JobKeeper: Assessing the business support

Garreth Hanley:
This is With Interest, a business, finance, and accounting news podcast brought to you by CPA Australia.

Dr Jane Rennie:
Hello, and welcome to With Interest. I'm Dr. Jane Rennie, head of media and external engagement at CPA Australia. JobKeeper was a wage subsidy to business and not-for-profits affected by COVID-19. It was the largest stimulus payment to business in Australian history. Taken up by around 1 million businesses, it was received by some 4 million employees. To put that in perspective, that's around one third of all Australian workers at the time. The final cost of the JobKeeper payment was just shy of 89 billion, which equates to roughly 4.5 per cent of Australia's gross domestic product. In June this year, the Australian government initiated a review of JobKeeper to which CPA Australia has made a submission. And to discuss it, I'm joined by two CPA Australia experts who were, shall we say, neck deep in JobKeeper at the time. Our head of policy and advocacy, Elinor Kasapidis, and senior manager of business policy, Gavan Ord. Welcome, Elinor and Gavan.

Elinor Kasapidis:
Hi, Jane.

Gavan Ord:
Hi, Jane

Dr Jane Rennie:
Elinor, we've now got several years under our belt since COVID began, and so I think it's easy to skate over just how chaotic things were at the time. Can you start by outlining some of the key events which led to the introduction of JobKeeper?

Elinor Kasapidis:
Thanks, Jane. From the beginning of 2020, if we remember, the government began responding to increasing cases of COVID being reported in Australia. And the health response began in March with lockdowns and restrictions taking effect across the states. JobKeeper was a year-long programme that was essentially a transfer payment to working Australians through the tax system. And it was intended to support and to minimise some of the economic impacts. The payment was announced on the 30th of March 2020, and gave eligible businesses and not-for-profits $1,500 per fortnight to be passed on to every eligible employee or business participant. And the eligibility included satisfying a decline in turnover test, which for most businesses was an estimate of 30% or more. Then in July 2020, JobKeeper was extended for an additional six months from September through to March 2021. And in this second phase, businesses needed to demonstrate an actual decline in turnover, and they also had a two-tiered payment system introduced.

Dr Jane Rennie:
So we've moved from the very first lockdown to a payment programme within such a short period of time. With things moving that fast, it was difficult for the government to consult and gain expert advice on how to design the programme. To what extent, if any, did they seek views from industry on this?

Elinor Kasapidis:
There were different levels and phases of the design, and that meant different types of consultation. So from my perspective, the government had a pretty strong general idea about the overall design, and that was reasonable given the time constraints. And while policy on the run is not recommended, when they consulted us for feedback, it was clear they'd been thoughtful about what they'd designed. Now, once implementation started, and that was really within a matter of days, that's when consultation really kicked up a notch. And we had really strong engagement on everything from law design, public guidance, IT systems, and tax agent support.

Dr Jane Rennie:
Gavan, at the same time the federal government was rolling out JobKeeper, the states were coming in with business support schemes of their own. Was that necessary to have those? And how did they interact with JobKeeper?

Gavan Ord:
So the States did have some support schemes in 2020, but most of the heavy lifting was left to JobKeeper and the cashflow boost from the federal government. The states, particularly Victoria and New South Wales, did roll out business support in 2021 after the end of JobKeeper. And that was really around about June or July 2021. What was disappointing to us was we knew COVID was going to be around and there would be further lockdowns. What was disappointing was no work was really done between the end of JobKeeper and the start of the second big lockdown in around June, July 2021. We knew what was going to happen. And again, we were left with this policy on the run development by the states. Unlike the federal government, they didn't necessarily engage with accountants or us or industry on the design principles and the delivery of their business support programmes often until it was too late. So we were consulted, but really only after some of the problems of delivery really came to the fore.

Dr Jane Rennie:
The overarching objectives of JobKeeper was to support business and job survival, preserve the employee-employer relationship, and provide income support. The treasury has appointed Nigel Ray to conduct the independent evaluation. And the main purpose of that is to examine the effectiveness of the payment in achieving those objectives. But according to the treasury consultation paper, the evaluation might also draw broader conclusions about value for money and other outcomes from JobKeeper. Gavan, we've already had, as I recall, a couple of reviews of JobKeeper. What's the point in having another? Because, I mean, these things are never cheap.

Gavan Ord:
Well, they are. The review will obviously cost money, but I think what do we want? What's more important, to look at what happened with JobKeeper and draw lessons learned and design a new better programme for the next disaster, not necessarily a pandemic, or we forget about everything that's happened and then next time something comes up and we, again, policy on the run, try to develop something from scratch? I think it's a wiser use of public money to do this review now, get the lessons learned, capture those into a document, feed into future disaster recovery support programmes. What we really want is for government, both federal and state, to have an off-the-shelf ready disaster support programme for business. Too often governments are running around like headless chooks trying to design business support programmes after a disaster is declared. That creates uncertainty for business. It creates extra work for our members. We have to advise business. So I really hope that out of this review becomes suggestions for an off-the-shelf ready to implement disaster support programme for business.

Dr Jane Rennie:
I think that's a key point, isn't it? Because JobKeeper might've been COVID-specific, but the need for a business support payment programme is by no means unique to COVID-19. And in Australia, we have a large number of circumstances, such as drought and bushfire and flood, which might lead to the need for a business support programme like COVID, for example.

Gavan Ord:
All the evidence suggests that those disasters will happen with a greater frequency. So I think we need something ready to go. And I talked about members. Often, our members are the ones who are the people advising business on how to access these grants. Every time a new grant comes in or a new support payment comes in and the rules are different, it creates extra work for our members having to learn the new rules, having to translate those for their clients. And we just need something that's consistent, easy to roll out, and easy for the public service to administer as well. Let's not forget the trouble they went through in implementing JobKeeper and the state disaster support as well.

Dr Jane Rennie:
Well, now that we do have a bit of distance between us and JobKeeper, I'm interested to hear how CPA Australia views JobKeeper in the cold, hard light of day. Elinor, perhaps starting with you first, what's your overall assessment of JobKeeper looking back?

Elinor Kasapidis:
I still get cold sweats when I think about the incredible stress and pressure of those months. But looking back, it's fair to say that JobKeeper was an effective programme. It protected Australians from the worst economic impacts of the pandemic. We didn't see mass layoffs or rising unemployment. And it moderated the devastating effects on business confidence. The other factor that shouldn't be underestimated is the mental and emotional security that JobKeeper provided. So in all of that disruption, employees and sole traders, they knew they would have some money to buy food and pay the rent. And businesses could feel they had a decent chance of surviving the shutdowns.

Dr Jane Rennie:
How did JobKeeper stack up compared to other international COVID stimulus programmes, of which there were more than you could count?

Elinor Kasapidis:
All governments around the world provided some form of support during this time. There's limited comparative analysis available at the moment. But in my view, JobKeeper avoided many of the integrity issues that you see in some other programmes. Examples include the US Paycheck Protection Programme or their economic injury disaster loans, and even some of our state-based programmes experienced integrity issues. And sometimes that's at the expense of access, but JobKeeper actually did achieve its goal of delivering relief to a large majority of the affected population. And I think one key part of that that gave Australia this advantage was the existing digital infrastructure. So the treasury, the government, the ATO, they leveraged single touch payroll and activity statement systems, which have high integrity historical data, and they had established processes to deliver the relief.

Dr Jane Rennie:
What about you, Gavan? Would you say the programme was a success? And just incidentally, what would've happened without JobKeeper?

Gavan Ord:
I totally agree with Elinor. I think JobKeeper was a success. And part of the success was the ability of government to work with accountants, to work with tax agents, to work with the professional bodies in the implementation of it. And what would've happened if we didn't have JobKeeper? Well, there was forecasts of unemployment rates of 15, 20oer cent, even higher. So if you think back to March, April 2020, we were on the precipice. We had no idea what was going to come down on us. And I think, yes, it alleviated the worst of what could have happened and left us in a strong position to rebound, which happened in, if you reflect back to early 2022, there was a pretty strong rebound. And part of that is because of the government support programmes during COVID.

Dr Jane Rennie:
And how did JobKeeper stack up against the business support offered by the states that you mentioned earlier?

Gavan Ord:
I think it was better designed and implemented than the state-based programmes. The state-based programmes took some of their lead from JobKeeper, but probably not enough. Ideally, we'd like to have seen more coordination between the states and the federal government in terms of their delivery. But yet, if I was to pick one of the two, definitely JobKeeper was better than the state-based programmes.

Dr Jane Rennie:
Well, that's a fairly rosy assessment from you both overall. Others have not been so kind over the past three years. And I'd like to present a couple of often repeated criticisms to you for your perspective on them.

Jacqueline Blondell:
If you're enjoying this podcast, you should check out our in-depth business and finance show, INTHEBLACK. Search for INTHEBLACK on your favourite podcast app today. And now, back to With Interest.

Dr Jane Rennie:
First that the eligibility criteria meant that JobKeeper went to some organisations who didn't need it, and indeed some who earned [inaudible] profits during that period. Elinor, how would you respond to that?

Elinor Kasapidis:
While in hindsight there's an argument to say the programme was too generous, at the time, the thinking certainly was that it was better to overtreat the problem than to allow Australian businesses and their employees to sink. It's always a trade-off, isn't it? Do you get money to as many people who need it as possible, or do you wait three or six months before the effects are obvious before delivering help? Certainly in our mind, it was a priority that relief was delivered, it was absolutely critical. And while some may not have needed that assistance in the end, JobKeeper saved many millions of businesses and jobs, which I believe was the most important goal at the time.

Dr Jane Rennie:
And Gavan, how do you respond to the criticism that there should have been a clawback mechanism built into JobKeeper to get that money back from businesses who took it but didn't need it?

Gavan Ord:
I think once you start introducing clawback mechanisms, it adds uncertainty, and we're in an incredibly uncertain time. And we could have seen businesses decide not to seek JobKeeper concerned that the money could be clawed back. So while I understand why people might suggest those things, look at the context, and the context was a highly uncertain time. And that would've added a whole degree of uncertainty totally unnecessarily.

Dr Jane Rennie:
At the other end of the spectrum, there were criticisms that the scheme made it too hard for some employers to access the payment. For example, very new businesses, micro businesses, or multiple partners in a partnership. Gavan, is that a fair criticism?

Gavan Ord:
I think some of those issues were addressed. But overall, the line had to be drawn somewhere and they chose some integrity measures, so new businesses were obviously excluded. And part of the concern there was people would just go and establish new businesses and access the funding. And we did see some of that in other programmes where people went off and established new businesses, backdated the start date and got access to the money. So I think part of the integrity check was some of those lines had to be drawn. And unfortunately, some businesses missed out. But we can't be all things to all people. And unfortunately, some missed out.

Dr Jane Rennie:
Elinor, tax and BAS agents were essential to the delivery of JobKeeper, and yet they weren't classified as essential workers during lockdowns, which I know provoked some upset. What impact did that have? And could the impact on the accounting profession have been better managed?

Elinor Kasapidis:
We had many members, particularly in Victoria, who were struggling to support their clients without being able to access their offices. And while online is normal now, think back to pre-COVID. Many interactions and processes were physical. And that meant a huge shift overnight in how tax practitioners worked. Now you combine that with JobKeeper and COVID support deadlines for clients, and it became a real stress point to not be able to go into the office or to do anything. And obviously, as the intermediary, you've got pressure from both the government and your clients to get things done. In my view, accountants were like the healthcare workers for business. And it's important for state governments in the future to take a more holistic approach to how they classify and define essential workers, for sure.

Dr Jane Rennie:
Elinor, the day-to-day administration of the scheme fell to the ATO. Was that an effective delivery mechanism? I mean, were the risks of fraud or other criminal activity appropriately managed?

Elinor Kasapidis:
I don't think any Australian agency except the ATO could have pulled it off. They redeployed thousands of staff to the measures. They have a strong IT and fraud detection capability. And a lot of people were already hooked up to that digital tax infrastructure, including tax practitioners. And they certainly had the existing relationships with professionals and industries, so we were able to be engaged with the ATO and treasury the whole time. So I remember the endless lists of technical questions that we were sending through from our members and working through together. They were sending out daily updates and guidance. And that really highlights that, while there were only two phases of JobKeeper, the rules and the guidance and the situations that were coming up were constant throughout the whole year. And that created a really sustained burden on everyone involved. So it was amazing to see the commitment by both public servants and tax professionals to seeing it through for so long. Now, you did mention fraud, Jane. And unfortunately, whenever there's government money on offer, there'll always be those that will seek to exploit the system. And Gavan mentioned the new businesses were not being eligible to avoid fake registrations. There were also eligible employee rules and notifications that were required to avoid claims for phantom employees, for example. So those checks and balances were there. And while we've seen some fraud cases coming out of JobKeeper, again, those costs were far outweighed by the benefits. And the ANAO actually did do a review of how the ATO managed these risks and found them to be effective.

Dr Jane Rennie:
Gavan, overall then, do you think JobKeeper could form a good model for disaster support in the future?

Gavan Ord:
I think it's one model. I think it's a model at the very extreme end where there's a huge impact. But some of the elements could be employed in smaller models for a smaller-scale disaster. And I think one aspect of it is the role of the federal government, as Elinor just said, the ATO was able to redeploy thousands of people to help. That sort of capacity doesn't exist necessarily in state governments. So I think there are elements around the administration, not just the design, that could be used in state-based disaster support programmes in the future. And that's because different disasters have different scale, different impact.

Dr Jane Rennie:
Elinor, if a JobKeeper-like scheme was to be rolled out in future for natural disaster support to business, for example, are there any improvements that you would make to the model that we had that we saw with JobKeeper?

Elinor Kasapidis:
This is a hard one because, like Gavan said, it was such a unique situation. What it did was, for me, probably highlighted a more systemic challenge for government and policy makers. And that is that our laws, systems, and processes are really, really complex. What that means is that design and delivery is never easy, which is a genuine problem when time is of the essence. With JobKeeper, what we did see was that the federal government and administration effectively used the tools that it had. And those learnings, like Gavan highlighted, what can you take from that to build on those experiences and make delivery increasingly seamless?

Dr Jane Rennie:
That's all we've got time for today. Thanks very much to our guest experts, Elinor Kasapidis and Gavan Ord. A link to our submission to the JobKeeper review is included in the show notes. From all of us here at CPA Australia, thanks for listening.

Garreth Hanley:
You've been listening to With Interest, a CPA Australia podcast. If you've enjoyed this episode, help others discover With Interest by leaving us a review and sharing this episode with colleagues, clients, or anyone else interested in the latest finance, business, and accounting news. To find out more about our other podcasts and CPA Australia, check the show notes for this episode. We hope you can join us again for another episode of With Interest.