Keep JobKeeper call

AUSTRALIAN bank stocks rebounded after the bungled JobKeeper cost was revised down by $60 billion, but the scheme may need to be extended if the economy does not improve by September.

Reserve Bank governor Philip Lowe declared it was “really good news” the wage subsidy program was now only expected to cost $70 billion, but warned it may need to continue beyond six months.

“If we have not come out of the current trough in economic activity there will be and there should be a debate about how the JobKeeper program transitions into something else,” he told the Senate COVID-19 committee yesterday.

Mr Lowe also said it was “entirely possible that the economic downturn would not be as severe as originally thought”, but it would depend on how quickly confidence was restored.

“Even as the recovery gets under way, as it will, there will still be a shadow cast over our economy by the pandemic,” he said.

Mr Lowe said although job losses recorded in April were “shocking” they “weren’t quite as bad as we thought they were going to be”.

He said there had been “some pick up” in employment since April in the industries hardest hit by the shutdown.

However, he said the “complex picture” of the labour market during the pandemic meant there was now a decline in employment in sectors such as construction and professional services that had “kept the jobs going” in the initial months of the shutdown.

Treasurer Josh Frydenberg said the Government’s JobKeeper program was supporting a rapid recovery in consumer confidence, boosting retail spending and stabilising the housing market.

“Australia has made progress on the health front which has helped deliver this economic benefit,” he said.

Mr Frydenberg said the banking sector was also playing a “key role” in supporting the economy.

“The Government recognises the important measures that banks are putting in place to support their customers during the coronavirus crisis including passing on interest rate cuts, deferring interest rate payments or other financial commitments, and supporting the Government’s SME guarantee loan scheme, and we continue to encourage that support,” Mr Frydenberg said.