a quantitative
value-for-money assessment of JobKeeper. Rather, a largely qualitative approach is taken when
assessing some of the costs and benefits of the program and its overall value for money.
The evaluation is both a process and an impact evaluation. The process component of the evaluation
relies heavily on the ANAO report Administration of the JobKeeper Scheme but also draws on other
information. To assess impacts, the evaluation team has attempted to measure the outcomes of
JobKeeper where possible and compare these with the policy’s objectives and intended outcomes.
Evidence is then combined and synthesised into findings. Principles to consider for any similar future
payments or programs are also reported.
Sources of information and evidence used in the evaluation include:
• Previous reports and reviews completed on the JobKeeper Payment.
• Formal submissions made through a public consultation process.
• Interviews and conversations with stakeholders such as business groups, unions, academics,
international peers and senior public servants who designed and worked on JobKeeper.
• Academic papers and literature on JobKeeper and similar programs introduced overseas.
• Analysis of program data and other data sources.
Program logic of the JobKeeper Payment
The evaluation has been guided by a program logic. A program logic (or similarly, a theory of change)
can be a useful tool to plan programs and policies and communicate how they will lead to the desired
outcomes for stakeholders. In the case of JobKeeper, a program logic was not developed
contemporaneously owing to the short time allocated to design and implement the program.
A program logic was developed during the evaluation process and has been used to frame the
approach taken to the JobKeeper evaluation and the issues that have been prioritised for
investigation. The program logic for JobKeeper diagrammatically sets out the inputs that are used by
the program activities to deliver outputs (see Table 1 below). These outputs have outcomes over the
short, medium and long-term.
Main Report | 10
Independent Evaluation of the JobKeeper Payment
Table 1: JobKeeper Payment program logic
Program objective: Provide income support, maintain
Proposal: A wage subsidy program to support workers
employment connections and support businesses to
and businesses through the COVID-19 pandemic.
survive.
Inputs Activities Outputs Short-term Medium-term Long-term
outcomes outcomes outcomes
Substantial Design a system Employers
government to deliver become aware Reduce Intended Economy
investment for payments to of scheme and uncertainty outcomes returns to
payments. eligible decide to apply. during an long-run path
Businesses can
businesses and economic crisis. of growth.
ATO and Forms and resume economic
employees.
Treasury staff. software Provide an activity once
Deliver payments integrations to immediate floor restrictions ease.
Existing ATO
to businesses to apply for and under Reduce search
payment
pay to workers receive consumer and and recruitment
systems,
with accuracy payments. business costs, preserve
particularly STP.
and integrity. confidence. match specific
Payments made
Private software human capital.
Training staff to to eligible Support
providers – STP
deliver the entities monthly incomes of Worker’s incomes
system links.
system and in arrears. employees and are protected and
Time to develop
communicate eligible entities businesses
and implement Monitoring of
with the public. affected by remain viable.
the policy. compliance and
COVID-19 and
Educating the systems to Unintended
associated
public on ensure outcomes
restrictions.
JobKeeper, integrity.
Reduce
including Keep
movement of
factsheets and employees and
employees to
websites. employers
new employers.
connected,
ready for Some entities
economic that were
reopening, but otherwise
also restricts unviable
labour mobility supported.
while in place.
Assumptions: Without substantial support the economy External Factors: Rates of infections rising and falling,
faces a risk of a severe downturn (rapidly rising other economic support implemented by the
unemployment), the economy will be able to open in government, international restrictions and responses
the short term (about 6 months) to COVID-19.
Main Report | 11
Independent Evaluation of the JobKeeper Payment
Official government reports and reviews
The evaluation draws on previous reviews and analysis of JobKeeper conducted by the Treasury, the
ANAO and the Inspector-General of Taxation and Taxation Ombudsman (IGTO). Government reports
and reviews are useful when considering the economic and policy context and the reason policy
decisions were made. There is also useful information about how Treasury and other agencies
responded to delivery and implementation challenges. Reports that were delivered after the
program finished also contribute evidence about the effect of the payment across the economy and
society helping to inform judgments about whether policy objectives were achieved. Some
publications of government agencies used in the evaluation are listed in Table 2. These publications
were used to inform analysis in Chapters 1, 2, 3, 4 and 5.
Table 2: Key releases by government departments on JobKeeper
Title Date Department Type Website
The JobKeeper Payment: 21 July 2020 Treasury Review https://treasury.gov.au/pu
Three-month review blication/jobkeeper-review
A Report on aspects of the December 2020 Inspector-Gen Analysis https://www.igt.gov.au/inv
Australian Taxation Office’s eral of estigation-reports/jobkeep
administration of JobKeeper and Taxation and er-and-boosting-cash-flow-
Boosting Cash Flow Payments for Taxation payments/
new businesses Ombudsman
An Investigation into the ATO’s September 2021 Inspector-Gen Investigation https://www.igt.gov.au/inv
administration of JobKeeper eral of estigation-reports/an-inves
enrolment deferral decisions Taxation and tigation-into-the-atos-admi
Taxation nistration-of-jobkeeper-enr
Ombudsman olment-deferral-decisions/
Insights from the first six months 11 October 2021 Treasury Analysis https://treasury.gov.au/pu
of JobKeeper blication/p2021-211978
Administration of the JobKeeper 4 April 2022 Australian Audit https://www.anao.gov.au/
Scheme National Audit work/performance-audit/a
Office dministration-the-jobkeepe
r-scheme
Submissions received through a public consultation process
A consultation paper released on 16 June 2023 called for public submissions, to be submitted by
14 July 2023. Submissions were received from a range of stakeholders including industry bodies,
unions and academics. Submissions were particularly helpful to inform the evaluation of JobKeeper’s
effect on individuals and businesses and the appropriateness of policy design features (Chapters 3, 4
and 5). They also provided useful references for comparison with similar programs introduced
overseas. Submissions can be accessed on Treasury’s website.
Interviews with experts and key stakeholders
Interviews were conducted with academics, think tanks, senior public servants, key stakeholders, and
international peers over the course of June to September 2023. Combined with submissions and
previous reviews and reports, these conversations assisted in understanding the context for
JobKeeper, why certain decisions were made and to inform judgments about the appropriateness of
certain design features (Chapters 1, 4 and 5). Additionally, these conversations provided insight into
the effect of JobKeeper on individuals and businesses (Chapter 3).
Introduction | 12
Independent Evaluation of the JobKeeper Payment
Academic research and literature
There is a substantial body of literature that analyses the effect of job retention schemes during the
pandemic (see bibliography at Attachment B). The OECD has published studies that provide detailed
comparison and analysis of wage subsidy schemes in several countries.2 There have been recent
publications in New Zealand and the United Kingdom on their wage subsidy schemes.3 Those
evaluations have been points of comparison for the JobKeeper evaluation and show the effects of
similar programs.
Academic research and literature has provided a critical source of evidence and information during
the evaluation, informing the analysis in Chapters 3, 4, 6 and 7 in particular. Where possible, the
evaluation attempts to synthesise the findings of these reports to draw conclusions about JobKeeper
and its effects. Literature on international experiences with job retention schemes also informed
considerations around the appropriateness of such policies in different contexts.
Treasury research using a combination of labour market data and program microdata
There were 2 broad categories of data used in JobKeeper analysis: aggregated data and microdata.
Aggregate data include releases on the labour force, national accounts, and business and consumer
confidence indices. Microdata sources include data from the JobKeeper Payment itself, which can be
combined with other microdata such as BAS and income tax assessments.
Program data were collected from firms that received JobKeeper by the ATO; they have been
de-identified for privacy. These data capture information such as the number of employees, amounts
paid, industry and location. Data analysis conducted by the Treasury and the evaluation team was
used to analyse the economic and policy context of JobKeeper (Chapter 1), the recipients and
coverage of JobKeeper (Chapter 2) and its economic effects (Chapter 4). It was also used to
understand the costs and benefits of JobKeeper and ultimately assess value for money (Chapter 6).
Analysis of program data also helped the evaluation to draw conclusions about the timing of
JobKeeper – when it commenced, when it was amended and when it finished – and about some
aspects of JobKeeper’s design eligibility and payment rates (Chapter 4).
2 OECD (Organisation for Economic Co-operation and Development) (2020) Job retention schemes during
the COVID-19 lockdown and beyond.
3 New Zealand Government, MSD (Ministry of Social Development) (n.d.) New Zealand Wage Subsidy
Scheme evaluations; His Majesty’s Government, HMT (His Majesty’s Treasury) and HMRC (His Majesty’s
Revenue and Customs) (2023) The Coronavirus Job Retention Scheme final evaluation.
Introduction | 13
Independent Evaluation of the JobKeeper Payment
1.3 Policy context in early 2020
25 January First reported cases of COVID-19 in Australia.
1 March Australia records its first death from COVID-19.
Foot traffic and public transport use is already declining across Australian cities.
4 March IMF Managing Director Kristalina Georgieva states that the pandemic presents a crisis and that two-thirds
of total economic losses associated with the pandemic are expected to stem from uncertainty.
9 March Italy becomes first country to introduce nation wide lockdown.
11 March Confirmed COVID-19 cases in Australia rise to over 100. From this point on, cases in Australia double
every few days over March 2020.
12 March Australian Government announces first stimulus package providing $17.6 billion in support.
The ASX200 declines 7.4 per cent and global benchmarks suffer the largest single-day percentage falls
since October 1987, with the United States of America’s S&P500 and the United Kingdom’s FTSE100
declining by 9.5 per cent and 10.9 per cent respectively. Stress emerges in US Treasury markets, typically
a safe haven market during crises and periods of elevated uncertainty.
All Australian states and territories have confirmed COVID-19 cases.
14 March Global fatalities from COVID-19 rise to over 5,000. From this point, global fatalities more than double
each week over the course of March and early April.
15 March Weekly discretionary retail sales contract. Passenger motor vehicle traffic volume on toll roads is falling
sharply.
16 March Deputy Chief Health Officer, Dr Paul Kelly, cites estimates that between 20 and 60 per cent of the
population could be infected by COVID-19, with a death rate of 1 per cent, implying that as many as
150,000 Australians could die under the worst-case scenario.
The ASX200 declines a further 9.7 per cent, the largest daily fall in over 30 years, with the index down
30.1 per cent since 21 February. The US S&P500 fell 12.0 per cent, down 29.2 per cent over the same
period.
Victoria declares State of Emergency and bans non-essential gatherings of over 500 people.
18 March Prime Minister Morrison announces nation-wide ban on essential indoor gathering of 100 people or
more; strict visitor rules for aged care facilities; social distancing of 1.5 metres; lifting work restrictions on
20,000 student nurses to assist with the pandemic response.
19 March Prime Minister Morrison announces the closure of Australia’s borders to all non-citizens and
non-residents. Qantas announces suspension of all international flights and 60 per cent of domestic
flights and stands down two-thirds of its staff.
Tasmanian Premier Rockliff announces state border restrictions.
The Reserve Bank of Australia eases monetary policy, commits to purchase government bonds as
necessary to support market function and provides additional liquidity to banks.
22 March Australian Government announces second stimulus package providing $66.1 billion in support.
Victorian Premier Andrews announces Victoria will implement a shutdown of all non-essential activities
and that school holidays will be brought forward.
Western Australia Premier McGowan and South Australia Premier Marshall announce restrictions and
arrival requirements for travellers from other states and territories. Unless exempt, arrivals would be
required to self-isolate for 14 days.
23 March New South Wales Premier Berejiklian announces that non-essential activities and businesses will be
temporarily shut down. Parents are encouraged to keep children at home.
24 March Queensland Premier Palaszczuk announces state border restrictions.
29 March Cumulative cases in the US increase to more than 120,000. Italy, Spain, and France have recorded 92,000,
108,000 and 40,000 cases respectively. Iran has recorded 35,000 cases and South Korea has recorded
9,000 cases. Australia recorded over 3,800 cases.
30 March JobKeeper is announced.
Introduction | 14
Independent Evaluation of the JobKeeper Payment
1.4 Introduction of JobKeeper: objectives and design
The JobKeeper Payment was a wage subsidy and income support program delivered in the first year
of the COVID-19 pandemic. It was announced on 30 March 2020. It was to remain in place for a
period of 6 months until 27 September 2020, based on health advice about the likely duration of
pandemic-related restrictions. Following a three-month review, on 21 July 2020, a decision was taken
to extend JobKeeper into a second phase until 28 March 2021. Modifications to policy design,
including changes to eligibility criteria and the payment rate and structure, were incorporated into
the second (‘extension’) phase.
JobKeeper was the third stimulus package to be announced over the course of March 2020 to
cushion the economic effects of the COVID-19 pandemic. A $17.6 billion package announced on
12 March 2020 included one-off direct payments to households through a one-off $750 payment to
pensioners, veterans and other income support recipients, cash flow assistance for small and
medium businesses, assistance to support industries in severely affected regions and an increased
instant asset write-off. A further $66.1 billion package announced on 22 March 2020 expanded and
increased income support payments, introduced early release of superannuation and a $39.1 billion
(including measures from the first package) Boosting Cash Flow Payments for Australian businesses.
With an initial estimated cost of $130 billion over 6 months, JobKeeper was significantly larger than
the 2 previous programs combined and one of the largest labour market policy interventions in
Australia’s history.4 Once announced, it became a key pillar and the single largest component of the
fiscal stimulus package during the pandemic.
JobKeeper had 3 broad objectives:
• supporting business and job survival
• preserving the employment relationship
• providing needed income support.
JobKeeper’s design reflected the unprecedented health and economic situation presented by the
pandemic. As a key element of the fiscal response, policymakers at the time considered that it
needed to be sufficiently large to be credible and to counterbalance the economic uncertainty during
the early months of the economic shock.
To achieve its goals and maximise take-up, policy designers considered that the scheme needed to be
simple for businesses to understand and to engage with. It also needed to be delivered as quickly as
possible and so deliberately used existing systems, data sources and concepts as much as possible.
The policy features of the initial and extension phases are summarised below. Key features are
examined in detail in Chapter 4 of the evaluation.
First phase of JobKeeper: 30 March 2020 – 27 September 2020
In the first phase, the government provided eligible businesses $1,500 per fortnight for each eligible
employee. The $1,500 payment was required to be passed on to the eligible employee.
Employers were eligible for JobKeeper if, at the time of applying, they estimated that their turnover
had fallen or would likely fall in a month or quarter relative to the corresponding period in the
previous year by the respective following amounts:
• 50 per cent or more if their business had an aggregated annual turnover of more than
$1 billion.
• 30 per cent or more if their business had an aggregated annual turnover of $1 billion or less.
4 OECD (2021) OECD Economic Surveys: Australia – September 2021.
Introduction | 15
Independent Evaluation of the JobKeeper Payment
• 15 per cent or more if they were a registered charity with the Australian Charities and
Not-for-profits Commission (ACNC).
An employer was not entitled to JobKeeper if the entity was an Australian Government agency or
local governing body; a sovereign entity; a company in liquidation (or provisional liquidation); or a
company imposed with the Major Bank Levy.
In early May 2020, public universities were subject to an alternative turnover test, which meant none
were eligible for JobKeeper. Approved providers of child care were excluded from early July 2020
onwards.
An eligible employee needed to meet all the following criteria:
• a permanent full-time, part-time, or long-term casual (a casual employed on a regular and
systematic basis for longer than 12 months).
• employed by the eligible employer on 1 March 2020 (including those stood down or re hired).
• an Australian resident or a New Zealander on a Special Category 444 visa.
• aged at least 18 years old (or 16 or 17 years old if independent and not undertaking full-time
study).
Some individuals were also entitled to JobKeeper as an eligible business participant, including sole
traders.
The first phase of JobKeeper supported around 4 million individuals, and around one million unique
businesses, with payments totalling $70 billion.
The flat assessable payment of $1,500 per fortnight paid in full to eligible employees was broadly
equal to the National Minimum Wage for an adult full-time employee.
The eligibility criteria to access JobKeeper drew upon existing tax and revenue concepts and
definitions. The full pass-through of payments to employees meant that JobKeeper operated as both
a wage subsidy and an income transfer, depending on the circumstances of individual recipients.
Second (extension) phase of JobKeeper: 28 September 2020 – 28 March 2021
On 21 July 2020, following an interim three-month review of the program by the Treasury, it was
announced that the JobKeeper Payment would be modified and extended for an additional 6 months
from 28 September 2020.5 During the extension, the payment was tapered and tiered by
employment status.
To be eligible for JobKeeper in Phase 2, businesses and not-for-profits needed to demonstrate that
they had experienced an actual decline (as opposed to a prospective decline) in turnover for a certain
reference period of the respective following amounts:
• 50 per cent or more if their business had an aggregated annual turnover of more than
$1 billion.
• 30 per cent or more if their business had an aggregated annual turnover of $1 billion or less.
• 15 per cent or more if they were a registered charity with the ACNC (excluding schools and
universities).
A two-tiered payment was also introduced to better align the payment with the hours worked by
employees and eligible business participants (see Table 3).
5 Treasury (The Australian Government the Treasury) (2020) The JobKeeper Payment: Three-month review.
Introduction | 16
Independent Evaluation of the JobKeeper Payment
Table 3: JobKeeper payment rates
JobKeeper Phase 1 Flat payment
28 March 2020 to The payment was a flat rate of $1,500 per fortnight for all eligible employees, regardless of
27 September 2020 hours usually worked.
JobKeeper Extension Tier 1 Tier 2
(Phase 2)
Part 1: The payment rate was $1,200 per fortnight for A lower payment $750 per fortnight for
28 September 2020 to all eligible employees who, in the 4 weekly pay employees who were working in the
3 January 2021 periods before the reference period, were business or not-for-profit for less than
working in the business or not-for-profit for 20 hours a week on average and business
20 hours or more a week on average and for participants who were actively engaged in
business participants who were actively the business less than 20 hours per week
engaged in the business for 20 hours or in the reference period.
more per week.
Part 2: The payment rate was $1,000 per fortnight for A lower payment of $650 per fortnight for
4 January 2021 to all eligible employees who, in the 4 weekly pay employees who were working in the
28 March 2021 periods before the reference period, were business or not-for-profit for less than
working in the business or not-for-profit for 20 hours a week on average and business
20 hours or more a week on average and for participants who were actively engaged in
business participants who were actively the business for less than
engaged in the business for 20 hours or 20 hours per week in the reference
more per week. period.
Introduction | 17
Independent Evaluation of the JobKeeper Payment
2 Coverage of JobKeeper
Key points
• JobKeeper had an extensive reach throughout the Australian economy. During the first phase
of JobKeeper (28 March – 27 September 2020), the program supported approximately
one-third of all Australian businesses and jobs – according to ATO data, 4 million individuals
and one million businesses were supported in one or more JobKeeper fortnights.
• Small businesses (turnover less than $10 million) comprised over 96 per cent of recipient
entities and received more than 60 per cent of all payments.
• The industries most affected by pandemic-related restrictions had the largest share of
businesses and employees covered; they included accommodation and food services,
construction, and arts and recreation services.
• Coverage of individuals supported by JobKeeper was relatively more evenly distributed
across regions than it was across industries, with Victoria exhibiting higher coverage than
other states in the extension phase due to lockdowns. Relative to pre-pandemic employment
levels, more men received JobKeeper payments than women.
This section presents key summary statistics on the program focusing on the businesses and
individuals that received JobKeeper payments.6
2.1 Individual characteristics
Figure 1 shows the shares of employment and JobKeeper receipt by age and gender. Younger
workers aged between 15 and 34 accounted for around 35 per cent of the JobKeeper population
during the initial phase, despite representing just under 40 per cent of the pre-pandemic workforce
and over 50 per cent of lost work hours during the June and September 2020 quarters. On average,
55 per cent of JobKeeper recipients were male and 45 per cent were female, compared with male
and female pre-pandemic shares of employment of 52.9 per cent and 47.1 per cent respectively.
JobKeeper recipients as a share of pre-pandemic employment declined in the JobKeeper extension.
Coverage more than halved from 28 per cent of pre-pandemic employment in the first phase of
JobKeeper to 12 per cent in the first 3 months of the extension phase, before declining again to
8 per cent in the second 3 months of the extension phase.
6 Further information on the first phase of the program can be found in the Treasury publication Insights
from the first six months of the JobKeeper Payment.
Coverage of JobKeeper | 18
Independent Evaluation of the JobKeeper Payment
Figure 1: JobKeeper individuals by sex and age
a) JobKeeper receipt by sex (share of b) JobKeeper receipt by age (share of
pre-pandemic employment) overall payments)
Source: ATO Taxation Statistics 2019–20; ABS Labour Force, Australia, Detailed.
In the extension phase, a higher proportion of recipients were male than in the initial phase, as
male-dominated industries such as construction continued to be significantly impacted by the
pandemic. The extension phase also introduced a tiered payment system based on previous hours
worked. Overall, 87 per cent of individuals claimed Tier 1 payments and 13 per cent claimed Tier 2
payments. Those that claimed Tier 1 payments were more likely to be male (62 per cent) than female
(38 per cent), which is roughly consistent with rates of full-time and part-time employment by
gender. Tier 2 recipients were also more likely to be younger (15-24 years old) and older (over
65 years).
2.2 Business characteristics
The support largely flowed to small businesses. Table 4 presents an overview of the distribution of
payments by entity size across the entire lifespan of the program. In the first phase, over 80 per cent
of payments went to businesses with a turnover less than $50 million and not-for-profits. The largest
businesses, with a turnover above $250 million, only received around 11 per cent of payments and
accounted for 0.2 per cent of recipient entities. Sole traders were the most common entity type.
These patterns continued in the extension phase.
Coverage of JobKeeper | 19
Independent Evaluation of the JobKeeper Payment
Table 4: JobKeeper payments by business size
Entity size Entities % Net Payment $b %
A. Micro 961,238 90.0% 39.15 44.1%
B. Small 66,750 6.2% 15.29 17.2%
C. Medium 16,802 1.6% 12.12 13.6%
D. Large 1,813 0.2% 3.52 4.0%
E. Very large 2,404 0.2% 9.10 10.2%
F. Not-For-Profit 19,031 1.8% 9.62 10.8%
G. Super fund 95 <0.1% <0.01 <0.1%
H. Other 15 <0.1% 0.02 <0.1%
TOTAL 1,068,148 100.0% 88.82 100.0%
Source: ATO Taxation Statistics 2019–20.
Note: The entity size is based on total business turnover, and is defined as follows:
A. Micro – More than $0 but less than $2 million
B. Small – $2 million to $10 million
C. Medium – $10 million to $100 million
D. Large – $100 million to $250 million
E. Very Large – Over $250 million
2.3 Coverage by industry
Figure 2 shows the share of individuals and entities covered by JobKeeper across industries – Arts
and Recreation Services had the largest coverage of employment, while Accommodation and Food
Services had the largest coverage of entities. The largest portion of JobKeeper payments in the initial
phase was distributed to large employing industries such as Construction; Professional, Scientific and
Technical services; Health Care and Social Assistance; and Retail Trade. Payments relative to
compensation of employees were highest in industries most affected by the restrictions, such as Arts
and Recreation Services and Accommodation and Food Services.
All industries saw declines in the number and proportion of individuals covered in the extension
phase. Almost a third (31 per cent) of all entities that operate in the Accommodation and Food
Services industry were supported in the first 3 months of the extension phase of JobKeeper. Other
industries that exhibited high shares of JobKeeper support in the first 3 months of the extension
phase included Transport, Postal and Warehousing, Other Services and Arts and Recreation Services.
Coverage of JobKeeper | 20
Independent Evaluation of the JobKeeper Payment
Figure 2: JobKeeper coverage by industry
a) Share of pre-pandemic b) Share of pre-pandemic
entities employment
Source: ATO Taxation Statistics 2019–20.
2.4 Coverage by geography
Figure 3 shows the coverage of JobKeeper across individuals by state and territory. As a share of
employment, Victoria and New South Wales (NSW) had the highest JobKeeper coverage and the
Northern Territory the lowest. Victoria and NSW accounted for two-thirds of all entities and
payments in the first phase, a slightly greater share than the states’ share of state final demand,
reflecting the impact of the second wave of COVID-19 in Victoria in the September quarter 2020.
Coverage of individuals supported by JobKeeper was relatively more evenly distributed across
regions than it was across industries, reflecting the diversified nature of most regions and the
widespread impact of health restrictions. The regions most reliant on JobKeeper were in Sydney and
Melbourne metropolitan areas, the Gold Coast and the Mornington Peninsula.
Coverage of JobKeeper | 21
Independent Evaluation of the JobKeeper Payment
Figure 3: JobKeeper coverage by state
a) Total individual recipients b) Proportion of April 2020 individuals
Source: ATO Taxation Statistics 2019–20.
Note: Panel A is the total number of individuals claiming JobKeeper by state and territory. Panel B shows the number of
JobKeeper-nominated workers, indexed to equal 100 in April 2020.
The decline in JobKeeper coverage across each of the phases was experienced across all states and
territories. This is largely due to the easing of restrictions and consequent improvements in economic
activity.
Victoria exhibited the highest coverage of individuals as a share of pre-pandemic employment across
the entire extension phase. This can largely be attributed to the second wave of COVID-19 and the
associated lockdowns in Victoria. Victoria’s JobKeeper coverage was almost 18 per cent of total
pre-pandemic employment in the first 3 months of the JobKeeper extension and around 11 per cent
in the second 3 months, more than 4 percentage points above the national average in both periods.
Coverage of JobKeeper | 22
Independent Evaluation of the JobKeeper Payment
3 Economic effects of JobKeeper
Key points
• JobKeeper was effective at preserving employment, supporting incomes and preventing
large scale business failures during the pandemic (Finding 2). JobKeeper reduced uncertainty
at a time when business and consumer sentiment was plummeting in response to the
COVID-19 crisis. It showed that the government was committed to supporting businesses
and workers through the pandemic. Its announcement was accompanied by a rebound in
confidence.
• JobKeeper functioned as both a wage subsidy to employers and an income transfer to
lower-earning workers. In the initial phase of the pandemic, it helped to preserve
employee-employer relationships, provided income support to employees and businesses
and alleviated labour market dysfunction. Estimates suggest that JobKeeper preserved
between 300,000 and 800,000 jobs.
• JobKeeper initially had a strong positive effect on productivity by preventing otherwise
competitive and productive firms from collapse. Over time, JobKeeper’s distortionary effects
– most notably reducing labour mobility and the productive reallocation of labour and
supporting unviable businesses – became more apparent.
• Minimising labour scarring was a key goal of JobKeeper. JobKeeper directly protected jobs
and contributed to the economic recovery. The unemployment rate peaked in July 2020 and
declined to be below its pre-pandemic level by mid-2021, indicating that risks of labour
scarring had largely been averted. Sustained strength in the labour market supported young
workers who are often more susceptible to scarring.
3.1 Early economic impacts of the COVID-19 pandemic
The pandemic had a significant impact on macroeconomic activity. Real GDP in Australia fell by
6.7 per cent in the June quarter 2020, the largest quarterly fall on record. Declines in output were
even larger elsewhere. In the corresponding quarter, GDP declined by 7.8 per cent in Japan, by
9.5 per cent in the United States, by 12.1 per cent in the Euro area and by 20.4 per cent in the
United Kingdom. Aggregate OECD GDP declined by 9.8 per cent.7
In Australia, the scale of the impact on the labour market was unprecedented in the post-war era.
The unemployment rate increased from its pre-pandemic level of around 5 per cent to 7½ per cent
by June 2020, but this only captured part of the overall impact. Total hours worked declined by
10.1 per cent in April 2020 and around 1.8 million workers had their hours reduced, of which 760,000
worked zero hours for economic reasons. In addition to those who became unemployed or had their
work hours reduced, almost 700,000 people left the labour force completely between March and
May 2020.
High frequency and real time indicators showed that behavioural changes preceded the introduction
of official restrictions. Voluntary behavioural changes saw discretionary travel and mobility – foot
traffic, driving and public transport use – decline sharply from early March 2020 (Figure 4).
7 OECD (2020) GDP Growth – Second quarter of 2020, OECD.
Economic effects of JobKeeper | 23
Independent Evaluation of the JobKeeper Payment
Figure 4: Discretionary travel and mobility
a) NSW toll road volumes b) Apple Mobility Trends
Source: Treasury analysis of Transurban and Apple data.
Note: 7-day rolling averages, indexed to equal 100 on 19 January 2020.
Real time indicators of consumer spending showed marked changes in consumption patterns from
early March 2020. Initial spikes in essentials as consumers stockpiled essential goods for
precautionary reasons were mirrored by sharp declines in discretionary consumer sales. Retail
transactions for discretionary categories plummeted from mid-March 2020 (Figure 5).
Figure 5: Weekly transaction volumes growth
Source: Treasury analysis of bank spending data.
Globally, Purchasing Managers’ Index (PMI) activity indicators for major economies plummeted into
deeply contractionary territory, highlighting widespread recession risks. Uncertainty rattled investors
and spurred a global flight away from risky assets such as equities and corporate debt and towards
cash. On 12 March 2020, the ASX200 fell 7.4 per cent while the United States’ S&P500 (Figure 6) and
the United Kingdom’s FTSE 100 suffered the greatest single-day percentage falls since 1987.
Stock exchanges in Indonesia, Japan and Hong Kong also saw prices plunge on the same
Economic effects of JobKeeper | 24
Independent Evaluation of the JobKeeper Payment
day.8 The market turmoil on 12 March was attributed to the United States’ announcement of a travel
ban from most of Europe and the World Health Organization’s (WHO) declaration of COVID-19 as a
global pandemic. Typical safe-haven assets showed signs of strain in March 2020.9 US and Australian
10-year government bond yields increased by 65 and 88 basis points respectively between 9 and 19
March. Central banks, including the US Federal Reserve and the Reserve Bank of Australia,
committed to purchase government bonds as necessary to support market function, provided
additional liquidity to banks, and eased monetary policy; these measures restored market function
and supported a reversal in bond yields.
Figure 6: ASX200 and S&P500
a) S&P/ASX200 (Australia) b) S&P500 (USA)
Source: Bloomberg.
The ABS surveyed businesses on the impacts of COVID-19 in mid-March 2020 and 86 per cent of all
businesses reported that they expected to be adversely affected by COVID-19.10 By late March 2020,
NAB and ANZ measures of business and consumer confidence had fallen at an unprecedented rate to
record lows reflecting the high degree of uncertainty and restrictions on activity (see Chapter 3.2).
The Westpac Melbourne Institute Consumer Sentiment Index fell by more than 21 points in March
and April 2020, the sharpest two-month decline recorded since the Index began in 1974.
In the fortnight to 3 April 2020, nearly half (47 per cent) of Australian businesses reported
having made staffing changes owing to COVID-19.11 The ABS Business Indicators, Business
Impacts of COVID-19 survey for May 2020 found that a quarter (24 per cent) of businesses
surveyed reported laying off staff in response to COVID-19.12 Job separations in what would
become JobKeeper-nominated businesses almost doubled from mid-March to the end of the
8 Rahman and Samboh, (12 March 2020) ‘Time-out: IDX halts trading as shares plunge 5%‘; Huang (11
March 2020) ‘Japan stocks follow Dow into a bear market as Trump suspends travel from Europe; WHO
declares coronavirus outbreak a pandemic‘; Sin and Shen (12 March 2020) ‘Hong Kong’s Hang Seng Index
plunges into bear market‘.
9 Vissing-Jorgensen (2021) The Treasury market in spring 2020 and the response of the Federal Reserve.
10 ABS (Australian Bureau of Statistics) (2020) Business Indicators, Business Impacts of COVID-19, March
2020.
11 ABS (2020) Business Indicators, Business Impacts of COVID-19, Week Commencing 30 March 2020.
12 ABS (2020) Business Indicators, Business Impacts of COVID-19, May 2020.
Economic effects of JobKeeper | 25
Independent Evaluation of the JobKeeper Payment
month (Figure 7). These results highlight many JobKeeper-nominated businesses were amongst the
most adversely affected by the initial COVID-19 shock prior to JobKeeper’s announcement.13
Figure 7: Job separations (indexed) by JobKeeper status
Source: Treasury analysis of de-identified administrative data (STP data linked to JobKeeper status).
Note: Figure 7 presents fortnightly time series of job separations, indexed to equal 100 in the fortnight ending 1 March 2020.
Separations are based on cease dates for a worker’s employment relationship with a business (it can include workers who
were on zero pay). Series exhibits volatility around end of financial year, which has been corrected. Based on employees in
STP data on weekly or fortnightly pay cycles.
3.2 Short-term effects of JobKeeper
The announcement of JobKeeper on 30 March 2020 affected economic outcomes through several
different channels:
• Reducing uncertainty and improving confidence
• Preserving employee-employer relationships
• Supporting business viability
• Supporting employee and business incomes.
Uncertainty and confidence
The most immediate effect of JobKeeper was through the confidence channel. Although it is difficult
to isolate JobKeeper’s direct effect on confidence, sharp falls in consumer confidence and business
sentiment began to reverse almost immediately after the announcement of JobKeeper (Figure 8).14
The ANZ measure of consumer confidence increased by 10 per cent to be above 70 in the week
following the announcement. Business confidence also improved immediately following the
announcement. JobKeeper was influential in 44 per cent of business’ decisions to retain staff during
the pandemic.15 These results are consistent with experience in the United Kingdom and New
Zealand when their wage subsidies were announced.16
13 Treasury (2021) Insights from the first six months of JobKeeper.
14 Ibid
15 ABS (2020) Business Indicators, Business Impacts of COVID-19, April 2020.
16 His Majesty’s Government, HMT and HMRC (2023) The Coronavirus Job Retention Scheme final
evaluation; ANZ Bank New Zealand (2020) ‘September 2020 – Final: Hanging in there‘, ANZ Business
Outlook survey; ANZ Bank New Zealand (2020) ‘September 2020: Steady at a low level‘, ANZ-Roy Morgan
Consumer Confidence.
Economic effects of JobKeeper | 26
Independent Evaluation of the JobKeeper Payment
Figure 8: Consumer and business confidence
a) ANZ consumer confidence b) NAB business confidence
Source: ANZ-Roy Morgan and NAB
Note: Panel A presents weekly time series of consumer confidence, indexed to equal 100 in the week ending 15 March 2020.
The announcement of JobKeeper was captured in the last week of March 2020. Panel B presents monthly time series of
business confidence, so the impact of the announcement was captured in observations following March.
Supporting employment
There is clear evidence that JobKeeper had a significant and immediate positive impact on supporting
employment during the crisis. There is also evidence that the employment benefits of JobKeeper
were concentrated in the early months of the pandemic and had significantly dissipated by the end
of the program.
Published studies suggest that in the initial stages of the fiscal response to the pandemic and when
uncertainty remained elevated, between roughly 300,000 and 800,000 jobs were estimated to be
saved directly by JobKeeper. Bishop and Day (2020) produced the first estimate of JobKeeper’s direct
effect on employment, estimating at least 700,000 jobs were saved in the first 4 months.17 Over
JobKeeper’s entire lifespan, Watson, Tervala and Sainsbury (2022) found it preserved around
812,000 jobs.18 Borland and Hunt (2023) contend that jobs-saved estimates were likely upper bounds
given the technical assumptions used in the calculations and the limited external validity of the
results.
Bradshaw, Deutscher and Vass (2023) estimate jobs saved directly by JobKeeper to be within the
range of 300,000 to 700,000 in mid-to-late April 2020.19 By the end of the initial phase, the analysis
finds up to 400,000 jobs were directly preserved by JobKeeper. The authors estimate JobKeeper’s
employment effects using a quasi-experimental method (fuzzy regression discontinuity) using
employee eligibility conditions for identification. As explored in detail later in this chapter and in
Chapter 6, a notable challenge in estimating the jobs saved by JobKeeper is the difficulty in
identifying the appropriate counterfactual. The estimation technique employed by Bradshaw et al.
circumvents this issue.
17 Bishop and Day (2020) How many jobs did JobKeeper Keep?
18 Watson, Tervala and Sainsbury (2022) The JobKeeper Payment: How good are wage subsidies?
19 Bradshaw, Deutscher and Vass (forthcoming 2023) The employment effects of JobKeeper receipt.
Economic effects of JobKeeper | 27
Independent Evaluation of the JobKeeper Payment
Bradshaw et al. also found that the spill-over of JobKeeper’s employment effects to ineligible
workers within firms ‘were likely modest at best’ in the initial phase.20 The employment effects on
the ineligible population would have depended largely on whether their labour was complementary
or substitutable with the labour of eligible workers. Treasury analysis of business microdata shows
jobs losses were largely borne by employees in ineligible businesses and ineligible employees in
JobKeeper-nominated businesses (Figure 9, Panel A).21
Aggregate employment was 8.1 per cent lower at the end of April 2020 compared with the start of
March 2020 (Figure 9, Panel B). Within businesses that were eligible for JobKeeper, payroll jobs held
by non-JobKeeper-nominated employees declined by around 50 per cent while payroll jobs for
JobKeeper-nominated workers declined by around 5 per cent over this period. Early estimates
suggested JobKeeper-eligible workers were at least 7 percentage points more likely than ineligible
workers to maintain employment to May 2020.22
Figure 9: Changes in payroll jobs (indexed)
a) By JobKeeper status (JobKeeper b) Aggregate
businesses)
Source: (a) Treasury analysis of de-identified administrative data (STP data linked to JobKeeper status); (b) ABS Weekly Payroll
Jobs and Wages in Australia, Week ending 30 May 2020.
Note: Panel A presents fortnightly time series, indexed such the cohorts’ share of all payroll jobs is equal to 100 in the fortnight
ending 1 March 2020. Payroll jobs include all employee-employer relationships with pay, including any JobKeeper amounts,
in the given fortnight. Series are shown for: payroll jobs in recipient businesses split by those that became
JobKeeper-nominated versus those that did not. Panel B presents weekly time series, indexed to equal 100 in the week ending
29 February 2020.
Among Xero subscribers (which are predominantly small businesses) employment fell by 13 per cent
from the beginning of March 2020 to the end of April. A feature of the Xero data is its ability to
distinguish people by employment status, which shows that payroll jobs within Xero businesses fell
least for ongoing full-time employees (down 2 per cent) and ongoing part-time employees (down
5 per cent) and by most for casual employees (down by 25 per cent).
JobKeeper’s direct effect fell away and lost significance as restrictions were eased, aggregate
employment rebounded, and the economy recovered. While subsidised wages incentivised
businesses to retain eligible employees early in the crisis or reengage them as the economy
20 Ibid
21 Treasury (2020) The JobKeeper Payment: Three-month review.
22 Bishop and Day (2020) How many jobs did JobKeeper Keep?
Economic effects of JobKeeper | 28
Independent Evaluation of the JobKeeper Payment
reopened, additional labour demand was filled by the ineligible worker population (Figure 10,
Panel A).23 There is also evidence that, within JobKeeper-eligible businesses, non-JobKeeper workers
were more likely to move into different jobs after being stood down or let go in the initial shock
compared with JobKeeper workers (Figure 10, Panel B). This trend became more apparent over time.
Figure 10: Paid jobs in JobKeeper-eligible firms in 2020
a) JobKeeper-nominated workers b) Non-JobKeeper-nominated workers
Source: Treasury analysis of STP
Note: Both panels present fortnightly time series, indexed to equal 100 in the fortnight ending 1 March 2020. Pre-existing
jobs are defined as those that existed before 1 March 2020. Since all JobKeeper-nominated jobs had to be ‘pre-existing’ the
difference between the 2 lines in the left panel is due to differences in whether the pre-existing job happened to have pay in
the fortnight ending 1 March. Data is fortnightly.
Most JobKeeper-nominated workers maintained their relationship with their JobKeeper employer
once they were transitioned off the policy. At the end of the initial phase in September 2020, just
under 1.8 million employees (excluding eligible business participants) transitioned off JobKeeper and,
over the following months, around 186,000 of these employees lost their JobKeeper jobs while
68,000 lost employment altogether. Within months of JobKeeper’s conclusion in March 2021 when
835,000 employees transitioned off the program, around 96,000 lost their JobKeeper jobs and 41,000
lost employment altogether.
Job loss among JobKeeper recipients was highest in the cohort of ‘vulnerable’ employees who
worked zero or low hours whilst on the payment. Program data showed the number and share of
vulnerable JobKeeper workers declined over time, reflecting improved hours worked. Despite this,
jobs lost by vulnerable employees accounted for 50 per cent of JobKeeper jobs lost in the months
after both the end of the initial phase in September 2020 and after JobKeeper’s conclusion in
March 2021.
While JobKeeper support had a clear significant positive effect on employment headcount in the
early months (April to June 2020), it had a negative effect on average hours worked because it
subsidised the reduction of hours and standing down of employees.24 This is a typical feature of job
23 Borland and Charlton (2020) The Australian Labour Market and the Early Impact of COVID-19: An
Assessment.
24 Bishop and Day (2020) How many jobs did JobKeeper Keep?
The effect of JobKeeper on average hours worked was found to be negative, given the increase in
employment was greater than the increase in total hours worked. This result, however, was not
statistically significant.
Economic effects of JobKeeper | 29
Independent Evaluation of the JobKeeper Payment
retention schemes like JobKeeper, which aim to avoid unnecessary layoffs by subsidising the wages
of stood down workers or those on reduced hours.
As restrictions eased, JobKeeper-nominated firms were incentivised to expand the hours worked by
their JobKeeper-eligible employees. By engaging these employees and generating revenue,
JobKeeper shifted from an income transfer for the stood-down workers to a wage subsidy for the
businesses. Walkowiak (2021) suggested that given these incentives, firms may have also reduced
underemployment amongst their part-time JobKeeper-eligible employees with subsidised wages.25
Box 1: The effects of job retention scheme generosity
In response to the COVID-19 health and economic crises, many OECD economies implemented job
retention schemes to mitigate and prevent the worst effects of the pandemic. These schemes supported
about 60 million jobs across almost all OECD countries by preserving employee-employer relationships.26
Job retention schemes differed by design features and duration, according to the national circumstances
and requirements. The generosity of job retention schemes also varied across countries, providing an
insight on the effects of payment rate designs (see Chapter 4.2).27
Wage subsidies like JobKeeper are typically more generous and broader in scope than STW schemes. Both
support incomes for stood down workers and those on reduced hours. Wage subsidies can also provide
support for active eligible businesses, incentivising their take-up of support.28 During the pandemic, greater
participation supported more jobs saved.
Evidence from European job retention schemes supports the link between generosity, take-up and
employment dynamics. That is, higher generosity (higher replacement rate) and broader support (looser
eligibility criteria) corresponded with greater participation in schemes. 29 A separate case study of the
German Kurzarbeit scheme, a relatively modest job retention scheme, provides evidence that greater
take-up can significantly dampen labour demand shocks by preserving employment. 30 These studies found
more pronounced effects in contact-intensive sectors most affected by the pandemic such as retail trade
and hospitality.
The link between generosity, take-up and employment dynamics was weaker in JobKeeper’s context,
largely based on relatively narrow eligibility criteria (see Chapter 4.3). OECD analysis found that JobKeeper
was relatively generous to eligible workers, particularly lower wage workers, and to businesses. 31 On the
other hand, JobKeeper’s coverage was less comprehensive compared to other pandemic job retention
schemes. For example, JobKeeper covered around one-third of Australian employment while New
Zealand’s wage subsidy scheme covered 65 per cent of New Zealand employment, the highest coverage in
the OECD.32 Nonetheless, estimates suggest JobKeeper directly saved between roughly 300,000 to 800,000
jobs that would have otherwise been lost.
25 Walkowiak (2021) JobKeeper: The Australian Short-Time Work Program.
26 OECD (2021) OECD Employment Outlook 2021.
27 Ando et al. (2022) European Labor Markets and the COVID-19 Pandemic.
28 OECD (2020) Job retention schemes during the COVID-19 lockdown and beyond.
29 Corti et al. (2023) Job Retention Schemes Between The Great Recession And The Covid-19 Crises.
30 Aiyar and Dao (2021) The Effectiveness of Job-Retention Schemes: COVID-19 Evidence From the German
States.
31 OECD (2020) Job retention schemes during the COVID-19 lockdown and beyond.
32 Borland and Hunt (2021) Did the Australian JobKeeper program save jobs by subsidizing temporary
layoffs?; OECD (2022) OECD Employment Outlook 2022: Building Back More Inclusive Labour Markets.
Economic effects of JobKeeper | 30
Independent Evaluation of the JobKeeper Payment
Business viability
Supporting businesses through the crisis was a key objective of several policies announced in late
March 2020. JobKeeper operated alongside substantial temporary relief measures including the
Cashflow Boost and policy changes to reduce the threat of actions that could unnecessarily push
businesses into insolvency.33 In combination, these policies played an important role in mitigating the
threat of unnecessary business insolvencies and closures due to COVID-19. Notably, company
insolvencies in May 2020 were lower compared with May 2019 (by 38 per cent) and lower compared
with previous downturns.34
JobKeeper mostly supported businesses that were heavily affected by the initial pandemic shock.
JobKeeper businesses suffered a median turnover decline of 28 per cent in the June quarter 2020
and 23 per cent in the September quarter 2020.35 Survey evidence provided by Sensis suggests
44 per cent of businesses would not have survived without JobKeeper.36
These results are consistent with findings presented in the United Kingdom’s evaluation of the
Coronavirus Job Retention Scheme (CJRS). During the CJRS, the median turnover decline in recipient
United Kingdom businesses was 27 per cent.37 Around 72 per cent of businesses supported by the
CJRS experienced a turnover decline compared to 40 per cent among other businesses. Similarly,
New Zealand’s wage subsidy scheme ‘supported firms experienced disproportionately larger revenue
losses than unsupported firms.’38 The outcome evaluation of this program estimated the subsidy
mostly had a positive effect on firm survival rates over a 12-month horizon following support.
At the end of the initial phase of JobKeeper in September 2020 and at the conclusion of the overall
program in March 2021, there were short-lived spikes in business exits among firms that received
JobKeeper up until these points. The spikes in business exits were slightly more pronounced in
March 2021, in small businesses, and in industries deemed vulnerable – those expected to have a
higher reliance on JobKeeper – such as Accommodation and Food Services, Retail Trade, and Arts and
Recreation Services. This evidence suggests that in the latter phases of JobKeeper, the payment may
have only delayed exits for some recipient businesses since those that remained on the payment
were likely to be less viable.
Income support and equity benefits
JobKeeper provided income support for both employees and firms for income lost owing to the
pandemic. In aggregate, income support provided by JobKeeper has been found to offset the
negative impact of the pandemic on Australian gross income for most of the policy’s lifespan.39
While this finding may be true in aggregate, it is not necessarily true at the individual level. Among
employees, those who were ineligible received no income support at all through JobKeeper and they
were more likely to lose employment. In many cases, ineligible employees may have received income
support from other sources such as JobSeeker. There is also evidence that some employees were
33 Treasury (2020) Factsheet: Temporary relief for financially distressed businesses.
34 Treasury (2020) The JobKeeper Payment: Three-month review.
35 Treasury (2021) Insights from the first six months of JobKeeper.
36 Sensis (2020) September 2020 Business Index.
37 His Majesty’s Government, HMT and HMRC (2023) The Coronavirus Job Retention Scheme final evaluation.
38 Hyslop, Maré and Minehan (2023) COVID-19 Wage Subsidy: Outcome evaluation.
39 Borland and Hunt (2023) JobKeeper: An Initial Assessment citing Breunig and Sainsbury (2023) Too Much
of a Good Thing? Australian Cash Transfer Replacement Rates During the Pandemic; Murphy (2023) Fiscal
Policy in the COVID-19 Era.
Economic effects of JobKeeper | 31
Independent Evaluation of the JobKeeper Payment
overcompensated for lost income.40 Around 11 per cent of JobKeeper recipients received more from
JobKeeper compared with their pre-pandemic earnings including those who previously worked
relatively few hours but received the flat JobKeeper Payment in the first phase.41 Contemporaneous
international schemes partially compensated employees for lost income caused by the pandemic but
not fully.42 These issues are explored further below in Chapter 4.2.
JobKeeper’s initial flat rate of $1,500 per fortnight reduced wage inequality in Australia. Lower
income individuals were both more likely to be on JobKeeper and the flat rate payment was a larger
share of their pre-pandemic wages. Treasury analysis (2021) found initial JobKeeper support was
concentrated in the lower 3 quintiles of the employment income distribution (Figure 11).43 Breunig
and Sainsbury (2023) reached similar conclusions with respect to the broader COVID-19 fiscal
support. The authors found the upwards shift in the income distribution was concentrated in
3 places: higher population mass at the lower‐middle and upper‐middle segments of the income
distribution, and lower population mass at the bottom of the income distribution.44
Figure 11: Income source as share of March income, by quintile
Source: Treasury analysis of Labour Market Tracker Data and ABS Australia National Accounts: National Income, Expenditure
and Product (Cat. No. 5206.0).
Note: Only covers employment and welfare income. Business, investment or other income excluded. Workers assigned
income quintile based on 2019 wage and salary income. As such those without wage income in 2019 are excluded.
The contribution of JobKeeper payments to income dropped in December 2020 across the
distribution as the payment was scaled back and fewer workers received JobKeeper. Analysis of
Household, Income and Labour Dynamics in Australia (HILDA) data suggests that among those that
received JobKeeper, the top 40 per cent of earners in Australia experienced income declines while
incomes rose for the remaining 60 per cent of workers.45
A counterpoint noted by Borland and Hunt (2023) is that the equity benefits of JobKeeper were
dampened by the fact that JobKeeper was also a transfer for businesses that remained active.
40 Treasury (2021) Insights from the first six months of JobKeeper; Murphy (2023) Fiscal Policy in the
COVID-19 Era; Submission 18 – Murphy.
41 ABS (2021) Household Impacts of COVID-19 Survey, March 2021, Australia.
42 Dias da Silva et al. (2020) Short-time work schemes and their effects on wages and disposable income.
43 Treasury (2021) Insights from the first six months of JobKeeper.
44 Breunig and Sainsbury (2023) Too Much of a Good Thing? Australian Cash Transfer Replacement Rates
During the Pandemic.
45 Marinos (2020) A light at the end of the inequality tunnel?
Economic effects of JobKeeper | 32
Independent Evaluation of the JobKeeper Payment
Business owners and shareholders who are generally towards the top of the income distribution
therefore also received a boost to business, investment, and other non-employment income.46 These
forms of income are not included in Figure 11.
Murphy (2023) examines the extent to which businesses were able to make windfall gains through
JobKeeper by manipulating their production and active employment.47 In doing so, Mr Murphy
demonstrates that some businesses could have received approximately $2 of JobKeeper for every
$1 lost by doing so.
Broader macroeconomic effects
JobKeeper was the largest component of the government’s fiscal response to the pandemic. By
preventing loss of employment, business failures and supporting incomes it contributed to
supporting aggregate demand when the crisis was at its worst and uncertainty at its highest. It also
helped to limit a reduction in the productive capacity of the economy and pave the way for a rapid
recovery.
Estimates of JobKeeper’s output multiplier range from around 1.348 to 1.549. The multipliers suggest
between roughly $0.23 to $0.36 of every JobKeeper dollar dispersed was consumed by recipients.
These estimates are indicative only and should be treated with caution as quantitative estimates of
the macroeconomic effects of JobKeeper are inherently unreliable. It is not possible to identify a
robust counterfactual given the extraordinary and unquantifiable uncertainty that existed in the peak
of the crisis in March–April 2020 and in the absence of any modern Australian experience of a global
pandemic. We do not know with any degree of certainty what would have happened to employment
and output in the absence of JobKeeper. Moreover, it is difficult to disentangle the impacts of the
different elements of the fiscal and monetary policy response to the crisis.
3.3 Medium and longer-term effects of JobKeeper
Labour mobility and productivity
Labour mobility fell sharply during the initial months of the pandemic (Figure 12). This reflected a
combination of pandemic-related circumstances, extreme uncertainty and the introduction of
JobKeeper which was designed to maintain pre-pandemic employment relationships.
There is a well-established body of literature covering the importance of labour mobility or
‘dynamism’ for productivity growth. Labour mobility and job switching ensures workers are
employed in roles that suit their preferences and skills.50 As labour is reallocated to more productive
firms, aggregate labour productivity increases and the economy benefits.51 Productivity-enhancing
labour reallocations in Australia have declined in recent years and can account for roughly
one-quarter of the slowdown in labour productivity growth.52
46 Borland and Hunt (2023) JobKeeper: An Initial Assessment.
47 Murphy (2023) Fiscal Policy in the COVID-19 Era; Submission 18 – Murphy.
48 Watson, Tervala and Sainsbury (2022) The JobKeeper Payment: How good are wage subsidies?
49 Borland and Hunt (2023) JobKeeper: An Initial Assessment.
50 Black and Chow (2022) Job Mobility in Australia during the COVID-19 Pandemic.
51 Leigh (2022) A more dynamic economy.
52 Duretto, Majeed and Hambur (2022) Overview: Understanding productivity in Australia and the global
slowdown ; Andrews and Hansell (2019) Productivity-enhancing labour reallocation in Australia.
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Independent Evaluation of the JobKeeper Payment
Figure 12: Labour mobility
a) Share of workers with a new job b) Job switching rate
Source: Treasury analysis of ABS Labour Force microdata.
Note: New jobs defined as having a tenure of less than 3 months. Data are not seasonally adjusted.
With JobKeeper’s support, the resilience of high productivity firms to the pandemic in the initial
phase boosted aggregate labour productivity. Andrews, Hambur, and Bahar (2021) estimated that
aggregate labour productivity increased between 4¼ and 5½ per cent over the pandemic, compared
to the counterfactual where reallocation and productivity were not linked.53 Roughly half of this gain
over the initial phase (2¾ per cent) is attributed to JobKeeper which disproportionately shielded high
productivity – and liquidity constrained – firms.
The benefits of supporting high productivity firms were noticeable at the conclusion of the initial
phase. JobKeeper’s first 6 months limited the scarring effects of the associated recession by
preventing indiscriminate premature exits and layoffs amongst high productivity firms. Once
ineligible businesses exited JobKeeper, more labour flowed towards these firms contributing to
labour productivity gains.
The extension phase likely preserved more jobs in lower productivity businesses. This phase curtailed
some productivity-enhancing reallocations by preserving jobs in less productive businesses. Although
this phase was more distortive than the initial phase, there is no evidence to suggest JobKeeper
facilitated widespread ‘zombification.’54 Andrews, Charlton and Moore (2021) provide evidence that
the reallocation-productivity link remained intact amongst both the JobKeeper eligible and ineligible
workforces across the pandemic. The stronger link amongst ineligible employees suggests
opportunities for growth in high productivity businesses were not crowded out by JobKeeper’s
continued support for businesses that would have otherwise restructured or exited.55
53 Andrews, Hambur and Bahar (2021) The COVID-19 shock and productivity-enhancing reallocation in
Australia: Real-time evidence from Single Touch Payroll.
54 Ibid
55 Andrews, Charlton and Moore (2021) COVID-19, productivity and reallocation: Timely evidence from three
OECD countries.
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Independent Evaluation of the JobKeeper Payment
These results support analysis from Borland and Hunt (2021) who found JobKeeper had a small and
short-lived impact on output by preventing labour reallocation.56 The small cost of missing
productivity growth from the limited dynamism is attributed by the authors to JobKeeper covering
one quarter of Australia’s workforce at its peak. Further, the lack of job destruction at the transition
and graduation points suggests that these negative productivity effects from preserving jobs in lower
productivity businesses were perhaps even smaller.
3.4 JobKeeper and labour scarring
One purpose of keeping people connected to their employers during the COVID-19 recession was to
avoid labour scarring. Labour scarring relates to the adverse, longer-term effects a worker
experiences from downturns. Effects of labour scarring can include lower chances of employment
overall, slower career progression and lower incomes.57 These effects are most salient in the
aftermath of economic downturns, especially those characterised by high unemployment.
Labour scarring can have economy-wide implications. When labour is underutilised, economic output
is reduced. Human capital starts to wane as skills and knowledge are lost or not used. Business
specific human capital (linked to a particular business and worker pair) can also be lost, reducing
economic potential.
56 Borland and Hunt (2021) Did the Australian JobKeeper program save jobs by subsidizing temporary
layoffs?
57 Borland (2020) Scarring effects: A review of Australian and International literature.
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Independent Evaluation of the JobKeeper Payment
Box 2: Literature on labour scarring
Studies on labour scarring published prior to 2020 point to many of the lingering negative effects of a
period of high unemployment. Most literature finds negative effects on workers such as lower earnings
and fewer employment opportunities.
Professor Borland finds that individuals entering the labour market during downturns have worse
outcomes. When the youth unemployment rate is 5 percentage points above average, earnings for
graduates is about 8 per cent lower at the time of entry and 3.5 per cent lower 5 years after entry.58
Farber finds that workers who lost their jobs during the Global Financial Crisis (GFC) period experienced
very low rates of reemployment and difficulty finding full-time employment.59 Kroft et al. finds a reduced
chance of receiving a call back for an interview which decreases with the length of unemployment. 60 For
good reason, the OECD and ILO raised labour scarring for young people as a key issue during COVID-19.61
During COVID, concerns around labour scarring continued as labour programs were introduced. The US
Bureau of Labour Statistics (BLS) published surveys from 2020 and 2021 and found that job recovery had
so far been more rapid than previous recessions, but labour force participation has not recovered from
declines seen through the pandemic.62 A Treasury research paper in 2020 found that graduating into a
labour market with 5 percentage point higher youth unemployment had earnings that were 3½ per cent
lower after 5 years.63 Day and Jenner found that regions with larger downturns have higher
unemployment rates decades after the initial shock.64
Labour scarring can have larger impacts on more vulnerable groups. e61 notes that those not in
employment, education or training (NEET), those that have not completed Year 12 and Aboriginal and
Torres Strait Islander people may be more susceptible to economic shocks.65 Ongoing monitoring of
labour market outcomes for these groups is warranted.
Recovery from periods of high unemployment can take many years. It took almost a decade for the
unemployment rate to recover to its pre-recession level following the 1990s recession and the rate of
unemployment never returned to its pre-GFC level after the GFC (Figure 13).
58 Ibid
59 Farber (2015) Job Loss in the Great Recession and its Aftermath: U.S. Evidence from the Displaced Workers
Survey.
60 Kroft et al. (2013) Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment.
61 ILO (International Labour Organization) and OECD (2020) The impact of the COVID-19 pandemic on jobs
and incomes in G20 economies.
62 Piacentini et al. (2022) The Impact of the COVD-19 on Labour Markets and Inequality.
63 Andrews et al. (2020) The career effects of labour market conditions at entry.
64 Day and Jenner (2020) Labour Market Persistence from Recessions.
65 e61 Institute (2022) Precenting scarring in the post-pandemic youth labour market.
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Independent Evaluation of the JobKeeper Payment
Figure 13: Unemployment rate in Australia during economic slowdowns
Source: ABS Labour Force Survey 2023.
Note: Vertical axis is average quarterly unemployment rate, indexed to equal 100 in the quarter before the downturn. The
vertical axis has been inverted.
The trajectory of the unemployment rate during COVID-19 was atypical because the shock was
extraordinary. Concerns around scarring at the outset of COVID-19 in part reflected the experience
from previous slowdowns. Initially, the labour market impact of COVID-19 was more severe than
recent periods of sharp increases in unemployment. Equally, the recovery was also much faster and
stronger. The removal of health restrictions and consequent re-opening of large parts of the
economy, supported by JobKeeper and other stimulus, paved the way for a rapid fall in the
unemployment rate.
JobKeeper and new labour market entrants
Recent graduates, new entrants and those who were not employed prior to the onset of COVID-19
were not directly supported by JobKeeper. Complementary policies were introduced to assist these
groups to enter or remain in training or education, including Boosting Apprenticeship
Commencements (BAC) and the JobTrainer fund.66 The scale and stimulus effect of JobKeeper
contributed to the broader economic and labour market recovery which assisted recent labour
market entrants.
66 Department of Employment and Workplace Relations (2023) Boosting Apprenticeship Commencements
and Completing Apprenticeship Commencements ; Department of Employment and Workplace Relations
(2023) JobTrainer Fund;
Economic effects of JobKeeper | 37
Independent Evaluation of the JobKeeper Payment
4 JobKeeper design features
The experience designing and implementing JobKeeper offers valuable lessons against the possibility
that a similar policy be adopted in future (see Chapter 7). In the circumstances of March 2020, the
need for simplicity and speedy implementation using available systems necessarily required
trade-offs and compromises in JobKeeper’s design. Policymakers were conscious that there was
scope to improve JobKeeper’s design as experience with implementation was gained and more
information became available about the nature of the challenges presented by the pandemic. They
took steps to do so following the three-month review.
As discussed in Chapter 3, JobKeeper was successful in achieving the government’s objectives.
Nevertheless, submissions, academic studies and interviews with key stakeholders provide a source
of information and analysis on the opportunities to improve on JobKeeper’s design should a similar
policy be needed in future. These opportunities relate to eligibility criteria, the payment rate and
issues around the timing, flexibility and targeting of payments. This chapter explores these issues and
draws conclusions in support of Finding 7.
4.1 Timing and flexibility
Key points
• Speed and timeliness are critical to policy effectiveness during a crisis. While JobKeeper was
implemented efficiently after its announcement, evidence suggests that an earlier
commitment to the policy would have increased its efficacy (Finding 7.b).
• Building more flexibility into the design of JobKeeper such that it could adapt and respond to
evolving economic and health conditions would have improved outcomes. An earlier switch
from prospective to retrospective turnover thresholds would have improved the targeting of
JobKeeper payments (Finding 7.a).
• An earlier move to retrospective payments would also address many of the concerns around
overcompensating some businesses without the uncertainty, costs and potential adverse
incentives introduced by a clawback mechanism.
• There is scope for further investment in real time data development and associated
analytical capacity to better equip policymakers to respond quickly and ensure policy
settings reflect developments in conditions during future crises.
Earlier introduction of JobKeeper
Speed and timeliness were critical to the effectiveness of pandemic policy responses. While
JobKeeper was implemented efficiently after its announcement, evidence suggests that an earlier
commitment to the policy would have increased its efficacy.
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Independent Evaluation of the JobKeeper Payment
The JobKeeper Payment was announced on 30 March as the economic effects of the pandemic were
unfolding. Before JobKeeper’s introduction, significant changes in behaviour driven by the pandemic
had clear implications for the economy and labour market (for more details see Chapter 3). Between
18 and 24 March, states and territories announced or scaled up restrictions including limits on public
gatherings, border closures and social distancing rules. These announcements reinforced the
behavioural changes already evident. In the 2 weeks prior to JobKeeper there was a large increase in
applications for income support (Figure 14). Job separations increased in the weeks prior to
JobKeeper. This trend reversed sharply immediately after the announcement. By May, entities that
received JobKeeper started to increase their staff levels (Figure 15).
Figure 14: Income support flow for individuals on the first phase of JobKeeper
Source: Treasury analysis of de-identified administrative data (linked STP and welfare payment microdata).
Note: Income support includes Newstart Allowance (prior to 20 March 2020), JobSeeker Payment (from 20 March 2020) and
Youth Allowance (Other). Flows onto and off income support payments include flows from nil rate recipient status to being
in receipt of a payment. Two-week moving average.
JobKeeper design features | 39
Independent Evaluation of the JobKeeper Payment
Figure 15: Separations and jobs by JobKeeper status and turnover
a) Separations b) Jobs
Source: De-identified administrative data (STP and BAS data linked to JobKeeper status).
Note: Figure 15 presents fortnightly time series of job separations and payroll jobs, indexed equal to 100 in the fortnight
ending 1 March 2020. Separations are based on cease dates for a worker’s employment relationship with a business (it can
include workers who were on zero pay). Series exhibits volatility around end of financial year, which has been corrected.
Payroll jobs are based on employee-employer relationships with pay, including any JobKeeper amounts. Dashed line indicates
start of JobKeeper. Turnover analysis is based on June quarter 2020 data compared to a year earlier.
An earlier introduction would have resulted in improved outcomes for a large number of Australians
that initially lost employment but were subsequently reemployed once JobKeeper was introduced
(Figures 14 and 15). There is a significant body of evidence around the importance of employment
for individual well-being and the negative effects of unemployment on well-being. The well-being
benefits of maintaining employment connections include social and psychological benefits of being
employed, such as social interactions and a sense of connection and purpose.67 Exposure to
unemployment is linked to increased psychological distress, depression and anxiety.68 Negative
effects can occur even without serious financial strain. International evidence suggests that
well-being loss associated with unemployment is long-lasting and is only partly mitigated by income
support through unemployment benefits and future re-employment.69
The benefits can be difficult to quantify but the literature suggests they are likely to be substantial. In
an Australian context, Atkins (2020) finds there was a significant mental health benefit associated
with maintaining employment during the pandemic.70 More generally, Carroll (2005) estimates that
the loss of well-being associated with being unemployed is equivalent to $42,100 (2001 dollars) for
67 Kassenboehmer and Haisken-DeNew (2009) You’re fired! The causal negative effect of entry
unemployment on life satisfaction; Hijzen and Menyhert (2016) Measuring Labour Market Security and
Assessing its Implications for Individual Well-Being; Pappas (2020) The toll of job loss.
68 ACOSS (Australian Council of Social Services) (2020) The impact of financial distress on mental health
during COVID-19; Strandh et al. (2014) Unemployment and mental health scarring during the life course.
69 Young (2012) Losing a Job: The Nonpecuniary Cost of Unemployment in the United States.
70 Atkinson (2 September2020) The impact of COVID-19 on the mental wealth of Australia.
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Independent Evaluation of the JobKeeper Payment
Australian men and $86,000 for Australian women.71 On the other hand, the evaluation of New
Zealand’s COVID wage subsidy scheme, uses a value of $8,405 (2023 NZD) as the well-being benefit
of being employed compared with being unemployed.72
Several submissions to the evaluation suggested that an earlier commitment to JobKeeper would
have led to better outcomes. This view is supported by the academic literature. Borland and Hunt
(2023) find that an earlier introduction could have resulted in more jobs being retained.73 The study
compares the New Zealand and Australian supports. In both countries, the drops in GDP were similar
and job losses stopped after wage subsidy policies were announced. In New Zealand, the wage
subsidy was announced on 17 March, 13 days earlier than JobKeeper. In New Zealand, the labour
market adjustment came almost entirely through a reduction in hours worked, while in Australia the
adjustment came via employment.
In its submission, the Australian Council of Trade Unions (ACTU) noted that it had called for the
introduction of a wage subsidy before the announcement of JobKeeper, arguing that similar schemes
were operating in other countries. Similarly, the Business Council of Australia (BCA) noted that
introducing JobKeeper sooner may have saved more jobs. In its submission, the BCA compares the
experience of Australia and New Zealand and observed that Australia suffered a greater loss of
employment in the early stage of the pandemic.
Improved flexibility and adaptability
There is considerable literature that emphasises the need for wage subsidies to be designed such
that they can adapt to economic conditions and developments. In Job retention schemes during the
COVID-19 lockdown and beyond, the OECD considers the design of job retention schemes introduced
by member countries during 2020 and finds that ‘job retention support should be time-limited, but
limits should not be set in stone.’74 This emphasises the need for flexibility as part of policy design,
and to consider when and under what circumstances to wind down programs.
Cassells and Duncan (2020) suggest that a wage subsidy that is flexible to respond to economic
conditions as they arise will help minimise distortions.75 Watson, Tervala and Sainsbury (2022) state
that policy trade-offs between speed and quality should be announced early, provide an
overwhelming level of economic support to meet the relevant economic challenges, but also provide
flexibility to calibrate and adjust the measure once it has been introduced to ensure that it is well
targeted and cost effective.76
Several European countries scaled up STW schemes in response to COVID-19. These schemes are
directly tied to reductions in work hours and hence operate in a similar manner to automatic
stabilisers in the sense that the level of support provided automatically adjusts to economic
developments. It would likely be difficult for a wage subsidy to be this adaptable. New Zealand
demonstrated that one way to come closer to such a system is by linking the reintroduction of the
wage subsidy to health restrictions.
71 Carroll (2005) Unemployment and Psychological Well-Being.
For women the effect of unemployment on life satisfaction is greater and the effect of income on life
satisfaction is smaller.
72 New Zealand Government, The Treasury (2022) CBAx Tool Spreadsheet model; Smith and Davies (2020)
Cost-wellbeing analysis of housing outcomes in the New Zealand General Social Survey.
73 Borland and Hunt (2023) JobKeeper: An Initial Assessment.
74 OECD (2020) Job retention schemes during the COVID-19 lockdown and beyond.
75 Cassells and Duncan (2020) JobKeeper: The efficacy of Australia’s first short-time wage subsidy.
76 Watson, Tervala and Sainsbury (2022) The JobKeeper Payment: How Good Are Wage Subsidies?
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Independent Evaluation of the JobKeeper Payment
Many experts and stakeholders hold a view that JobKeeper could have been better designed to adapt
to the rapidly changing health and economic developments. One criticism is that it did not
adequately consider a rapid, V-shaped recovery following the onset of COVID-19 as suggested by
literature on economic crises stemming from pandemics.77 In his submission, Mr Murphy contended
that overcompensation in the JobKeeper program was partly linked to the pre-commitment to a
6-month payment duration ‘whereas the national lockdown that prompted JobKeeper only lasted
2 months.’78 When a no-COVID-19 world is used as a counterfactual scenario (a ‘V-shaped’ recovery),
analysis suggests JobKeeper went beyond a macroeconomic stabilisation policy tool and
over-compensated many households and businesses.79 Mr Murphy went on to argue that
subsequent Commonwealth and state programs were linked to the (uncertain) duration of
lockdowns.
In his submission, Mr Goding similarly linked the projected decline in turnover test and the relatively
lengthy support at the start of the program to profiteering and wastefulness.80 He suggested a more
flexible approach to the timing of the payment may have led to fewer payments going to businesses
that had reopened and were not at risk of firing employees.
The Australian Chamber of Commerce and Industry (ACCI) raised shorter than expected lockdowns in
its submission, noting that the first phase of reopening commenced around 10 weeks after the
lockdowns began.81 The submission states that while there were restrictions on some industries,
many businesses quickly recovered and no longer required the assistance JobKeeper provided.
Adopting retrospective turnover tests sooner
Switching to a retrospective turnover test as soon as practicable would be an effective way to
achieve adaptability and targeting in wage subsidy design. Retrospective eligibility testing reduces
scope for payments to businesses that may no longer need them as economic conditions improve. In
this way, retrospective turnover testing can achieve similar results to an automatic stabiliser, with
the scope of support provided adjusting as conditions change. This feature guards against the risk
that conditions change suddenly in the presence of a policy with a fixed time commitment.
The benefits of retrospective turnover tests were recognised by JobKeeper’s designers, who shifted
to a retrospective turnover test in the extension phase of JobKeeper. A lesson for the future is that a
clear upfront commitment to move to a retrospective test as soon as possible – for example, at the
three-month mark – could improve targeting and efficiency while also providing certainty around the
duration of the policy.
Targeting of payments: Retrospective eligibility versus a ‘clawback’ mechanism
A common criticism of JobKeeper is that payments were not tightly enough targeted to firms that
needed support. Treasury’s Insights from the first six months of JobKeeper concluded that $27 billion
of JobKeeper payments were paid to businesses whose turnover did not decline by at least
30 per cent (or 50 per cent) compared with a year earlier.82 Treasury also estimated that at least
$4.9 billion was paid to growing or restructuring businesses that had higher through the year
77 Carlsson-Szezak, Reeves and Swartz (2020) What Coronavirus Could Mean for the Global Economy,
Murphy (2023) Fiscal Policy in the COVID-19 Era.
78 Submission 18 – Murphy.
79 Murphy (2023) Fiscal Policy in the COVID-19 Era.
80 Submission 17 – Goding.
81 Submission 16 – Australian Chamber of Commerce and Industry.
82 Treasury (2021) Insights from the first six months of JobKeeper.
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Independent Evaluation of the JobKeeper Payment
turnover. These businesses were eligible for alternative turnover tests to demonstrate that they
were adversely affected by the pandemic.
Many commentators, academics and stakeholders argue that a ‘clawback mechanism’ should have
been included in JobKeeper’s design to enforce repayment of funds from firms that didn’t meet the
turnover thresholds ex-post. The ACTU was a prominent advocate for the inclusion of a claw-back
mechanism. The ACTU labelled JobKeeper’s targeting and integrity mechanisms inadequate given
many recipient companies ended up with significant increases in turnover in the period for which
they claimed support.83 Mr Goding’s submission to the evaluation argued that the absence of a
claw-back was ‘at odds with community expectations’ and contributed to ‘profiteering and
wastefulness’.84
An evaluation of the Commonwealth’s fiscal response to the pandemic chaired by Peter Shergold AC
with the assistance of a secretariat from the e61 Institute also recommended a clawback mechanism
in future policy responses. This evaluation suggested payments to businesses which did not end up
meeting the turnover test thresholds ‘could have been better spent supporting excluded groups of
workers’.85
Some submissions to the evaluation highlighted the negative effects of including a clawback
mechanism in JobKeeper’s design. Professor Borland’s submission concluded that a cost-recovery
mechanism – whether a contingent loan or claw-back mechanism – ‘would have created uncertainty
for businesses about the net payments they would receive, and therefore have been likely to reduce
willingness to participate’ in JobKeeper.’86 The BCA also noted the adverse effects a clawback would
have through increasing uncertainty for business and potentially compromising take-up.87
Scope for international comparison of clawback arrangements is limited as schemes had different
eligibility conditions, timing, scope, and compliance mechanisms. New Zealand’s scheme is most
instructive, as it also relied on retrospective revenue thresholds and was similar in many other ways
to JobKeeper. A mandatory clawback mechanism was not included in New Zealand’s scheme, with
authorities opting instead for a ‘high-trust model’ with voluntary repayments at the discretion of
businesses. New Zealand authorities highlighted that a public register of businesses receiving wage
subsidy payments provided transparency and enabled public scrutiny. Transparency arrangements in
JobKeeper are considered in Chapter 5.2.
The decision by Australian authorities not to include a clawback mechanism in JobKeeper’s design
reflected the goal of supporting confidence, a desire to maximise take-up by reducing uncertainty,
and a desire to encourage businesses to adapt and innovate.88 Treasury’s Insights from the first six
months of JobKeeper explained how including a clawback may have operated like an ‘anti-production
subsid[y] and perversely [encouraged] businesses to reduce activity to qualify for support.’89 That is,
a clawback mechanism may have potentially disincentivised businesses from recovering when
circumstances improved and encouraged them to reduce output, sales, and revenue. Motivated by
potentially higher profits, some businesses may have prioritised continued receipt of JobKeeper over
full operating activity.
On balance, a policy design that enabled a switch to retrospective eligibility sooner, combined with
transparency of claimants, would have been a better option to improve targeting of JobKeeper
83 Submission 11 – Australian Council of Trade Unions.
84 Submission 17 – Goding.
85 Shergold et al. (2022) Fault lines: An independent review into Australia’s response to COVID-19.
86 Submission 10 – Borland.
87 Submission 5 – Business Council of Australia.
88 Treasury (2021) Insights from the first six months of JobKeeper.
89 Ibid
JobKeeper design features | 43
Independent Evaluation of the JobKeeper Payment
payments. The inclusion of a clawback mechanism could have undermined the role of JobKeeper in
underpinning confidence and reducing uncertainty in the early months of the pandemic and
introduced adverse incentives and distortions.
The importance of timely data
Significant progress has been made to data granularity, timeliness and coverage in recent years,
including through initiatives introduced by the ABS in response to the pandemic. The release of ABS
Weekly Payroll Jobs and Wages in Australia, Business impacts of COVID-19 and Household Impacts of
COVID-19 early in the pandemic greatly assisted policy makers.90 These datasets were not perfect
and had limitations at the time of their introduction. They still provided invaluable insights to assist
policy makers to understand the pandemic’s effect on the economy and labour market and respond
accordingly.
There is scope for further investment in the quality and availability of real time data to assist with
policy in future. Stakeholders identified data gaps regarding household and business balance sheets.
Such data, along with the capability to analyse and interpret such data, would be beneficial for future
emergency policies.
STP was essential to the administration and delivery of the JobKeeper Payment. Without it and
business’ existing systems for interaction with the ATO, payments could not have started to flow
6 weeks after announcement. STP was primarily designed as a system for information flows, so there
were limitations in what could be achieved with this system. Including additional information on
employees, in particular hours worked and an employee’s usual location of work, would enhance the
data set for future policy design and implementation.
High frequency data were key to understanding, responding and adapting to COVID-19 and the
associated economic shock. Investments should continue to be made in data capability and
infrastructure and to remove barriers to agility. This includes the ability to access and analyse data in
a timely matter.
90 Hambur, Montaigne, Parsons and Whalan (2022) Looking under the lamppost or shining a new light: New
data for unseen challenges.
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Independent Evaluation of the JobKeeper Payment
4.2 Payment rate structure
Key points
• The flat payment of $1,500 per fortnight during the first phase of JobKeeper provided
certainty, simplicity, and clarity for both employees and employers. It contributed to the
speedy implementation and high uptake of JobKeeper.
• At the time, it was thought that anything other than a flat payment could cause
unacceptable delays and introduce implementation risks.
• The flat payment rate was a unique feature of JobKeeper. Other countries that adopted
wage subsidies typically used a tiered or proportional payment based on pre-pandemic
income.
• Many academics and stakeholders argue the flat payment was inefficient and disincentivised
certain groups of recipients from working as the economy recovered from the initial
COVID-19 shock. Some also highlight the fiscal cost associated with relatively high payments
to low-income earners.
• ABS data indicate that 11 per cent of JobKeeper-eligible employees received more from the
JobKeeper than their normal wage. These were typically part-time and lower paid
employees. Higher earners received a much lower JobKeeper payment relative to their
pre-pandemic earnings.
• While there is anecdotal evidence of a disincentive effect for those who received more than
their usual earnings, the issue has not yet been interrogated by a data-driven empirical
study. There is no evidence that lower proportionate coverage for higher wage earners
affected the efficacy of JobKeeper in preserving employment connections for this group.
• The extension phase of JobKeeper included a two-tiered payment, which improved the
efficiency of JobKeeper. The adjustment reflected improved confidence in the system and
data used to administer JobKeeper. The experience of the extension phase assuaged earlier
concerns about implementation risks associated with tiered payments.
• One of the lessons learned from JobKeeper is that a tiered wage subsidy payment, or one
that is proportionate to previous earnings, is more targeted and efficient. It would be worth
considering the investment required to enable a payment that is proportionate to earnings
(Finding 7.c).
Context for JobKeeper’s payment rate structure
JobKeeper’s payment rate structure reflected the unprecedented health and economic situation
presented by the pandemic. Support needed to be simple and implemented rapidly.
In the first phase of JobKeeper, the flat payment structure was designed to be simple and easy to
administer, supporting a timely take-up of the payment. The flat taxable payment of
$1,500 per fortnight paid in full to eligible employees was also broadly equivalent to the National
Minimum Wage for an adult full-time employee. The payment rate reflected JobKeeper’s income
support objective.
The ATO advised that both its own system and business’ payroll systems did not allow for a tiered or
proportional payment rate to be implemented from introduction without introducing unacceptable
risk.
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Independent Evaluation of the JobKeeper Payment
Box 3: International comparisons of payment rate structures
During the pandemic, many countries supported employee-employer connections through STW schemes
or wage subsidy programs. Job retention schemes typically had tiered payment rates dependent on
employees’ usual hours worked or made payments proportionate to usual wages, subject to a maximum
ceiling rate. JobKeeper’s flat rate approach is unique internationally.
Payment rate structures abroad:91
Denmark: The basis on which wages were usually paid determined how much of
employees’ wages were subsidised by Denmark’s STW scheme. Employees
usually paid on a monthly basis had 75 per cent of their wages subsidised by
the scheme, up to Kr23,000 per month. Participating businesses covered the
remaining 25 per cent of the employee’s wage bill. The Danish Government
covered 90 per cent of the wage bill for eligible employees usually paid
hourly, up to Kr26,000 per month.
France: France’s pandemic job retention scheme was a more generous extension of
the existing STW scheme, Activité Partielle.92
Eligible minimum wage earners were covered by a 100 per cent replacement
rate under the scheme. Other eligible workers received a subsidy of
84 per cent of their net wages (70 per cent of gross wages), up to a
maximum of 4.5 times the minimum wage. 93
Germany: During the COVID-19 pandemic, Germany also strengthened the support
provided by their existing STW scheme, Kurzarbeit. This scheme generally
provided employees working reduced hours 60 per cent of their wages for
hours not worked.94
After their fourth month on the STW scheme, eligible employees were
generally paid 70 per cent of their wages for hours not worked. After their
seventh month on the scheme, this was increased to 80 per cent.
Japan: Japan strengthened its wage subsidy scheme during the pandemic. From
April to June 2020, wage bills in eligible small and medium businesses were
subsidised 90 per cent by the government. From June 2020 until
August 2021, these businesses were entitled to a wage subsidy of
100 per cent. For larger businesses, wages were subsidised by 75 per cent
across the policy.
Ireland: Ireland introduced the Temporary COVID-19 Wage Subsidy Scheme (TWSS)
in March 2020 lasting until August 2020. The TWSS subsidised up to
85 per cent of eligible employees’ wages and was available to businesses
with a projected turnover decline of at least 25 per cent.
91 World Bank (2022) Social Protection and Jobs Responses to COVID-19 – A Real-Time Review of Country
Measures.
92 Vincent (2021) Job retention schemes in Europe: France.
93 Müller, Schulten and Drahokoupil (2022) Job retention schemes in Europe during the COVID-19 pandemic –
different shapes and sizes and the role of collective bargaining.
94 IMF (International Monetary Fund) (2020) Kurzarbeit: Germany’s Short-Time Work Benefit.
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In September 2020, the TWSS was succeeded by the Employment Wage
Subsidy Scheme (EWSS) which required demonstrated turnover declines of
at least 30 per cent for businesses to be deemed eligible. The replacement
scheme was initially planned to run until March 2021; however, it was
extended until April 2022. The payment rates were phased down in the
latter stages of the policy.
Netherlands: The Netherlands’ Temporary Emergency Measure for the Preservation of
Jobs (NOW) scheme lasted from March 2020 to October 2021 and was
available for businesses with a projected turnover decline of at least
20 per cent. The NOW scheme paid up to 90 per cent of eligible businesses’
wage bills, depending on turnover for 3 months.
New Zealand: New Zealand’s wage subsidy was the most like JobKeeper. The tiered
payment rates for eligible part-time and full-time employees in JobKeeper’s
extension phase was broadly aligned with the payment rates of the New
Zealand wage subsidy scheme.
In New Zealand, eligible employees who usually worked 20 hours or
more per week were entitled to $585.80 NZD per week in support. Eligible
employees who usually worked less than 20 hours were entitled to $350.00
NZD per week. Eight weeks of wage subsidies were paid in lump sum from
the date of application.
Republic of Korea: In response to the COVID-19 pandemic, the Republic of Korea expanded its
STW scheme, the Employment Retention Subsidy (ERS). The ERS provided
support to businesses that continued to pay at least 70 per cent of their
eligible employees’ wages.
The payment rate to businesses was dependent on the size of the business.
The ERS covered 67 per cent of the payments made to eligible workers in
larger firms, up from 50 per cent before the pandemic.95 For affected
workers in smaller firms, the replacement rate was increased from
67 per cent before the pandemic to 75 per cent. The subsidy was capped at
a maximum of 66,000 KRW per day per employee.96
United Kingdom: The United Kingdom’s CJRS subsidised 80 per cent of furloughed employees’
salaries up to a total of £2,500 per month.
The rate of CJRS support was reduced in the last extension phase of the
policy (July to September 2021) to reflect the improving economic
conditions. Furloughed employees still received 80 per cent of their salaries.
However, CJRS provided 70 per cent from 1 July and 60 per cent from
1 August. The remaining payments were made by employers to stood down
employees.
95 Eichhorst et al. (2022) Job Retention Schemes during COVID-19: A Review of Policy Responses.
96 Mandel, Lee and Wook Cho (2020) ‘Labour and Employment Compliance in the Republic of Korea’ in
International Labour and Employment Compliance Handbook.
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Efficiency of JobKeeper’s payment rate structure
The unique design of JobKeeper’s initial flat payment rate likely resulted in some inefficiencies in the
distribution of payments amongst employees. The extension phase of JobKeeper reduced these
adverse outcomes. The efficiency of the payment rate structure is distinct from the impacts of
JobKeeper on income inequality discussed in Chapter 3.
The initial flat rate effectively acted as a wage floor with all eligible employees receiving the same
level of support. For stood down workers, JobKeeper’s initial flat rate of $1,500 compensated
47 per cent of a median full-time earner’s ($1,592 per week) lost earnings.97 The $1,500 rate was
greater than the pre-pandemic earnings for 60 per cent of part-time workers. As Cassells and Duncan
(2020) note, ‘a part-time worker on 15 hours per week effectively [had] access to the same weekly
wage as their colleague who may still [have worked] a 35-hour week’.98 While it may be inefficient,
more generous proportionate payments to those on lower incomes is partly what drives JobKeeper’s
effect of reducing wage inequality.
The ABS Household Impacts of COVID-19 Survey looked at those receiving JobKeeper. Across all
phases of JobKeeper, about two-thirds of recipients reported receiving less income than their usual
pay, 22 per cent reported receiving about the same and 11 per cent reported receiving more.99 The
proportion of those who received more income than their usual pay was higher during the initial
phase of JobKeeper than during the extension phases. The proportion those who received less
income was lower during the initial phase and higher during the extension phases (Figure 16). The
reduction likely reflected the introduction of the tiered payment rates based on average hours
usually worked. The ABS also reported that of those who received less from JobKeeper than their
usual pay around half were forced to take a pay cut.
Figure 16: JobKeeper income compared to usual pay
Source: ABS Household Impacts of COVID-19 Survey
97 Murphy (2023) Fiscal Policy in the COVID-19 Era.
98 Cassells and Duncan (2020) JobKeeper: The efficacy of Australia’s first short-time wage subsidy.
99 ABS (2021) Household Impacts of COVID-19 Survey, March 2021, Australia.
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Potential consequences of the inefficient payment rate structure
Given the simplicity of JobKeeper in the initial phase of the policy, some submissions to the
evaluation found the payment to be appropriate and effective in achieving its objectives.100 Other
submissions raised concerns about the potential disincentive effects of overcompensation.101
Treasury’s three-month review also provided anecdotal evidence from industry stakeholders of
JobKeeper’s initial payment rate distorting incentives to work.102 These adverse effects were centred
primarily on 2 employee recipient groups.
• Part-time and casual workers who received more from JobKeeper than their usual wages,
particularly in the initial phase. These workers may have been reluctant to do additional hours
of work.
• Employees who were stood down who may have been reluctant to recommence working as
businesses began to reopen.
Compared with analysis of other features of JobKeeper, there is an absence of quantitative evidence
on employees’ possible disincentives to work. As exhibited above, the basis for these views lies
almost entirely in industry stakeholders’ case studies.
Similarly, there is no evidence that lower proportionate coverage for higher wage earners affected
the efficacy of JobKeeper in preserving employment connections for this group. Pre-existing
employee-employer relationships for lower hours workers may have been changed by JobKeeper’s
payment rate structure.103 For instance, employers were incentivised to renegotiate part-time
employees’ hours to reflect the fact that subsidised wages provided by JobKeeper were above some
of these employees’ usual wages. These incentives for businesses likely reduced underemployment
among their eligible part-time population.104
Alternative payment rate structures
The literature on wage subsidies and similar policy responses indicates that JobKeeper’s payment
structure was not optimal in either phase of the policy.105
Alternative and potentially more optimal pandemic support policies have been analysed with respect
to the Australian experience and to international experience. Cassells and Duncan (2020) proposed
an adjustment to JobKeeper’s design of a proportionate wage subsidy of up to 100 per cent of
normal wages, up to a maximum payment rate ceiling.106 The authors noted that their preferred
design also incorporated ‘a graduated scale of entitlement depending on the degree of business
turnover loss’. The proportionate turnover test was included to prevent the risk of businesses
manipulating their productive activity.
Breunig and Watson (2020) proposed an alternative JobKeeper payment rate ‘capped at the lesser of
all or a fraction of average fortnightly income over the 6 months to February 2020, or
$1,500 per fortnight’.107 These analyses were consistent with modelling by Abbott and Phan (2022)
100 Submission 8 – Institute of Chartered Bookkeepers; Submission 9 – Council of Small Business
Organisations Australia.
101 Submission 2 – Gorecki; Submission 5 – Business Council of Australia; Submission 6 – Walkowiak;
Submission 8 – Institute of Chartered Bookkeepers; Submission 14 – Professional Accounting Bodies.
102 Treasury (2020) The JobKeeper Payment: Three-month review.
103 Cassells and Duncan (2020) JobKeeper: The efficacy of Australia’s first short-time wage subsidy.
104 Walkowiak (2021) JobKeeper: The Australian Short-Time Work Program.
105 Submission 6 – Walkowiak.
106 Cassells and Duncan (2020) JobKeeper: The efficacy of Australia’s first short-time wage subsidy.
107 Breunig and Watson (16 June 2020) Strengthening JobKeeper.
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that found the optimal policy offered a proportional but capped wage subsidy alongside enhanced
unemployment benefits.108 When only wage subsidies are implemented, the optimal replacement
rate decreases slightly but the ceiling almost doubles. The welfare costs of the pandemic were
significantly reduced under both policy options.
The Three-month review noted lower and tiered payment rates would remove or lessen the potential
disincentives for some employees that arise from the flat payment and align with comparable
international policies.109 The review noted that lowering the payment rate and, thereby, narrowing
or removing any differential between the JobKeeper and JobSeeker payments may have potentially
amplified disincentives to work among recipients. The changes to these payments coincided to
minimise such risks.
4.3 Eligibility criteria
Key points
• There were exclusions to JobKeeper eligibility based on employee and employer
characteristics. Around 2 million employees were excluded based on their status as a
short-term casual or because they were employed on a temporary visa. Many employers
who were significantly government funded were also excluded, along with employers owned
by foreign governments and sovereign entities.
• Submissions were critical of employee-based exclusions, citing a failure to protect some of
Australia’s most vulnerable workers – many of whom are young and women – and the
significant effects on labour supply in some industries which constrained recovery.
• Narrow recipient eligibility and exclusions reduced the effectiveness of JobKeeper and had
negative economic consequences (Finding 7.d). Most notably, exclusion from JobKeeper
significantly increased the likelihood of job loss with significant economic and well-being
costs for individuals (Chapters 3 and 4.1).
• Excluding temporary migrants was not consistent with international peers and likely
contributed to a temporary labour supply shock. Businesses that were most reliant on
temporary migrant labour responded by reducing output.
• The exclusion of largely government-funded organisations from JobKeeper was appropriate.
In Principle, policies tailored to the specific challenges and needs of these organisations were
better suited than JobKeeper to support these sectors. The effectiveness or otherwise of
these policies is beyond the scope of the evaluation.
• Excluding foreign-government owned firms left some Australian workers unsupported
because of who owned the firm. This result was inconsistent with the intent of JobKeeper.
108 Abbott and Phan (2022) Should wages be subsidized in a pandemic?
109 Treasury (2020) The JobKeeper Payment: Three-month review.
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Employee-based exclusions
Estimates suggest that around 2 million employees were excluded based on their characteristics. The
2 largest groups of employees excluded were short-term casuals and temporary migrants.
• Casual employees were only eligible for JobKeeper if they had been with their employer on a
regular and systematic basis for at least the previous 12 months on 1 March 2020. This
restriction led to around 950,000 short-term casuals being excluded from JobKeeper.110
• JobKeeper was only made available for workers who were also eligible for JobSeeker payments.
This restriction led to around 1.1 million temporary migrants being excluded from
JobKeeper.111 Estimates suggest over 500,000 people on temporary visas left Australia during
the pandemic.112
Several submissions and academic studies have questioned the efficacy and equity of
employee-based exclusions from JobKeeper. The ACTU’s submission suggested the exclusion of
short-term casuals and temporary migrants overlooked ‘those who were experiencing job and
financial insecurity long before the COVID-19 crisis began’.113 Their submission highlighted that these
exclusions disproportionately affected women and young workers and that the distinction between
short- and long-term casuals appeared arbitrary.
The National Association for the Visual Arts (NAVA) submission noted that the contemporary arts
sector was particularly affected by the exclusion of short-term casuals.114 Their submission
highlighted that many employees in the contemporary arts sector ‘have multiple employers and/or
are employed casually.’ NAVA cites its own survey results which show that over 70 per cent of arts
workers are employed casually in small to medium-sized arts organisations.
Dr Walkowiak’s submission argued that the exclusion of temporary migrants may have resulted in
‘institutionalised discriminatory layoffs’ and led to labour shortages and a cost to productivity.115
Professor Borland suggested in his submission that excluding temporary migrants from income
support had an adverse impact on equity.116 He suggested that ‘the design of JobKeeper (or
JobSeeker) could have been improved with respect to providing some type of income support to
categories of workers/jobseekers who were excluded from both JobKeeper and JobSeeker, such as
temporary visa holders’. Cassells and Duncan (2020) argued that the exclusion of certain employer
and employee groups challenges the overall efficacy of the JobKeeper design and its primary
objective of retaining existing employee-employer matches.117
A further issue that arose in stakeholder discussions is that exclusions at the employee level reduced
the efficiency of the underlying payment system. The JobKeeper Payment was administered using
ATO’s STP data.118 Ideally, the ATO would prefill the JobKeeper application forms, as they do with tax
110 Cassells and Duncan (2020) JobKeepers and JobSeekers: How many workers will lose and how many will
gain?
111 Tazreiter and Metcalfe (2021) New Vulnerabilities for Migrants and Refugees in State Responses to the
Global Pandemic, COVID-19.
112 Parliament of Australia (2021) Parliamentary Joint Standing Committee on Migration.
113 Submission 11 – Australian Council of Trade Unions.
114 Submission 4 – National Association for the Visual Arts.
115 Submission 6 – Walkowiak.
116 Submission 10 – Borland.
117 Cassells and Duncan (2020) JobKeeper: The efficacy of Australia’s first short-time wage subsidy.
118 ATO (Australian Taxation Office) (2021) Single Touch Payroll.
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return forms, using STP data. The STP dataset is not able to identify short-term causal workers or
temporary migrants. So, JobKeeper forms were left blank, leaving businesses to self-fill.
Short-term casuals
There were several reasons that decision-makers excluded short-term casuals from JobKeeper
eligibility. The employee-employer relationships that JobKeeper was seeking to preserve were
considered less firmly established among this group and temporary increases to JobSeeker
entitlements would provide income support if employment connections were lost. There was also a
desire to maintain some degree of mobility and flexibility in the labour market. Lastly, there was a
desire to use existing legislative definitions to define eligible employees.119
Exclusion from JobKeeper had economic and well-being costs for short-term casuals. The evidence
discussed in Chapter 3 finds that non-JobKeeper eligible employees (and particularly casuals) were
much more likely to lose employment in the early stages of the pandemic. There are significant
well-being costs associate with loss of employment (Chapter 4.1).
From a financial and economic perspective, the increased accessibility and payment rate of
JobSeeker did not fully compensate for being excluded from JobKeeper. The Jobseeker Payment was
$192 per week lower than JobKeeper.120 This difference is likely to be significant for those on income
support.
Evidence on the extent to which short-term casual exclusion affected labour mobility in the early
months of the pandemic is mixed. Internal Treasury research suggests that few jobless workers were
redeployed during the initial lockdowns. Around 40 per cent of the recovery in paid employment
between mid-April and mid-June (the early lockdown phase) was driven by JobKeeper eligible
workers returning to their past jobs (Figure 10, Panel A). Most JobKeeper ineligible workers were
redeployed after 1 June (Figure 10, Panel B), after the worst of the initial lockdowns.
On the other hand, Andrews, Charlton and Moore (2021) found that short-term casuals had higher
labour reallocation than those eligible for JobKeeper, but this benefit was short lived.121 They
highlighted that Australia initially had higher reallocation-productivity than New Zealand (whose
wage subsidy covered all casuals), but the cross-country differences faded by late 2020.
Lastly, short-term casuals share many similar characteristics to long-term casuals which lends
support to the ACTU’s observation that the distinction between long-term and short-term casuals in
JobKeeper seemed arbitrary. For example, short-term casuals had similar pre-pandemic incomes to
long-term casuals. About 45 per cent of short-term casuals and 49 per cent of long-term casual
workers earned above $550 a week.122 In addition to having similar incomes, there was a low risk
that any worker could have claimed both JobKeeper and JobSeeker. The ATO matched JobKeeper
and JobSeeker data, preventing people from claiming both.
119 Fair Work Act 2009.
The Fair Work Act was amended on 27 March 2021, removing the 12-month requirement for casuals to be
considered a “regular casual employee”.
120 A single person receiving JobSeeker and the JobSeeker supplement would receive $1,116 a fortnight,
$558 a week.
121 Andrews, Charlton and Moore (2021) COVID-19, productivity and reallocation: Timely evidence from three
OECD countries.
122 Cassells and Duncan (2020) Short-term and long-term casual workers: how different are they?
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Temporary migrants
The exclusion of temporary migrants from JobKeeper eligibility carried significant economic and
well-being costs for those affected. These costs were larger for temporary migrants compared with
Australian workers as they were not eligible for JobSeeker payments if they lost their jobs. The
exclusion of temporary migrants was inconsistent with international counterparts (Table 5).
Table 5: Treatment of Temporary visa holders and non-residents
Country Treatment of Temporary visa holders and non-residents
Australia123 Not eligible (except New Zealand, reciprocal arrangement) – Eligibility was based on JobSeeker
eligibility.
New Zealand124 Eligible – All residents and work visas (including working holiday makers and students).
United States125 Eligible – All residents who paid tax and had a valid Social Security number were eligible.
United Kingdom126 Eligible – All employees were eligible, regardless of visa type.
Canada127 Eligible – Eligibility was based on place of employment, not nationality and residence.
Germany128 Eligible – All employees who pay social security contributions were eligible.
Japan129 Eligible – All residents with a valid residence card were eligible.
Singapore130 Not eligible – The Jobs Support Scheme (JSS) only covered local employees (Singapore Citizens
and Permanent Residents).
Many temporary migrants left Australia and were not replaced, causing a temporary labour supply
shock. In June 2021, the stock of temporary migrants was 22 per cent lower than in March 2020. The
decline was driven by a 34 per cent decrease in the number of student visa holders and a 69 per cent
decrease in working holiday visa holders. These workers were concentrated in hospitality,
agriculture, and administrative services.131 The stock of temporary migrants has since recovered,
exceeding pre-pandemic levels by the end of the June quarter 2023.132
In firms where more than 40 per cent of employees were temporary migrants, employment declined
by more than 20 per cent in early 2020 (Figure 17, Panel A). These firms also recovered more slowly
than other firms. While most firms’ turnover largely recovered by June 2021, temporary migrant
dependent firms’ output was still down by around 18 per cent (Figure 17, Panel B).
123 Treasury (25 April 2020) Factsheet: JobKeeper Payment: Supporting businesses to retain jobs.
124 New Zealand Government, MSD (n.d.) Declaration – 2020 COVID-19 Wage Subsidy Scheme.
125 United States Government, IRS (Internal Revenue Service) (2022) Questions and Answers about the First
Economic Payment – Topic A: Eligibility.
126 His Majesty’s Government, HMRC (2021) Check which employees you can put on furlough to use the
Coronavirus Job Retention Scheme.
127 Government of Canada, CRA (Canadian Revenue Agency) (2022) Frequently asked questions – Canada
emergency wage subsidy (CEWS).
128 CMS Legal (n.d.) FAQ on short-time work (Kurzarbeit).
129 Government of Japan, MIC (Ministry or Internal Affairs and Communications) (2020) Special fixed amount
benefits.
130 ILO (2020) Temporary Wage Subsidies.
131 Department of Home Affairs (2022) Student visa and Temporary Graduate visa program report.
132 Commonwealth of Australia (2023) Budget 2023-24, Budget Strategy and Outlook, Budget Paper No. 1.
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Figure 17: Change in employment and turnover, by firm temporary migrant reliance
a) Change in employment b) Change in turnover
Source: Treasury analysis of tax and visa microdata, controlling for industry, location and firm size.
Exclusions based on employer characteristics
Many organisations that are significantly government funded – public schools, public universities and
many childcare providers, among others – were excluded from receiving JobKeeper explicitly or by
the design of eligibility criteria.
While there is no doubt that government-funded entities faced significant challenges and hardships
because of the pandemic, their exclusion from JobKeeper was appropriate and consistent with the
payment’s objectives. In principle, sector-focused policies tailored to the specific challenges and
needs of these organisations would have been more appropriate forms of support than JobKeeper. In
many cases, sector-specific support was available. The appropriateness and effectiveness or
otherwise of these packages is beyond the scope of the evaluation.
JobKeeper also excluded firms owned by foreign governments and sovereign entities.133 The
evaluation understands that the purpose of this exclusion was to ensure that funding did not support
workers offshore. It resulted in the exclusion from JobKeeper of some Australians, working in some
heavily impacted sectors. The ACTU’s submission is critical of the exclusion of foreign government
owned companies, arguing that Australian workers of these companies were left with little
government support leading to financial hardship.134 Box 4 considers the case study of dnata. The
exclusion of firms such as dnata was not consistent with the objectives of JobKeeper.
133 Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 3) 2020.
134 Submission 11 – Australian Council of Trade Unions.
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Box 4: dnata case study
A partner of 46 airlines, dnata offers ground handling, cargo and catering services in Australia. The
business is part of the Emirates Group, which is wholly owned by the government of Dubai. This
ownership structure made dnata ineligible for JobKeeper.
dnata was initially eligible for JobKeeper, until an amendment made on 1 May 2020. The amendment
changed the definition of sovereign entities, effectively excluding from JobKeeper all employees of
companies wholly owned by foreign governments. The Australian workers at dnata were largely
performing roles that, if duplicated in the private sector or with a different employer, would have
qualified for the JobKeeper program. It was operating in a heavily pandemic-affected industry.
The amendment to the sovereign entities definition was backdated to 30 March 2020 – the start of
JobKeeper payments. Business excluded by the sovereign entity definition change had anticipated
receiving the first 2 JobKeeper instalments on 8 May, but this change meant they did not receive the
payments.
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5 Integrity and implementation
5.1 Program delivery and integrity
Key points
• The administration of JobKeeper has been substantially investigated by the Auditor-General
and the IGTO. These investigations support Finding 5 that JobKeeper delivery was effective
and payment integrity was maintained.
• The Auditor-General’s audit of JobKeeper found that the administration of JobKeeper was
effective and that the ATO implemented fit-for-purpose arrangements to protect the
integrity of JobKeeper payments.
• The Auditor-General found that the ATO successfully balanced the need for rapid
implementation and the integrity of the program. The ATO made the payment process as
simple and fast as possible for eligible entities.
• The Auditor-General noted that the ATO maintained fit for purpose governance
arrangements to monitor scheme performance, regularly monitored performance and
provided regular reporting to Treasury and other government entities.
• The IGTO investigated actions, decisions and systems of the ATO in relation to JobKeeper and
commended its responsiveness in assisting the Australian community.
• The ATO’s gap analysis estimated that the net payment gap for JobKeeper was only
2.4 per cent.
The Auditor-General conducted a substantial audit of the administration of JobKeeper in 2021–22.
This evaluation does not revisit the administration of the program. No submission received by the
evaluation questioned the Auditor-General’s conclusions.
In addition, the IGTO provided a submission to the evaluation, attaching the IGTO’s 2 published
reports on JobKeeper.
The ATO has published a payment gap analysis. The gap analysis estimates the difference between
the amount of JobKeeper the ATO paid and what the ATO expects it should have paid out if every
payment was fully compliant with tax law.
The evaluation summarises these public sources, which taken as a whole, indicate that while there
are lessons to be learned, program delivery was effective and payment integrity was maintained.
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Table 6: Some reports on JobKeeper implementation and program management
Title Date Author Website
Administration of the JobKeeper 4 April 2022 Australian National https://www.anao.gov.au/work/perform
Scheme Audit Office ance-audit/administration-the-jobkeeper
-scheme
A report on Aspects of the ATO’s December Inspector General of https://www.igt.gov.au/investigation-rep
Administration of the JobKeeper 2020 Taxation and Taxation orts/jobkeeper-and-boosting-cash-flow-p
and Boosting Cash Flow Ombudsman ayments/
Payments for New Businesses
An investigation into the ATO’s September Inspector General of https://www.igt.gov.au/investigation-rep
administration of JobKeeper 2021 Taxation and Taxation orts/an-investigation-into-the-atos-admi
enrolment deferral decisions Ombudsman nistration-of-jobkeeper-enrolment-defer
ral-decisions/
JobKeeper payment gap 31 October Australian Taxation https://www.ato.gov.au/About-ATO/Res
2022 Office earch-and-statistics/In-detail/Tax-gap/Jo
bKeeper-payment-gap/
Approach taken in the reports
The Auditor-General conducted the audit to assess the effectiveness of the ATO’s administration of
JobKeeper. This audit was phase 2 of the ANAO’s multi-year strategy to assess the delivery of the
Australian Government’s response to the pandemic. The Auditor-General examined ATO
documentation, analysed JobKeeper data to assess timeliness of payments and correct payment
rates, examined the Treasury documentation relating to the evaluation of the JobKeeper program
and policy, and conducted meetings with ATO and Treasury staff.
The Inspector General of Taxation and Taxation Ombudsman (IGTO) received 327 complaints relating
to JobKeeper from individuals and businesses. In response, the IGTO carried out 168 investigations
into ATO actions and decisions made in administering JobKeeper. Following its investigations of
JobKeeper complaints, the IGTO published 2 reports that outline its observations on the ATO’s
administration of JobKeeper.
The ATO gap analysis estimated the difference between the amount of a particular tax the ATO
collected and what would have been collected if all taxpayers were completely compliant. Tax gap
analysis and trends are an indicator of the performance of the tax and superannuation systems. In
the case of JobKeeper, the approach has been modified as the program was a payment rather than a
tax. Box 5 provides more details on the methodology used.
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Box 5: ATO gap analysis methodology
Estimation method
For payments made in the initial six-month program (April to September 2020), verification teams were
assigned a randomly selected sample of 1,513 JobKeeper payments. The process was designed to make
use of existing client information and to contact the client only when necessary.
For payments made in the extension periods (October 2020 to March 2021), operational audit data were
obtained on all taxpayers who received JobKeeper payments in the extension phase. The JobKeeper
extension population was run through a 2-step regression process to determine the extent of the gap.
The key measure is the ‘net payment gap’, which estimates and reflects incorrect payments not
recovered or detected. The ‘gross payment gap’ estimates all the incorrect payments that were applied
for even if they were ultimately stopped or recovered by the ATO as part of compliance activity.
Table 7: JobKeeper payment gap
Number of
Element Value in $m
Payments
Payments applied for 64,454,373 89,163
Stopped 144,741 206
Recovered 145,941 202
Final Payments 64,163,691 88,755
Correct payments 62,619,666 86,575
Net payment gap 1,544,025 2,180
Gross payment gap 1,834,707 2,588
Net gap (per cent) 2.4
Gross gap (per cent) 2.8
Source: ATO (2022) Australian tax gaps overview.
Businesses that did not ultimately realise turnover decline thresholds in the first JobKeeper period are
considered part of the policy gap and are not estimated in the gap analysis. This is because these
businesses were not necessarily non-compliant.
The reports found JobKeeper’s program delivery was effective
The ANAO found the ATO’s operational performance was effective
The Auditor-General found that the ATO’s monitoring and reporting on the operational performance
of the JobKeeper scheme was effective. The ATO maintained fit for purpose governance
arrangements to monitor scheme performance, regularly monitored performance, and provided
regular reporting to Treasury and other government entities.
The report found the ATO appropriately prioritised rapid implementation of JobKeeper. The payment
arrangements were found to be largely fit-for-purpose to protect the integrity of JobKeeper
payments.
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The Auditor-General concluded that the ATO made JobKeeper payments in a timely manner.
99 per cent of JobKeeper payments were made to entities within the initial 14-day timeframe set out
in the Rules.135 The average timeframe was 4 days.
ANAO found that the ATO reported externally on the JobKeeper scheme in a timely and informative
manner. While the legislative framework for JobKeeper did not impose reporting obligations, the
ATO and Treasury developed reporting standards in line with public sector mechanisms such as
parliamentary committees, including the Senate Select Committee on COVID-19 (COVID-19
Committee), and annual reporting requirements.
The IGTO commended the ATO on its responsiveness
The IGTO noted that the ATO needed to act quickly to implement administrative systems and
associated guidelines to facilitate JobKeeper payments. The IGTO notes some matters arose that had
an impact on the efficient and fair administration of the tax system.
The ATO showed JobKeeper was one its most effective programs
The ATO estimated the net payment gap of 2.4 per cent, or 1.5 million payments to the value of
$2.2 billion. That is, the correct payments were made to 97.6 per cent of applicants under the
JobKeeper program. This compares favourably to other ATO estimates. The estimated gaps for taxes
and programs administered by the ATO are 7.8 per cent for GST (2019–20), 2.9 per cent for Wine
Equalisation Tax (2018–19) and 3.8 per cent for the Superannuation guarantee (2018–19).
Australia’s payment gap was less than the United Kingdom’s payment gap.136 The United Kingdom
Evaluation estimated the level of error and fraud within the CJRS lifecycle of 1 March 2020 to
30 September 2021. The gap was estimated to be in a range between 3.0 per cent and 7.8 per cent,
with the most likely gap was 5.1 per cent.
In Australia, the most common causes of payment ineligibility were entities being late or not lodging
their tax return or activity statement, and employees of Eligible Business Participants being
employed elsewhere. Table 7 outlines the full results from the ATO gap analysis on JobKeeper.
While the implementation of JobKeeper was effective, ANAO and the IGTO provide some
valuable lessons
The Auditor-General made no formal recommendations to the ATO or Treasury. The Auditor-General
did identify some lessons for the implementation of similar economic response measures in future.
The key lesson was for the implementing agency to adhere to a more structured approach when
documenting the reasons for exercising discretion on overpayments. This would provide more
transparency and accountability for the use of public funds.
The IGTO reports provide a summary of the key issues raised by their community which accord with
best-practice policy implementation and regulation. As noted by the Auditor-General, the ATO’s
arrangements were generally appropriate. It balanced the need for rapid implementation and the
integrity of the program in the extraordinary circumstances of the pandemic.
135 The Rules refers to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020,
which is a legislative instrument made under the Coronavirus Economic Response Package (Payments and
Benefits) Act 2020 by the Treasurer.
136 His Majesty’s Government, HMT and HMRC (2023) The Coronavirus Job Retention Scheme final evaluation.
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5.2 Transparency
Key points
• Transparency and openness in public policy builds public trust. International organisations
and governments of advanced economies recognise this and have recommendations and
policies in place to promote transparency and openness in public policy.
• JobKeeper did not include in its design a public registry or disclosure requirement for entities
that received the JobKeeper Payment. Over time, information became available to the public
about some entities that received JobKeeper. Entity-specific disclosures were restricted to
listed companies which comprise a small proportion of total JobKeeper entities (593 out of
around 1 million). There is no public information about the vast majority of entities that
received JobKeeper.
• The decision not to include a public register reflected concerns about privacy and publicly
identifying firms that may have been in a precarious financial position.
• In this regard, JobKeeper was an outlier compared with programs in other countries.
Comparable schemes had public registers or other disclosure requirements. There is no
evidence that these requirements affected take-up of the subsidy or had a negative
signalling effect.
• Future design of a wage subsidy or similar policy should include a public register of recipient
entities or other real-time disclosure requirements (Finding 7.e). Best practice in public
policy is greater transparency and there was strong public appetite to understand where
JobKeeper payments were going.
• Consideration should also be given to facilitating repayments in a way that minimises cost
and ambiguity for the repaying entity.
The role of transparency in public policy
Transparent design and implementation of public policy is good practice and consistent with
international standards. The IMF, World Bank and OECD recognise that transparency helps
economies to function better, encourages governments to act more effectively and efficiently and
enables citizens to fully participate in public life.137 Providing access to information held by
government also builds legitimacy in government.138 It allows the public to understand
decision-making process and hold governments to account. Transparency also improves internal
accountability.
137 IMF (2013) 2013 Review of the Fund’s transparency policy; World Bank (2015) Open Government; OECD
(2016) Open Government: The Global Context and the Way Forward.
138 Addink (2019) Good Governance: Concept and Context, Chapter 8: The Principle of Transparency.
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In Australia, the Department of Finance sets out clear guidelines around transparency in all facets of
policy making. There are 3 core frameworks overseen by the Department of Finance.
• The Commonwealth Grants Rules and Guidelines that promotes the proper use and
management of public resources, which is in part achieved through probity and
transparency.139
• The Managing Commonwealth Resources framework to support an accountable and
transparent public sector.140
• Transparency in Australian Government Procurement which states that ‘Transparency involves
relevant entities taking steps to enable appropriate scrutiny of their procurement activity’.141
These frameworks and guidelines aim to ensure that government decisions allow for appropriate
scrutiny and are defensible.
Transparency arrangements in JobKeeper
The initial design of JobKeeper did not incorporate any transparency mechanisms. Unlike other
countries’ job retention schemes, there was not a public register of entities that received the
payment and there was no requirement for public disclosure for recipient entities.
The absence of transparency mechanisms was partly a function of utilising ATO systems to
administer JobKeeper which meant that Australian taxation legislation applied to recipients of
JobKeeper. Entities and individuals that received JobKeeper were not publicly disclosed in
compliance with the Privacy Act 1988 (Privacy Act) and the Taxation Administration Act 1953
(Taxation Administration Act).
Over the lifespan of JobKeeper and in the period after its conclusion, some changes were made to
transparency requirements. In some cases, additional disclosures were a direct response to public
and political pressure for information about recipient entities.
In July 2020, the Australian Securities and Investment Commission (ASIC) issued guidance requiring
listed entities to disclose in notices to market operators (such as the ASX) how much support they
had received and any repayments they made.142 The support entities were required to disclose was
not limited to JobKeeper.
On 13 September 2021, the Treasury Laws Amendment (2021 Measures No. 2) Act 2021 received
Royal Assent with amendments introduced by crossbench senators. These amendments obliged ASIC
to regularly publish a consolidated report of all notices provided to market regulators as soon as
practicable.143
On 7 December 2021, ASIC published its first report detailing listed companies that had received the
JobKeeper Payment. The latest report was published on 18 August 2022.144
To date, 593 publicly listed firms have reported receiving JobKeeper payments covering at least
186,000 employees. This is a small fraction of the more than 1 million businesses and 4 million
139 Department of Finance (2023) Commonwealth Grants Rules and Guidelines 2017.
140 Department of Finance (2022) Managing Commonwealth Resources.
141 Department of Finance (2023) Transparency in Commonwealth Government Procurement.
142 ASIC (Australian Securities and Investment Commission) (7 July 2020) Focuses for financial reporting under
COVID-19 conditions.
143 Treasury Laws Amendment (2021 Measures No. 2) Bill 2021.
144 ASIC (2022) Section 323DC Consolidated Report.
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individuals who received the payment. Listed entities received only about $4.3 billion in JobKeeper
payments, less than 5 per cent of total payments.
Public engagement with JobKeeper
JobKeeper had a high level of public engagement and interest over the course of the policy. The
public had a clear desire and expectation to know who received JobKeeper payments.
During JobKeeper’s lifetime, media reporting and public engagement with businesses that received
support were limited to information disclosed by the individual businesses.145 Ownership Matters
highlighted the need for more transparent practices in its submission to the Senate Economics
Legislation Committee inquiry on JobKeeper.146 The submission relied on information compiled from
listed entities’ annual reports.
Calls for increased transparency around JobKeeper recipient entities intensified over time as the
economic recovery strengthened and business conditions and profitability improved. Support for
transparency extended to some businesses that received JobKeeper. In its submission to a Senate
Committee inquiry, Domino’s Pizza Enterprises supported greater disclosure of payment receipt.
Domino’s Pizza Enterprises suggested ‘the publication of a list of all entities with annual turnover of
more than $50 million … would align with community expectations’.147
Box 6: Voluntary disclosures and repayments
Like voluntary disclosures of JobKeeper receipt, voluntary repayments of JobKeeper were not
incorporated in the original design of the policy. There was ambiguity as to how repayment was treated in
taxation law. This made repayments more difficult, although the ATO clarified some aspects of the
treatment of JobKeeper repayments over time. 148
A few companies chose to repay their JobKeeper payments. Most repayments were made by publicly
listed firms. According to ASIC’s report on JobKeeper payments, listed entities voluntarily repaid
$248 million of JobKeeper payments, about 5.8 per cent of the $4.3 billion they received. According to the
ATO’s de-identified data set, entities with incomes greater than $10 million made about $193 million of
voluntary JobKeeper repayments.149
In retrospect, the process to make voluntary repayments should have been simpler and considered in
JobKeeper’s initial design. Public engagement with JobKeeper put pressure on companies who received
potentially unneeded support to make repayments, strengthening the case for more transparent
practices via a public register of recipients.
145 May (25 October 2020) BossKeeper: how JobKeeper lined the pockets of top ASX directors, executives and
shareholders.
146 Ownership Matters (6 July 2021), Submission No 1 to Senate Standing Committees on Economics,
Parliament of Australia, Inquiry into Coronavirus Economic Response Package Amendment (Ending
JobKeeper Profiteering) Bill 2021.
147 Domino’s Pizza Enterprises (n.d.), Submission No 4 to Senate Standing Committees on Economics,
Parliament of Australia, Inquiry into Coronavirus Economic Response Package Amendment (Ending
JobKeeper Profiteering) Bill 2021.
148 Lian (16 March 2021) ATO clarifies JobKeeper repayment tax deductibility.
149 ATO (2 February 2022) Letter to the President of the Senate from the Acting Commissioner of Taxation
responding to Orders of 4 and 23 August 2021 (1196 and 1219), Parliament of Australia.
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Stakeholder concerns about the implications of public disclosure
There were concerns among some stakeholders about the potentially distortive outcomes a public
register may have introduced for the take-up, delivery, and efficacy of JobKeeper.
Some feared disclosure of the receipt of government support through JobKeeper could signal
financial vulnerability. In such a highly uncertain environment, this could affect market perceptions
and in the extreme, threaten the survival of otherwise viable firms.
There were further concerns around the privacy implications associated with disclosing entities that
received JobKeeper payments and how such a provision interacted with the legislative infrastructure
of the ATO’s delivery system.150 While it is undoubtedly the case that trust in the ATO to maintain
taxpayer privacy is fundamental to the administration of the tax law, JobKeeper was a grants
program rather than a tax. Consistent with other grants programs, any future wage subsidy should
have transparency as a primary objective in the design of the policy. Applicants should expect that if
they apply for a subsidy or grant then this will be made public.
International experience with transparency arrangements
JobKeeper was an outlier compared with programs in other countries. Comparable schemes used
abroad had public registers or other disclosure requirements (see Box 7). International experience
does not support the concerns raised around public transparency and reputational issues, nor that
transparency requirements affected take-up of wage subsidy programs.
Recently published impact evaluations for both the United Kingdom and New Zealand wage subsidies
did not identify linkages between disclosure requirements and take-up or reputational issues. The
fact that a large cross-section of firms around the world were suffering a significant upheaval and
turmoil in the early stages of the pandemic may explain why concerns about reputational risks were
not borne out.
150 Gottliebsen (1 September 2021) Confusing two JobKeeper issues.
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Box 7: Transparency mechanisms in pandemic job retention schemes abroad
Australia’s transparency practices in JobKeeper were less robust than most comparable policies used
abroad during the pandemic. There was no transparency mechanism in JobKeeper’s initial design and
information was eventually released in an ad-hoc and incomplete manner making engagement with
this information more difficult.
Several comparable job retention schemes used abroad incorporated public registries of entities that
received support during the pandemic to avoid such outcome. Information disclosed in transparency
mechanisms abroad:
Canada:151 The names and business numbers of companies that received the Canada
Emergency Wage Subsidy (CEWS) were added to a public registry by the
Canada Revenue Agency. The public registry is no longer available; however,
users can view more detailed data at the semi-aggregate level.
Ireland:152 A published list of most employers that received the Temporary Wage
Subsidy Scheme (TWSS) included:
• the employer’s name
• the employer’s address.
Ireland’s published list of TWSS recipients does not include information on
the value of wage subsidies received nor does it disclose the number of
employees covered.
New Zealand:153 A public register of all the companies that received their wage subsidies
listed:
• the name of the entity
• the name of wage subsidies received
• the number of employees paid
• the total amount received by each entity.
New Zealand’s register, unlike many others, is still available to the public and
easily accessible with a browsable function.
151 Zimonjic (22 December 2020) Federal government launches searchable database of firms, groups that got
wage subsidy; Government of Canada, CRA (2022) CEWS claims – detailed data.
152 Government of Ireland, Revenue, Irish Tax and Customs (2023) List of employers who received payments
under TWSS.
153 New Zealand Government, MSD (n.d) COVID-19 wage subsidies – Employer Search.
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United Kingdom:154 A monthly list of CJRS claimants published:
• the name of the employer
• the company number for each claimant
• the value of employers’ CJRS claim (in bands).
The publication of the list was intended to encourage public tip-offs and to
deter fraudulent claims. Employees were able to check whether their
employer had claimed the CJRS through the online personal taxation
platform. Information published on the claimants list was removed by the
United Kingdom Government after one year.
United States of Detailed data on the loans provided under the Payment Protection Program
America:155 was released by the US Small Business Administration (SBA). Key information
released included:
• the business name and type
• the industry and sector of the business
• the number of jobs supported
• the loan amount and amount forgiven
• the date of the loan approval and forgiveness
• the lender.
The US PPP database is the most detailed of the comparable policies. The
detailed nature of the database is not only beneficial to monitoring but also
to analysis of the policy.
Singapore:156 Singapore’s JSS had limited transparency provisions. The JSS was considered
a grant under Singapore’s accounting rules, meaning firms had to report any
JSS funding on their balance sheets.
154 Sunak (12 November 2020) The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs
(Coronavirus Job Retention Scheme) Direction.
155 United States Government, SBA (United States Small Business Administration) (2023) PPP data.
156 Government of Singapore, Auditor-General’s Office Singapore (2023) Report of the Auditor-General for the
financial year 2022/23; Institute of Singapore Chartered Accountants (2020) COVID-19 Government Relief
Measures: Accounting for the grant provided by the Singapore Government for wages paid to local
employees under the Jobs Support Scheme.
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5.3 Communication strategy
Key points
• Authorities recognised that the speed at which JobKeeper was implemented, and the fact
that some policy details were understandably settled after the initial announcement, meant
that an efficient communication strategy to disseminate information would be critical to
achieving policy outcomes.
• There were multiple ministerial offices and government departments involved in
communicating policy details and providing guidance on JobKeeper. While stakeholders
acknowledged, and in some cases commended, authorities’ effort to communicate the
policy, many suggested that a more structured and better co-ordinated approach could have
minimised scope for confusion.
• Stakeholder feedback highlights the importance of clear communication from policy makers,
particularly when speedy implementation necessarily requires that some details are decided
after the initial policy announcement (Finding 8).
The JobKeeper communication strategy
As discussed in Chapters 1 and 3, JobKeeper was implemented in a period of extraordinary
uncertainty. It was introduced at speed and its reach was intended to be nationwide. The
prioritisation of rapid implementation necessarily meant that some policy details were amended or
decided as issues arose in the days and weeks following the initial announcement.157 Authorities
recognised that an efficient communication strategy to disseminate information in a clear and timely
manner would be critical to achieving policy outcomes.
Authorities created a specific JobKeeper ATO website on the date of announcement (now
decommissioned). This website initially sought expressions of interest in JobKeeper from businesses
and was developed by the ATO into a source of truth platform over time.
Treasury published digital factsheets tailored to employers and to employees, streamlining the
dissemination of information. These factsheets included information on eligibility, payment process,
and timing. Treasury also updated the factsheets to reflect the changes made to the policy under the
extension phases. These resources directed the public to the JobKeeper ATO website for further
information.
Feedback on the JobKeeper communication strategy
Submissions noted and commended authorities’ efforts to communicate JobKeeper details quickly
and clearly, acknowledging that implementing a communication strategy was difficult in the
circumstances. Some, though not all, found that policymakers were appropriately responsive and
efficient in engaging with industry to resolve complications or issues with policy design as they arose.
Several submissions argued that a more structured method of communicating policy details and
decisions could have improved clarity and reduced uncertainty for JobKeeper recipients, particularly
in the weeks following the initial policy announcement in March 2020.
157 For example, the exclusion of state and local government entities and schools was announced on 3 April
2020 and changes to the eligibility criteria (turnover test) for charities was announced on 5 April 2020.
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NAVA found that ‘the eligibility criteria for JobKeeper was confusing when communicated,
particularly as criteria kept changing as different business situations were taken into
consideration’.158 Professional accounting bodies similarly found there was ‘confusion over the
ever-changing rules and how to calculate turnover’. The Australian Small Business and Family
Enterprise Ombudsman (ASBFEO) recommended future policy responses should have ‘clear and
targeted communication supported by practical guidance for small business’.159
The professional accounting bodies noted that JobKeeper changes were often contained on several
different government websites which they argue led to some confusion as websites were updated at
different times and occasionally there were differences between sites.160 The accounting bodies
advocated for a ‘single source of truth’ website to which other government websites could refer
rather than duplicate.
The IGTO also raised concerns about what it observed as inconsistencies in public guidance that
created uncertainty.161 As noted in Chapter 5.1, the IGTO recommended that synchronising public
advice and guidance with the implementation of significant new tax law minimises some of the
uncertainty caused by the administration of that new law.
The concerns raised in submissions were echoed in interviews and discussions with some key
stakeholders. A common theme was that the involvement of multiple government agencies and
ministerial offices in disseminating information at different times increased scope for confusion and
inconsistency in communicating policy details.
158 Submission 4 – National Association for the Visual Arts.
159 Submission 12 – Australian Small Business and Family Enterprise Ombudsman.
160 Submission 14 – Professional Accounting Bodies.
161 Submission 3 – Inspector-General of Taxation and Taxation Ombudsman.
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6 Value for money
Key points
• JobKeeper provided value for money through its broad social benefits and the role it played
alongside other policy measures in addressing extraordinary and unquantifiable uncertainty
and averting the worst economic tail risks of the pandemic (Finding 4). Although difficult to
measure, the scale and nature of the benefits compared favourably with the upper bound
estimate of JobKeeper’s social costs.
• The evaluation is concerned with the broad social value of JobKeeper. It takes a qualitative
approach to analysing value for money. Quantitative measurement of the macroeconomic
benefits and some of the costs of JobKeeper would be inherently unreliable, because of the
impossibility of identifying a robust counterfactual for what would have happened to
employment, the economy and indeed the path of the COVID-19 virus in the absence of
JobKeeper. In addition, disentangling the macroeconomic impacts of JobKeeper from other
policy support presents quantitative challenges.
• The direct economic benefits of JobKeeper included preserving employee-employer
relationships, providing income support, and ensuring otherwise productive businesses
remained viable. These direct benefits had broader macroeconomic consequences, through
the confidence channel and by supporting aggregate demand and supply. JobKeeper also
played a critical role in addressing the extraordinary and unquantifiable uncertainty at the
time of its introduction and averting the worst economic tail risks of the pandemic. Other
benefits of JobKeeper were improved equity across the wage distribution and increased
well-being of recipients.
• On the cost side, the value for money assessment of JobKeeper is concerned with the social
cost of the program rather than its gross fiscal cost of $88.8 billion. JobKeeper was a transfer
payment from one group in society to another through which no resources were created or
destroyed. Consistent with best practice evaluation, such payments are not treated as
economic costs though there is a social cost of taxation associated with the additional
taxation needed to finance the program.
• The upper bound to the social cost of JobKeeper is estimated to be $22.4 billion (25 per cent
of the gross fiscal cost of the program plus its administration cost). This is an overestimate of
the true social cost of JobKeeper as downward adjustments to the gross fiscal cost should be
made to account for voluntary repayments, the tax revenue raised on JobKeeper payments,
and the expenditure saved by preventing recipients from becoming unemployed and
accessing JobSeeker payments. The large spike in job separations and flows onto income
support payments just prior to the introduction of JobKeeper in late March 2020 suggests
the latter adjustment would be non-trivial.
• While JobKeeper was value for money, there are lessons identified throughout this
evaluation which could help to increase the benefits and reduce costs should a similar
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program be required in future, including by minimising inefficiencies relating to deadweight.
These do not detract from the overall positive value for money assessment of JobKeeper.
• The discrepancy between the initial estimate of the cost of JobKeeper and its actual cost
highlights the risk associated with estimating policy costings during an economic crisis. In a
crisis, there would be benefits in emphasising the uncertainty around producing cost
estimates in such an environment and being clear about the assumptions underpinning the
costing (Finding 10).
6.1 Approach to assessing value for money of JobKeeper
A value for money assessment is an analysis of whether resources were well spent on a policy or
program. In the case of JobKeeper, the value of undertaking such an exercise ex-post is largely to
inform future policy deliberations.
The evaluation is primarily concerned with the social value of JobKeeper, defined as the broad
benefits and costs to society associated with the program and its overall effect on welfare. The
evaluation applies a largely qualitative approach to assessing the social benefits and costs of
JobKeeper, although it draws on quantitative analysis in doing so.
6.2 Benefits of the JobKeeper Payment
Economic benefits
As identified in Findings 1 and 2, JobKeeper had far-reaching economic implications and was effective
in achieving its stated objectives of preserving employment, supporting incomes, and preventing
business failures. The direct effect of JobKeeper on employment was large. It supported
approximately 4 million employees – almost one third of pre-pandemic employment. Credible
estimates suggest it prevented the direct loss of between 300,000 to 800,000 jobs.
JobKeeper provided income support to employees and businesses. The large majority of JobKeeper
payments were made to small businesses and not-for-profits with turnover of less than $10 million.
Andrews, Bahar and Hambur (2023) suggest JobKeeper played a critical role in preventing otherwise
productive but financially fragile businesses from failing in the early stages of JobKeeper.162 Business
failures were low during the pandemic relative to levels experienced prior to the pandemic and in
previous downturns, though this likely reflected the effect of other policy support as well as
JobKeeper.
Beyond its direct economic benefits, JobKeeper had macroeconomic consequences reflecting its
scale and the environment in which it was introduced. JobKeeper played a critical role in addressing
the extraordinary and unquantifiable uncertainty at the time of its introduction and averting the
worst economic tail risks of the pandemic. Quantitative estimates of the macroeconomic effects are
inherently unreliable. It is not possible to identify a robust counterfactual given the extraordinary and
unquantifiable uncertainty that existed in the peak of the crisis in March–April 2020 and in the
absence of any modern Australian experience of a global pandemic. We do not know with any
degree of certainty what would have happened to employment and output in the absence of
162 Andrews, Bahar and Hambur (2023), The Effects of COVID-19 and JobKeeper on Productivity-Enhancing
Reallocation in Australia.
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JobKeeper. It is difficult to disentangle the impacts of the different elements of the fiscal and
monetary policy response to the crisis.
The impossibility of establishing a robust counterfactual against which to assess macroeconomic
benefits is recognised in evaluations of the United Kingdom and New Zealand wage subsidy schemes.
In the evaluation of the United Kingdom wage subsidy scheme, authorities do not attempt to
quantify the macroeconomic impacts of the scheme through the crisis against a robust
counterfactual, for similar reasons to those outlined above. Instead, they look to the strength and
speed of the recovery, compared with recent recoveries from recessions, as a basis for empirical
estimates of the macroeconomic impact of the policy. There would be 2 difficulties in adopting a
similar approach in the Australian context. First, the nature of the impact of lockdown and reopening
associated with a pandemic is very different from a normal business cycle recession and recovery.
Second, the most recent recessions in Australia prior to the pandemic preceded significant structural
changes to the labour market.
Equity benefits
There were equity benefits associated with JobKeeper. While equity was not an explicit policy
objective of JobKeeper, it is common practice to consider equity when appraising the social benefits
of a policy. The United Kingdom Green Book on policy appraisal recognises that financial benefits for
lower income households carry a higher social value based on the principle of diminishing marginal
utility of income.163 In an Australian context, the Measuring What Matters framework recognises the
importance of equity in ensuring well-being outcomes are shared fairly among the population.164
As discussed in Chapter 3, JobKeeper payments played a larger role in supporting people in lower
wage quintiles, primarily because lower wage earners were more likely to receive JobKeeper than
higher wage earners and the payment itself was a larger proportion of lower wage earners’
pre-pandemic wages.
Well-being benefits
JobKeeper had well-being benefits that extended to non-monetary benefits of being employed (or
not being unemployed), which are discussed in Chapter 4. These include social and psychological
benefits of being employed, such as social interactions and a sense of connection and purpose.
Estimating this benefit would rely on a robust estimate of the number of people who would have
been unemployed in the absence of JobKeeper which, as discussed above, is not possible.
6.3 Cost of JobKeeper
Social cost of payments
The evaluation is concerned with the total economic cost of JobKeeper. This is conceptually different
from its fiscal cost.
JobKeeper payments were transfers from one group of society to another, where no resources were
created or destroyed in the process. Payments that are transfers between groups are not economic
costs and society overall is not made better or worse off. All additional government expenditure
must be financed at some point. Economic theory suggests there is a reduction in economic welfare,
the so-called ‘marginal excess burden’ of taxation, associated with higher taxation. This cost is often
called the social cost of taxation.
163 His Majesty’s Government, Government Finance Function and HMT (2022) The Green Book.
164 Commonwealth of Australia (2023) Measuring What Matters.
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This loss of economic welfare is typically reported as the amount of loss for every unit of tax raised.
In Australia, the social cost of taxation is often considered to be about 25 per cent (economic welfare
is reduced by 25 cents for every dollar of taxation raised).165 The United Kingdom and New Zealand
use a cost of 20 per cent of tax raised.166
JobKeeper had a gross fiscal cost of $88.8 billion. Applying a social cost of taxation rate of 25 per cent
to the gross fiscal cost and adding the administrative cost (see below) yields an upper bound for the
social cost of the program of $22.4 billion. This is an indicative estimate only and likely an
over-estimate of the true social cost of JobKeeper. Quantitative cost-benefit analyses typically adjust
the gross fiscal cost of a program to arrive at a net fiscal cost. In JobKeeper’s case, this would include
deducting voluntary repayments, the tax revenue raised from JobKeeper payments (JobKeeper was
assessable income), and the expenditure JobKeeper saved by preventing recipients from becoming
unemployed and accessing JobSeeker payments. The social cost of taxation rate is typically applied
on this final (net) fiscal cost amount – the amount of taxation required for the payment. To calculate
this figure a macroeconomic counterfactual would be needed, which as discussed above is not
possible.
Inefficiency of JobKeeper
JobKeeper had costs relating to the inefficiency of payments being wasted. Deadweight is defined as
the proportion of spending on activities that would have occurred in the absence of the policy or
program. Fraud and error in payments also detract from the effectiveness of the payment. Most
policies have some degree of deadweight, error and fraud. These inefficiencies do not add to the
social cost described above, because they are included in the gross fiscal cost. But they do suggest
that policy objectives could have been achieved at a lower gross fiscal and, therefore, social cost. The
key consideration is how effective JobKeeper was at minimising payments towards these streams
and whether there are lessons to be learned.
The administration of JobKeeper was highly efficient. There was a relatively low net payment gap of
2.4 per cent associated with the payment. This equates to an error and fraud cost of around
$2.2 billion, as discussed in Chapter 5.
Estimating deadweight for JobKeeper is challenging because of the impossibility of estimating a
robust counterfactual. Still, there is evidence to suggest it was substantial. The Insights report found
that $8.9 billion in payments were made to businesses that experienced an increase in turnover and
were not a fast growing or new businesses subject to different eligibility requirements.167 The shift to
a retrospective turnover test in the extension phase should have reduced this source of deadweight.
Productivity and administrative costs
As discussed in Chapter 3, there was a cost to JobKeeper associated with impeding
productivity-enhancing labour mobility. This cost, while relatively small and temporary, was larger in
the extension phase.
165 Commonwealth of Australia (2006) Handbook of Cost-Benefit Analysis.
166 Fujiwara (2010) The Department for Work and Pensions Social Cost-Benefit Analysis framework; New
Zealand Government, The Treasury (2015) Guide to Social Cost Benefit Analysis.
167 Treasury (2021) Insights from the first six months of JobKeeper.
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Lastly, the cost of administering a program the size and complexity of JobKeeper was substantial.
Estimates published by the ANAO indicate that ATO administration of JobKeeper cost at least
$286 million and involved 1160 staff at the peak of the program.168 Treasury also employed an
average of 22 staff in the division responsible for JobKeeper policy between April 2020 and
June 2021, although this division had a broader scope than JobKeeper.
Box 8: Costing policy in a crisis: managing uncertainty
The JobKeeper Payment was originally announced on 30 March 2020 with an estimated fiscal cost of
$130 billion for the first 6 months of the program. The costing reflected assumptions about the likely
reach and take-up of JobKeeper and the length of time that shutdowns and other restrictions to manage
the pandemic would remain in place.
The costing assumptions were made early in the pandemic at the height of uncertainty around both
health and economic outcomes. As it turned out, shutdowns and other restrictions were lifted earlier
than anticipated and the take-up of JobKeeper was lower than expected. A joint Treasury-ATO media
release issued on 22 May 2020 announced that a reporting error in the program exposed an overestimate
of the cost of JobKeeper.169 The cost estimate for the first phase of JobKeeper was subsequently revised
down to $70 billion.
The adjustment to the cost risked causing reputational damage to the government, the Treasury and the
ATO. This risk could be managed by emphasising the uncertainty around producing cost estimates during
a crisis and being transparent about the assumptions that underpin costings. This could be achieved by
using a range rather than a point estimate or including a sensitivity analysis.
168 ANAO (Australian National Audit Office) (2022) Administration of the JobKeeper Scheme.
169 Treasury (22 May 2020) JobKeeper update.
Value for money | 72
Independent Evaluation of the JobKeeper Payment
7 Suitability of JobKeeper in future circumstances
Key points
• JobKeeper was an appropriate policy response in the circumstances Australia found itself in
March 2020. Such a scheme should only be considered in Australia in response to a shock
that is exogenous, with economy-wide macroeconomic effects and that is expected to be
temporary (Finding 11).
• In the Australian context, a JobKeeper-type policy should be reserved for a macroeconomic
crisis. Other policies can provide better-targeted support in response to industry or
region-specific shocks at a lower economic cost.
• A JobKeeper-type wage subsidy is not appropriate for managing aggregate demand during
typical fluctuations in the business cycle. If used for this purpose, a wage subsidy would
impede productivity-enhancing resource reallocation to the detriment of long-term
prospects, including for workers.
• Australia’s institutional settings do not lend themselves to a STW scheme.
7.1 Why was JobKeeper an appropriate policy in the pandemic?
JobKeeper was an appropriate policy response at the outset of the pandemic, alongside other
monetary and fiscal stimulus measures. COVID-19 was an exogenous shock that was not itself
economic in nature. The pandemic and the policy response to manage it had far-reaching,
nationwide economic effects. The extraordinary and unquantifiable uncertainty, alongside the nature
of social distancing restrictions and industry-wide shutdowns, did not discriminate between highly
productive firms and workers and less productive firms and workers. The prospect of destroying
firms and employee-employer relationships that were otherwise viable and productive threatened to
destroy the productive capacity of the Australian economy.
While the economic consequences of the pandemic were expected to be temporary, there was
enormous uncertainty about the duration and scope of those consequences. In March 2020, the
unquantifiable uncertainties about the path of the COVID-19 virus, the potential global financial and
goods market – including supply chain – shocks, and the functioning of the economy under lockdown
supported a robust economic policy response.
It made sense to effectively freeze a large part of the Australian labour market at the outset of the
pandemic and to provide broad support to the firms and workers most likely to be significantly
affected, so that the businesses and the employer-employee relationships would be in place to help
accelerate the recovery. The evidence presented in Chapter 3 suggests that JobKeeper helped
prevent large-scale destruction of otherwise productive firms and employee-employer relationships
in the early months of the pandemic when the macroeconomic risks were greatest. In doing so, it
helped preserve the productive capacity of the economy and pave the way for a rapid recovery after
reopening and lifting of restrictions.
Suitability of JobKeeper in future circumstances | 73
Independent Evaluation of the JobKeeper Payment
7.2 A JobKeeper-type wage subsidy should be reserved for a macroeconomic
crisis
By mid-2020, the functioning of the economy under lockdown and quarantine and the nature of
shocks, including the COVID-19 virus, were better understood. The way the pandemic developed in
Australia meant some regions and industries were affected by restrictions while others returned to
more normal activity levels. A nascent economic recovery was underway, but it was highly
fragmented across industries and regions.
The evidence presented in Chapter 3 indicates that once the initial period of uncertainty and the
most acute macroeconomic risks had receded, the positive effects of JobKeeper were smaller. On the
other hand, the economic costs of the policy – including impeding productivity enhancing labour
reallocation – were larger, though still minor and short-lived. While changes were made to tighten
eligibility in the extension phases, the nation-wide nature of JobKeeper made it difficult to target
support to businesses and employees affected by the later waves of the pandemic. As a result,
JobKeeper generally supported less productive firms in the extension phase.
Policies introduced later in the pandemic addressed the increasingly localised economic effects of the
pandemic and associated health measures. The Pandemic Leave Disaster Payment, announced in
August 2020, and the COVID-19 Disaster Payment, announced in June 2021, were available for
individuals who lost income because of state- or territory-imposed lockdowns or because they were
directed to self-isolate or quarantine. These payments were administered through the income
support system. The states and territories also introduced business support programs for those
affected by COVID-19 following JobKeeper. The effectiveness of these policies is beyond the scope of
this evaluation, but conceptually, the approach of providing more targeted support to particular
industries and regions was appropriate by that stage of the pandemic as the macroeconomic crisis
had abated.
7.3 A JobKeeper-type wage subsidy is not suitable for managing the business
cycle
Economic slowdowns – and in some cases, recessions – can occur during the business cycle for many
reasons. Some are associated with sharp changes in the price of production inputs, imbalances or
volatility in asset markets, a loss of confidence in the domestic economy or a slowdown in external
demand.170 Economic slowdowns are typically characterised by weaker growth or a decline in output,
a period of elevated unemployment and a larger than usual number of business closures as less
productive firms exit.
Economic slowdowns and recessions are always costly, in economic terms and to the well-being of
those affected by loss of employment or business closure. As discussed in Chapter 4, long term
adverse labour market effects or labour scarring are a significant risk in protracted downturns, which
are best avoided.171 In Australia, monetary policy has been the primary tool for managing cyclical
economic fluctuations since the 1990s. Experience shows tailored fiscal measures can support
monetary policy to help stabilise the economy in response to a contractionary shock.172 The
appropriate form of fiscal support depends significantly on the circumstances. The ability to design
170 Claessens and Kose (n.d.) Recession: When bad times prevail.
171 Barlevy (2002) The Sullying Effect of Recessions.
172 Commonwealth of Australia (2023) Working Future: The Australian Government’s White Paper on Jobs and
Opportunities.
Suitability of JobKeeper in future circumstances | 74
Independent Evaluation of the JobKeeper Payment
appropriate policy responses in slowdowns is possible only when risks can be quantified by drawing
upon the experience of past episodes.173
While JobKeeper was appropriate in the initial crisis phase of the pandemic, a similar policy would
unlikely be appropriate for managing aggregate demand during more typical fluctuations in the
business cycle. The process of firm-level and labour market adjustment during downturns tends to
reallocate resources from less productive firms to more productive firms which are more likely to
adapt and survive.174 The result is a productivity enhancing reallocation of resources which increases
aggregate productive capacity and wages over time. A wage subsidy risks impeding this adjustment
process and weighing on long-term economic outcomes to the detriment of both workers and
businesses. Other policies – conventional monetary policy and fiscal stimulus measures – are better
suited to addressing the costs of economic slowdowns without impeding the adjustment process.
7.4 Short-time work schemes
Some stakeholders canvassed the option of introducing a permanent STW scheme in Australia. STW
schemes are used in several European countries, including France, Germany and Switzerland, to
manage the risk of job losses during economic and non-economic shocks.
A STW scheme would be difficult to implement in Australia. STW schemes typically run alongside
unemployment insurance systems, which are not a feature of Australia’s current institutional
arrangements. Australia’s working-age income support payment – the JobSeeker Payment – is set at
a single rate rather than, as in many OECD countries, one proportionate to prior earnings. It is
available for an unlimited duration, subject to satisfying eligibility requirements. It is funded by
general taxation revenue, not through a per employee unemployment insurance tax. In his
submission to the evaluation, Professor Borland acknowledged the practical difficulties of
implementing a STW in Australia and suggested that it may not be workable under current
institutional settings.175
Beyond operational limitations, OECD analysis suggests the efficacy of a STW scheme may be limited
in an Australian context.176 Australian businesses face relatively low layoff costs. STW schemes are
more attractive in countries where the presence of relatively high layoff costs encourages businesses
to respond to shocks with adjustments in work arrangements rather than by laying off staff.177
More generally, wage subsidies likely facilitate swifter economic recoveries than STW work schemes.
Both wage subsidies and STW schemes aim to preserve employee-employer relationships. But STW
schemes only subsidise hours not worked by employees stood down or those on reduced hours.
Wage subsidies also cover the cost of hours worked by eligible employees, so providing more
generous support to businesses that continue to operate. Given these design differences, the OECD
identified that businesses face stronger incentives to maintain active employment during crises and
re-engage employees in the recovery period under wage subsidies than under STW schemes.178
173 Kennedy (2022) A tale of two crises: reflections on macroeconomic policy responses to the GFC and the
pandemic [speech, ‘The 2022 Sir Leslie Melville Lecture’].
174 Caballero and Hammour (1994) The Cleansing Effect of Recessions.
175 Submission 10 – Borland.
176 OECD (2020) Job retention schemes during the COVID-19 lockdown and beyond.
177 Ibid
178 Ibid
Suitability of JobKeeper in future circumstances | 75
Independent Evaluation of the JobKeeper Payment
Attachment A: List of submissions
• Mr Piotr Gorecki
• The Inspector-General of Taxation and Taxation Ombudsman
• National Association for the Visual Arts
• Business Council of Australia
• Dr Emmanuelle Walkowiak
• Institute of Certified Bookkeepers
• Council of Small Business Organisations Australia
• Professor Jeff Borland
• Australian Council of Trade Unions
• Australian Small Business and Family Enterprise Ombudsman
• Professional Accounting Bodies
• Australian Chamber of Commerce and Industry
• Mr Vincent Goding
• Mr Chris Murphy
Attachment A: List of submissions | 76
Independent Evaluation of the JobKeeper Payment
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Attachment B: Bibliography | 84
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