House of Representatives

Coronavirus Economic Response Package (Jobkeeper Payments) Amendment Bill 2020

Second Reading Speech

Mr FRYDENBERG (Kooyong - Treasurer)

I move:

That this bill be now read a second time.

Just over four months ago, I stood in this chamber and introduced legislation to implement the JobKeeper payment, the single largest fiscal measure in Australia's history.

Since then, more than 990,000 eligible organisations and more than 3.5 million employees have benefited from the $1,500 payment.

In the words of the Governor of the Reserve Bank, Dr Phil Lowe:

... the JobKeeper program is really about keeping people in jobs, isn't it? It's done a remarkably good job at that.

It has supported millions of Australians and given businesses the support they desperately need to help them get to the other side.

The payment is fulfilling its promise: keeping businesses in business and Australians in jobs.

While originally expected to run for a six-month period, following a review of the program, on 21 July the government announced it would be extended by a further six months until 28 March 2021 and that the payment would be tapered in the December and March quarters to encourage businesses to adjust to the new environment.

The government also announced that as part of extending the program, a two-tiered payment would also be introduced to better align the payment with the incomes of employees before the onset of the COVID-19 pandemic.

The government's decision recognised that Australia's economic recovery was still in its early stages and that a number of businesses and individuals remained significantly affected by the global COVID-19 pandemic.

At the time of being announced, these changes were expected to cost an additional $16.6 billion.

Subsequent to this announcement and following the introduction of stage 4 restrictions in metropolitan Melbourne and stage 3 restrictions across regional Victoria, the government announced it would make further changes to the program in order to help more businesses qualify for JobKeeper.

On 7 August, the government announced it would ease the eligibility requirements so that, post 28 September 2020, organisations will only have to demonstrate that their actual turnovers have significantly declined in the previous quarter.

The government also announced it would change the employee reference date so that, from 3 August 2020, the relevant date of employment for an eligible employee will move from 1 March to 1 July 2020, expanding employee eligibility.

The combined effect of the economic deterioration in Victoria which will see more firms needing to rely on JobKeeper and the eligibility changes announced on 7 August will see the cost of JobKeeper increase by around $15.6 billion.

These changes take the total cost of the JobKeeper payment to an estimated $101.3 billion.

The extension of the JobKeeper payment will provide much needed support for those businesses that continue to be most impacted by this crisis.

Nowhere will this be more important than in Victoria where the extension of the program will help to cushion the blow for businesses and their employees that have been severely impacted by the restrictions which have been introduced in response to the second wave of infections in that state.

Around $16.8 billion in JobKeeper payments is expected to flow into Victoria during the December 2020 and March 2021 quarters.

For many businesses, this support will be the difference between them remaining in business and reopening on the other side or having to permanently close their doors and let go of all their employees.

That is why this bill is so important.

Schedule 1 to the bill extends the prescribed period of operation for the coronavirus payment framework, enabling the extension of the JobKeeper payment until March 2021. Consequently, the ability to make amended rules to give effect to the JobKeeper payment will be extended and the rules can be further amended up until 28 March 2021.

The bill also amends the relevant information sharing provisions to enable the ATO to share certain JobKeeper payment information with Commonwealth, state and territory government agencies to assist them in their efforts to address the impacts of the coronavirus.

A two-tiered payment will also be introduced from 28 September. Employees who were employed for less than 20 hours a week on average in the four weekly pay periods ending before 1 March 2020 will receive the lower payment rate.

The phasing down of the JobKeeper payment will ensure a smooth and gradual transition to economic recovery, while ensuring that those who most need support continue to receive it. The introduction of a two-tiered payment rate will also better align the JobKeeper payment with the pre-COVID incomes of recipients - particularly those who work part-time hours.

When the JobKeeper scheme was introduced, it was accompanied by temporary changes to the Fair Work Act 2009. These allowed those employers qualifying for JobKeeper greater flexibility in operating their business, so as to respond to the impacts of the coronavirus pandemic, and assisted their employees to remain in employment and connected to their workplaces.

The government has heard from stakeholders and directly from employers that these provisions have been vital in keeping their business operational and keeping their employees in jobs. Survey results show that around three in four JobKeeper employers used the flexibilities in the provisions. Almost all of the employers surveyed that used the provisions said they were either important or essential for the continued operation of their business and for employees to keep their jobs.

Schedule 2 to the bill supports the continued operation of the JobKeeper scheme by extending the temporary JobKeeper fair work provisions in part 6-4C of the Fair Work Act, except for those relating to annual leave until 28 March 2021.

From 28 September 2020, employers who remain eligible for JobKeeper payments after this date will retain access to the full range of remaining flexibility measures in part 6-4C in relation to employees for whom they are claiming the payment.

Legacy employers, being employers who have previously received the JobKeeper scheme, but who no longer qualify after 28 September 2020, will be able to access a modified version of the JobKeeper provisions in relation to employees for whom they have previously received JobKeeper payments.

To do so, legacy employers will be required to hold a certificate from an eligible financial service provider stating that they have satisfied a 10 per cent decline in turnover test in the previous quarter before they can use the provisions, and again for each following quarter to have the flexibilities remain in place.

Under these changes, legacy employers will not be able to use a JobKeeper enabling standdown direction to direct an eligible employee to work less than 60 per cent of their pre-coronavirus ordinary hours, and cannot require an employee to work less than two hours in a day on which the employee works. Pre-coronavirus ordinary hours will be assessed using the employee's ordinary hours of work as at 1 March 2020.

Under these changes, the various safeguards that apply to the existing provisions will continue, including continuation of unfair dismissal rules, general protections and work health and safety laws to name just a few. And of course, an employer must continue to pay an employee in full, including any penalty rates or allowances applicable to hours they work.

There are also enhanced consultation and notice requirements for legacy employers before they can give an employee a JobKeeper enabling direction.

The JobKeeper fair work provisions provide greater operational flexibility for businesses in the recovery from the coronavirus pandemic than the more rigid terms and conditions under awards and enterprise agreements and support the effective continuation of the JobKeeper wage subsidy scheme between September 2020 and March 2021.

The measures will provide continued workplace flexibility at a time when businesses are still in distress and recovering from the economic impact of the coronavirus pandemic. Ensuring the viability of businesses in these circumstances will help preserve Australian jobs and assist employees to remain connected to their workplaces.

Full details of the measure are contained in the explanatory memorandum.

I would like to take this opportunity to thank the opposition for the constructive approach they have taken to progressing this legislation through the parliament swiftly to provide certainty to Australian businesses and employees.

At an expected cost of over $100 billion, JobKeeper forms a vital part of the government's plan to support Australians and Australian businesses during this crisis.

My message to every Australian is that the Morrison government will continue to do what it takes during what is one of the most difficult times in our history. We have your backs.

Debate adjourned.

Leave granted for second reading debate to resume at a later hour this day.