Clamp down on JobKeeper rorts, detractors argue

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Labor and the unions are demanding the government do more to ensure JobKeeper payments are being used properly as many casuals and others miss out after The Sydney Morning Herald and The Age revealed the tax office had issued no penalties under the scheme.

But economics experts said the scheme was designed to get money out the door quickly with few safeguards, which resulted in a far larger amount of money being directed to businesses that did not need it than potential rorts.

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ACTU president Michele O'Neil has urged the government to make sure JobKeeper money goes where it is needed.Credit: Alex Ellinghausen

No business has been fined for defrauding the $110 billion JobKeeper scheme despite more than 15,000 ineligible businesses being removed between the scheme's start in March and August 26 and the Australian Tax Office receiving more than 8000 tips about reported abuse. Ten cases are being investigated by the office's financial crime taskforce.

Australian Council of Trade Unions President Michele O’Neil said the "urgent priorities" for JobKeeper are to expand its eligibility to the thousands of workers who have been excluded and to continue payments at the current rate.

"The Morrison Government has designed a scheme which is open to rorting – we have seen companies receiving JobKeeper paying dividends and bonuses, and now the ATO is declining to prosecute thousands of businesses who have improperly accessed the scheme," Ms O'Neil said.

Casuals who have been with their employer for less than a year as of a set date are not eligible for JobKeeper.

Labor's finance spokeswoman Katy Gallagher was incredulous at the low number of investigations and penalties. "We need to make sure... the proper response from the government and from the ATO is actually being done to make sure that we get the money going to where it's needed the most," Senator Gallagher told reporters in Canberra.

Asked whether he was confident in the tax office's monitoring of JobKeeper, Treasurer Josh Frydenberg stood by his previous answer that it was a matter for the ATO. "Whilst we recognise most businesses and employees are doing the right thing, there are a range of penalties available to the ATO, consistent with other tax laws they administer," Mr Frydenberg said in a statement.

The Tax Office has been refraining from starting new audits since the pandemic hit, redeploying its auditors to other measures, including JobKeeper.

University of Melbourne Economics Professor Jeff Borland said because the JobKeeper scheme had to get money to businesses quickly, it originally operated "like an honour system" to support about 875,000 workers who would have otherwise had reduced or no income.

"By design, it included a large subsidy to businesses who pay workers who they would have likely retained even in the absence of COVID-19," Professor Borland said. "Saying firms needed to lose more revenue to be eligible would have meant more workers who lost jobs missing out."

Visiting Fellow at the Tax and Transfer Policy Institute at the Australian National University Steve Hamilton said the extent of rorting JobKeeper payments pales in comparison to the "excessive generosity" of its initial eligibility criteria, which are being made tighter for the second phase of the scheme.

Under the rules, "businesses only needed to say they expected revenue to fall, and for many businesses only for the first month and then they got locked in for six months," Dr Hamilton said.

Innes Willox, chief executive of industry body Ai Group, defended the design of the scheme. "While there may have been more than usual scope for misuse, the urgency of the task and the macroeconomic imperative to get cash stimulus into the hands of businesses and employees meant that the risks were outweighed by the benefits," Mr Willox said.

As the JobKeeper scheme comes under the spotlight, the Australian Council of Social Services has released modelling showing the potential impact of withdrawing higher JobSeeker payments.

JobSeeker, which was formerly known as Newstart and is paid primarily to unemployed people, was increased along with JobKeeper by $550 during the pandemic but is set to drop by $300 later this month and revert to its old rate if the government does not intervene by December.

Modelling by Deloitte Access Economics commissioned by ACOSS predicts that could cost $31.3 billion and 145,000 full-time jobs nationally over two years.

ACOSS chief executive Cassandra Goldie said people on welfare had been relieved by the additional payments. "But they now face a deeply uncertain future, with the prospect of these devastating cuts to their already tight budgets," Dr Goldie said.

Some in the Coalition have voiced their concern that higher welfare payments are discouraging people moving to regional areas for jobs, though Dr Goldie said there were far more applicants than jobs available.