“Proposals before Federal Parliament to publish the names of some businesses that were eligible for JobKeeper but who in retrospect are thought to be undeserving are misguided, liable to be misused and would set dangerous precedents. These proposals must be rejected,” Innes Willox, Chief Executive of the national employer association Ai Group said today.
“Ironically, it was because JobKeeper was such a success that these companies are now facing accusations that they are undeserving
“To be absolutely clear, the proposed criteria for naming and shaming do not in any way amount to evidence that the relevant businesses behaved fraudulently or that they misrepresented their circumstances in order to receive JobKeeper. Of course, as the name and shame proponents are very well aware, their proposals have the potential to create exactly this false impression of fraudulent behaviour. They are very deliberately making mischief.
“The name and shame proponents, many of whom voted for JobKeeper in the national parliament, now want to use the fact that businesses did not suffer the catastrophic fall in income that was in prospect to shame these same businesses.
“Some are arguing that they should repay the funds that helped to avert their failure; helped to preserve their ability to retain employment and ensured that Australian households were cashed up and could keep spending.
“But this reasoning ignores a number of important facts.
“First, and most importantly a key reason JobKeeper worked was because it was a permanent payment. It was not a loan. Very sensibly, people and businesses behave differently when they expect to repay funds. JobKeeper was not designed to be repaid and it was much more effective as a stimulus measure because of that.
“Second, JobKeeper was a wage subsidy. It was funnelled through businesses to their employees. Even if an employee normally earned less than the subsidy, the business was required to pay the full subsidy to the employee. JobKeeper was therefore both a business stimulus measure and a household stimulus measure. This has interesting implications if businesses are to be asked, or pressured, to repay the JobKeeper payments they funnelled to their employees. Should the ultimate recipients be required to return the funds?
“For these reasons the name and shame proponents should think again about what they are putting forward. And if that is not enough, they should also consider the precedents they are proposing.
“The Commissioner of Taxation has pointed to the privacy issues.
“There is another dangerous precedent. One that says that if in retrospect a payment (or tax cut) comes to be thought of as underserving according to criteria established with hindsight, that the recipients can be named and shamed.
“The logic of this is astounding. Should it apply to parliamentary superannuation entitlements?
“It is important to remind ourselves of the dire circumstances that JobKeeper was aimed at preventing. In short it was intended to rescue the Australian economy at a time when it was facing the uncertainties of a global pandemic and to help avert what was anticipated would be a very deep recession in the absence of a comprehensive wage subsidy program.
“Critically, JobKeeper was designed to help employees and employers retain an ongoing economic relationship despite the likelihood of a very steep recession. As was widely discussed at the time of its introduction, the historical evidence shows very strongly that unemployment hangs around for many years once it gets out of hand.
“These fears were anything but baseless. Apparently, it’s easy now to forget that the domestic economy shrank by a stunning 7 per cent in the June quarter of 2020; that people were frightened and stopped spending – the household saving ratio was 22 per cent in the same June quarter; and that the number of people employed in May 2020 was more than 850,000 lower than just three months earlier.
“In the face of this very real threat JobKeeper worked. Despite the second, and much larger COVID-19 wave centred in Victoria in the second half of 2020, the national economy bounced back very quickly rising by 3.5% and 3.1% in the third and fourth quarters of calendar 2020. The further rise of 1.8% in the March quarter of 2021 when JobKeeper also ended, completed an astonishingly rapid recovery.
“Even more astonishing was the recovery of the labour market. By March 2021, there were more people in work in Australia than had been the case before the pandemic hit and the unemployment rate fell to its lowest level in more than a decade. The feared scarring effects on the labour market had been averted.
“What would have happened in its absence? We would have had widespread unemployment that lingered for the rest of the current decade. We would have had a destructive wave of business failures: a loss of output and the destruction of capital.
“Instead, we had an unanticipated rebound in activity, strong employment growth and a very welcome lift in business investment. As the Reserve Bank has pointed out, JobKeeper and other stimulus measures not only underwrote the rapid rebound out of recession, they have left businesses and households cashed up and able to fuel the recovery,” Mr Willox said.
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