The lobby group representing Australia’s major retailers has joined calls for the Morrison government to rethink its plan to cut the jobkeeper wage subsidy in September, arguing economic conditions remain weak.
The shadow treasurer, Jim Chalmers, told Guardian Australia on Wednesday the government needed to reconsider its plan to taper the jobkeeper payment in the light of the Victorian outbreak, because “we know the jobs crisis has been getting worse, not better”.
Dominique Lamb, the chief executive of the National Retail Association, backed that call. She said that even before the second coronavirus wave only 80% of retailers had reopened nationwide and the Australian economy was still suffering from high unemployment rates, low confidence and rates of discretionary spending.
Lamb said with “the second wave in Victoria and the fear it could happen elsewhere” including New South Wales at risk, there was a case at least to “carve out” the worst-hit states from jobkeeper and jobseeker cuts, if not the entire country, due to declines in domestic and international tourism.
“The idea was to gradually reduce the payments as we reached the point of recovery, but it’s clear that recovery is a longer road than anticipated.”
“If it’s the case that particular states are the worst impacted, that’s something we need to look at – but I don’t accept that all is well elsewhere, given that both international and domestic tourism are inhibited.”
The prime minister, Scott Morrison, and the treasurer, Josh Frydenberg, in July announced an extension of the income support rolled out to support Australians during the pandemic, but foreshadowed cuts to both the jobkeeper and jobseeker payments on the rationale that the government could not keep “burning cash”.
As well as lowering the rate of the jobkeeper wage subsidy and the $550 coronavirus supplement in jobseeker after September, the government proposed to tighten the eligibility requirements for both payments – including retesting businesses in October.
But three weeks later, the government changed tack, overhauling the new eligibility requirements for the jobkeeper wage subsidy in the light of the deterioration in Victoria.
The government’s adjustments in early August mean that businesses and not-for-profits will only have to show a fall in turnover in the September quarter compared with a comparable period in 2019, rather than having to show declines in the June and September quarters to requalify for the subsidy after 28 September.
After 4 January 2021, businesses and not-for-profits will have to show a fall in the December quarter compared with a comparable period the year before instead of having to demonstrate a fall in turnover in the June, September and December quarters to access the payment.
Morrison in August flagged that he would look at whether or not to taper the payment as per the July announcement closer to September. “We’ll be making further assessments of that,” he said on 3 August.
The government does not need parliamentary approval to adjust the payment between now and the end of the year. Any changes made next year would have to come back to the parliament for approval.
Chalmers said on Wednesday the government needed to consider the impact of reducing the wages subsidy next month given the prolonged second wave of Covid-19 infections in Victoria and the risks of an outbreak in NSW.
“Winding back jobkeeper will remove a fair bit of support from the economy, which is more alarming in the absence of any comprehensive jobs plan,” he said.
“If they are winding back jobkeeper, and the economy is not recovering as fast as we like, then what is going to fill the hole? Economists and peak groups we speak to are increasingly worried about this new September cliff.”
The call follows similar arguments on Sunday by the former Labor leader and now shadow government services minister Bill Shorten. Shorten told the ABC Labor would “arrive at its position” but “I live in Victoria – it’s pretty bloody obvious that we should be extending jobseeker and jobkeeper into the next year”.
But other major employer groups have signalled they have accepted the tapering of wage subsidies from late September and now prefer a more targeted approach.
Australian Chamber of Commerce and Industry chief executive, James Pearson, said it is pleased the government had eased eligibility requirements but “going forward, it is best to focus on targeted support for industries and businesses in ways that are outside jobkeeper including direct cash support”.
“This would be the most efficient and effective way of providing assistance where it is most needed.”
The Council of Small Business of Australia chief executive, Peter Strong, said he hadn’t “heard anybody complain” about changes to jobkeeper, including tapering payments and lower rates for part-time workers doing less than 20 hours a week, which he labelled a “commonsense” change.
“Even in deficit there is still a need to budget responsibly with government money,” he said. “It’s still a good amount of money.”
Labor is also calling on the government to ditch plans to double the liquid assets waiting period to receive jobseeker, after social services department officials told the Covid committee on Tuesday it is still government policy to double it from 13 to 26 weeks.
The waiting period means from 25 September those with $11,500 in the bank have to wait for 13 weeks before receiving jobseeker, or 26 weeks if a government bill still before the Senate passes.
Labor’s Linda Burney said: “Now is not the time to introduce more uncertainty and make it more difficult for Australians who have lost work to get support.”