Josh Frydenberg has defended the phased withdrawal of wage subsidies and lower rates of jobkeeper for part-time workers after Treasury cautioned against the move and the Greens released an analysis showing it will hit women hardest.
The treasurer told ABC’s Insiders on Sunday the lower tier of jobkeeper will pay part-time workers closer to their pre-Covid income and also confirmed the government is “very favourably disposed” to extending the coronavirus supplement for jobseekers beyond December.
Under changes announced on Tuesday, the fortnightly jobkeeper payment will shrink to $1,200 a fortnight from September to January then $1,000 from January to March, with lower rates of $750 and $650 to apply to those who worked less than 20 hours a week in February.
Frydenberg said the government had opted to gradually reduce rates and require businesses to reapply after September because the economy is “starting to recover, and in transition” outside Victoria, which is in the grip of a second wave of coronavirus infections.
“Ultimately, this is a program that at $11bn [a month] cannot be continued,” he said.
Addressing concerns of the Reserve Bank, Frydenberg insisted that the government was “not withdrawing support” but rather had extended jobkeeper beyond its original six-month legislated lifespan.
According to a parliamentary library analysis for the Greens, released on Sunday, women would be hit hardest because 22% of women on jobkeeper work fewer than 20 hours a week compared with 10.6% of men receiving the wage subsidy.
Labor has argued for months that jobkeeper overpaid workers who normally earn less than $1,500 a fortnight by providing a flat-rate payment.
The Greens leader, Adam Bandt, told Guardian Australia: “With the Liberals giving in to Labor’s push to cut jobkeeper [for part-time workers], women will once again bear the economic brunt of the coronavirus.”
Frydenberg told Insiders the two-tiered payment “better reflects what the pre-Covid income of the people who are receiving the jobkeeper payment is”.
“What the [Treasury] review found was that women were receiving the jobkeeper payment in a larger proportion than they were as a proportion of the overall private-sector workforce,” Frydenberg said.
“And at the same time, what we’ve seen in the most recent job numbers [is] that 60% of the 210,000 jobs that were created in the month of June were women.”
In its review, Treasury urged caution on cutting jobkeeper for part-time workers, concluding it was “not clear that the net benefit of these changes would be positive for such a time-limited program” and also warned it might be “unfair” to use February as a reference month because the bushfires were affecting many businesses at the time.
Frydenberg said the tax commissioner would have “discretion” to use another month to judge normal work hours, and would issue guidance to employers so that people on leave or fighting bushfires in February were not disadvantaged.
According to the treasurer, the review found you “absolutely can” move to a two-tiered payment and Treasury “haven’t counselled against” it.
Frydenbeg revealed that about 975,000 of the 3.5 million people on jobkeeper are employed in Victoria. Treasury estimates that three-quarters of those (about 730,000) will continue to receive the payment after September, meaning Victorians will make up “roughly half” of the projected 1.5 million recipients.
Although the official unemployment rate is rising, the treasurer said the effective rate – which includes people performing zero hours of work and discouraged jobseekers – is 11.3% and trending downwards, and Treasury believes it will match the official rate of 9.25% in the December quarter.
From September the $550 fortnightly coronavirus supplement will be cut to $250, a move estimated to throw 370,000 Australians into poverty, and then cut out in December, although Scott Morrison has signalled willingness to extend it further.
Frydenberg said the government had “given ourselves the flexibility to assess the future of jobseeker [and the] coronavirus supplement, closer to the end of the year”.
“It means we’re favourably disposed to continuing it, but we’ve got to do an assessment of where the jobs market is at that time.”
The government will aim to get the balance right between a safety net to “cushion the blow” of unemployment and “incentives for people to return to work”.
Frydenberg defended plans to extend industrial relations powers for employers to cut workers’ hours even when the business was no longer eligible for jobkeeper.
He said changes must be “reasonable” and involve consultation with workers, and argued that there had been few disputes over employers’ uses of such powers during the pandemic.
Businesses with a 20% downturn in revenue may “no longer be eligible for jobkeeper but don’t think that they’re not doing it tough”, he said.
Although “reform is not an end in itself”, the government was pursuing “deregulation” to industrial relations and skills policy to create jobs and changes to energy policy to reduce prices.
Frydenberg defended his comments at the National Press Club on Friday about drawing inspiration from Margaret Thatcher and Ronald Reagan, arguing that Thatcher must have been “doing something right by the people of Britain” because she was in office for 11 and a half years and Reagan “cut taxes, cut red tape, and created 20 million new jobs”.
“Thatcher and Reagan are figures of hate for the left because they were so successful,” he said. “One got two terms, which was the maximum that you can get in the United States. Margaret Thatcher got 11 and a half years.
“You take inspiration from lots of different sources. I also take it from [John] Howard and [Peter] Costello. But the reality is that Thatcher and Reagan cut red tape and cut taxes and delivered stronger economies.”