Government support for business, March quarter 2021

Released
2/06/2021

The Government’s economic response to the COVID-19 pandemic continued into March quarter 2021. This response included the continuation of JobKeeper and Boosting cash flow for employers subsidies. JobKeeper and Boosting cash flow for employers are the two largest subsidies recorded in the history of national accounts. For further information on the classification of these policies, see Economic measurement during COVID-19: Selected issues in the Economic Accounts (cat. no. 5261.0).

JobKeeper payments accounted for $6.4 billion in March quarter, down from $12.0 billion in December quarter. Boosting cash flow for employers contributed $692 million, down from $6.7 billion in December quarter. Other COVID-19 related subsidies, including those made by state governments, added an additional $1.7 billion in the March quarter.

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Changes to JobKeeper

The JobKeeper policy was extended from 28 September 2020, with new employer eligibility tests and a two-tiered payment system. The second part of the extension commenced 4 January 2021 and the policy ceased on 28 March 2021.

Eligibility for the JobKeeper extension was based on the change in turnover from December 2019 to December 2020. This eligibility criterion for the second part of the JobKeeper extension remained the same as the first extension’s employer eligibility test.

The extension of the two-tiered payment system reduced payments of $1200 per fortnight for eligible employees working 80 hours or more to $1000 (tier 1) whilst all other eligible employees received $650 per fortnight (tier 2), down from $750.

Both the eligibility retest and the lower rate of Jobkeeper payments contributed to the overall fall in total payments.

JobKeeper payments by industry

In the March quarter, the largest portion of JobKeeper payments remained distributed to large employing industries such as Construction, Professional, Scientific and Technical Services, and Accommodation and Food Services.

JobKeeper payments relative to compensation of employees (COE) fell across all industries and reflects both the decline in JobKeeper payment rates and continued rise in economic activity. The easing of COVID-19 containment measures led to increased economic activity, growth in employment and hours worked.

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Of total JobKeeper, 84.6% were tier 1 and 15.4% were tier 2 payments. Industries with the highest composition of casual and part-time workers received the lowest proportion of tier 1 payments. These industries included Arts and Recreation, Education and Training, Accommodation and Food Services, and Retail Trade.

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Boosting cash flow for employers by industry

In addition to JobKeeper, the Government continued to support small and medium-sized businesses and not-for-profit employers with the Boosting cash flow for employers policy.

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Industries with high shares of small and medium-sized businesses received the largest portion of Boosting cash flow for employers payments. These included Construction, Professional, Scientific and Technical Services and Health Care and Social Assistance.

Boosting cash flow for employers relative to operating surplus were highest in the Administrative and Support Services (1.6%), Accommodation and Food Services (1.7%), and Other Services (3.7%) industries.

Boosting cash flow for employers relative to operating surplus in the Construction industry was 0.9%, down from 6.5% in the December quarter. This reflects continued recovery in this industry with easing of COVID-19 related restrictions and increased demand with the introduction of Government stimulus, such as HomeBuilder.

Taxes less subsidies on production and imports

Taxes less subsidies on production and imports rose 62.3%, following a record rise in December quarter 2020. Taxes on production and imports rose 8.2%, driven by payroll tax (20.3%), tax on financial and capital transactions (20.8%), taxes on international trade (14.5%) and goods and services tax (3.1%). Subsidies on production and imports continued to fall from record high levels, driven by falls in both JobKeeper and Boosting cash flow for employers.

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