*(Photo: Aaishah Janif)

Reduced JobKeeper and JobSeeker payments and stricter eligibility tests come into effect today (September 28), despite record high unemployment and tough social restrictions in Melbourne.

The Morrison Government argued that the supplements designed to offset COVID-19 job losses were also increasing the federal budget deficit and discouraging people from working.

But some of Australia’s leading economists believe the Federal Government has reduced payments prematurely, and warn that businesses will be forced to lay-off even more workers.

Under JobKeeper 2.0, the flat rate of $1500 will be replaced by a two tiered payment system.

If you were working the equivalent of 20 hours a week or more during the reference periods of either February or June, you are entitled to $1200 per fortnight. If you don’t qualify for the full-time rate, you will be paid $750 a fortnight – effectively half the previous amount.

In January, JobKeeper rates will fall again. The full-time rate will reduce to $1000 and the part-time rate will reduce to $650 per fortnight. Those amounts will continue until March 2021.


Treasury maintains that gradually improving economic conditions support the reductions. In a statement to media, Treasurer Josh Frydenberg said: “JobKeeper has been an economic lifeline to millions of Australians and that lifeline will be extended for those businesses that need it most.”

However, the winding back of government support concerns Deloitte Access Economics Senior Partner, Nicki Hutley.

We are still very much in the midst of this pandemic, we have very high levels of unemployment. We know that those levels will actually rise again before the end of the year and to take away that support, could risk damaging the economy further,” she said. 



Associate Professor at the Social Policy Research Centre at UNSW Dr Bruce Bradbury, refutes the government’s argument that higher payments are discouraging the majority of people from looking for work.

“In some circumstances that’s valid… but right now with so many more people unemployed than there are job vacancies, that’s not really a relevant argument. If a few people stopped looking for work, there are plenty to take their place,” he said.

Deloitte estimates that reducing and then removing the JobSeeker coronavirus supplement, could pull back Australia’s Gross Domestic Product (GDP) by 31 billion dollars – close to one per cent –  in both this and the next financial year.

“The flow on impacts to other sectors would mean that there is the potential for job losses of an average of 145 thousand full-time equivalent jobs,” Ms Hutley warned


Nicki Hutley, Senior Partner Deloitte Access Economics

Reporter: Aaishah Janif


According to the economic modelling conducted by the ANU Centre for Social Research and Methods, over half million Australians will be below the poverty line once JobSeeker payments return to pre-COVID-19 pandemic levels. 

Job subsidies have been a vital element in the government’s fiscal response to the pandemic. ABS data for the June quarter, shows the economy retracted seven per cent – the biggest fall on record. But Nicki Hutley says that Australia has a very low debt to GDP ratio. When interest rates are low and the economy grows at a rate faster than the level of interest, debt can be reduced quite quickly.

“The level of increased interest payments on the debt of the government amounts to less than two billion [dollars] – a very small proportion. It’s equivalent to paying a couple of dollars a year, as individual taxpayers,” she said.

“In the midst of this crisis, it’s vital that the government uses a fiscal stimulus to keep us from being in an even worse recession. And we can afford [it] if the Government spends that stimulus wisely. We can afford to pay down our debt and not necessarily sacrifice future generations.”

— Aaishah Janif @AaishahJanif