Government support for business, September quarter 2020

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Released
2/12/2020
Source
Australian National Accounts: National Income, Expenditure and Product, September 2020
Released
02/12/2020 11:30am AEDT

The government’s economic response to the COVID-19 pandemic continued into September quarter 2020. 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 $35.8 billion, following $35.1 billion in June quarter. Boosting cash flow for employers contributed $13.5 billion, following $14.6 billion in June quarter. Other COVID-19 related subsidies, including those made by state governments, added an additional $2.9 billion in September quarter.

JobKeeper payments by industry

In the September quarter, the largest portion of JobKeeper payments remained distributed to large employing industries such as Construction, Professional, Scientific and Technical Services, Health Care and Social Assistance and Retail Trade.

JobKeeper payments relative to compensation of employees (COE) were highest in Arts and Recreation Services (51.5%), down from 55.2% in June quarter. Accommodation and Food Services (45.4%) recorded the second highest share of JobKeeper relative to COE, down from 50.8% in June quarter. The falls in relative shares reflected increased economic activity and hours worked in these industries as containment measures eased.

JobKeeper by state

COE rose 2.3% in the September quarter, with rises recorded in all states and territories reflecting increased economic activity, employment and hours worked.

Victoria recorded the largest rise in JobKeeper relative to COE of all states and territories, up to 18.8%, as lockdown measures continued into September quarter and economic activity remained low. For Australia excluding Victoria, JobKeeper relative to COE was 13.6% in September quarter, down from 14.1% in June quarter.

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.

Industries with high shares of small and medium sized businesses received the largest portion of Boosting cash flow for employers payments. These industries 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 Other Services (23.3%), Health Care and Social Assistance (20.9%), and Administrative and Support Services (18.1%) industries.

Accommodation and Food Services’ boosting cash flow for employers relative to operating surplus was 13.4%, down from 20.8% in June quarter reflecting recovery in this industry with easing of COVID-19 related restrictions.

Taxes less subsidies on production and imports

Taxes less subsidies on production and imports rose 50.9% following a record fall of 118.3% in the June quarter 2020. Taxes on production and imports rose 7.6%, driven by goods and services tax (4.5%), tax on financial and capital transactions (16.8%) and payroll tax (12.5%). Subsidies on production and imports were maintained at high levels driven by JobKeeper and Boosting cash flow for employers.