Coronavirus JobKeeper package revised down $60b after 'reporting error'

Treasury Department secretary Dr Stephen Kennedy. Picture: Elesa Kurtz
Treasury Department secretary Dr Stephen Kennedy. Picture: Elesa Kurtz

Treasurer Josh Frydenberg has dismissed calls to extend the JobKeeper scheme, after the $130 billion scheme was revised down to $70 billion due to a "significant" reporting error.

The Treasury department and the Australian Taxation Office advised government late on Thursday that about 1000 businesses had made an error when filling out the self-assessment enrolment form, when reporting the number of employees they expected to receive the benefit.

More than 500 businesses with one eligible employee instead wrote 1500 - a reference to the $1500 payment they expected to receive under the wage subsidy scheme.

The error means the number of likely recipients has been revised down from 6.5 million to 3.5 million.

The estimated cost of the scheme has been revised down to $70 billion, however it is a demand-driven program.

"This reporting error has come to light as the ATO and Treasury have been analysing the amounts being paid out under the scheme, reconciling these with the estimates provided by enrolled businesses of the likely number of eligible employees," Treasury said in a statement.

"It was not picked up by the ATO earlier as their primary focus in the first fortnight of JobKeeper payments was on ensuring that JobKeeper payments were paid promptly to those eligible for them, and not paid to those who were ineligible.

"These initial estimates from businesses of employees covered are not linked to payments, and so were not as carefully analysed."

Australian Taxation Office Second Commissioner Jeremy Hirschhorn said when they noticed the discrepancy between the projected number of applicants and the actual number, they did a "line-by-line" analysis to determine what was happening.

"What became clear to us is about 1000 of the 900,000 employers had misunderstood that question in the enrolment form," Mr Hirschhorn said.

He said the data from that part of the form was being collected for "analytical purposes only" and money was only paid after the Tax Office went through each nominated employee's details.

"With hindsight, perhaps the form could have been more straightforward," Mr Hirschhorn said.

"However, I do note that only 1000 of the 900,000 employers misinterpreted that question. So the question was clearly reasonably clear - it is just unfortunate that 1000 employers misunderstood it."

The revision was also necessary because "economy has been more resilient than anticipated in the original estimates, which is good news," Mr Hirschhorn said.

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About six million Australians were expected to be enrolled in the scheme when it was announced in March.

Treasury said the lower-than-expected demand was a result of the social distancing restrictions being lifted earlier than expected.

"This has been reflected in some improvement to the outlook for the economy since the original estimate was developed as a consequence of these and other factors," the department said.

"The variation in estimates also reflects the inherent uncertainty associated with estimating the take-up of a demand driven program in the current circumstances."

There are 910,055 businesses that have applied for JobKeeper so far, with 759,654 claims processed.

About $8.7 billion had been paid so far to 2.9 million employees.

In a statement, Mr Frydenberg said the error had no consequences for the businesses that had already been paid the wage subsidy.

"It is welcome news that the impact on the public purse from the program will not be as great as initially estimated," Mr Frydenberg said.

Labor MPs and unions have renewed calls for government to use the savings to extend the scheme to workers previously deemed ineligible.

Labor leader Anthony Albanese said there were one million casual workers who had missed out.

"This is a mistake you could have seen from space," Mr Albanese said.

"They said they couldn't expand the program because they'd drawn a line in the sand. What we know now is that that sand was, indeed, quicksand. And Australian working people have been sunk by the failure to provide support for them at this time."

Greens leader Adam Bandt simply said: "Wow." The party has been pushing for the government to extend JobKeeper to all workers who needed it and retain the JobSeeker coronavirus supplement.

Get Up's national director Paul Oosting said the scheme should be expanded to all the casuals and temporary visaholders who had been locked out.

"This has been one of the government's biggest policy failures in this pandemic, now they have the opportunity to step up and do the right thing," Mr Oosting said.

"If Scott Morrison doesn't use this opportunity to extend JobKeeper to casual workers and people on temporary visas then he cannot say it's because of the cost."

The university sector is also lining up for a slice of the savings, after being excluded from the scheme.

Universities Australia Chief Executive Catriona Jackson called on the government to reverse their position.

"As we have said in recent weeks, without greater support universities face the loss of 21,000 jobs in the next six months and a significant reduction in the essential research undertaken on our campuses," Ms Jackson said.

"We were disappointed that government has changed the regulations on a number of occasions to effectively exclude universities. We call on them to reconsider."

However Mr Frydenberg told the ABC this was not a invitation to spend money.

"We're not making wholesale changes to the JobKeeper program. We'll have a review, as we've always stated, midway through the program, and we'll wait for the results of that review," Mr Frydenberg said.

Combined with the 1.6 million people on the JobSeeker, Mr Frydenberg said Australian taxpayers would be supporting five million workers through the coronavirus pandemic, "nearly half the Australian labour force".

"This revision by Treasury is not an invitation to go and spend more," Mr Frydenberg said.

"Every dollar that we're spending is borrowed money. It means that our children will be paying it back."

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This story 'Reporting error' sees JobKeeper cost revised down $60 billion first appeared on The Canberra Times.