Kept out of the loop

Despite spending $60 billion less on JobKeeper than forecast, the government has announced an early end to the wage subsidy for childcare workers. By Karen Middleton.

When he appeared before the senate’s Covid-19 committee this week, asked to explain the $60 billion JobKeeper bungle, Finance Minister Mathias Cormann was all about the upside.

The original $130 billion price tag had been, he said, a “prudent and very conservative initial estimate” and its revision downward “a very good thing ”.

“We might have been forced to make an estimates variation in the other direction, which would not have been good for confidence,” he said.

Cormann confirmed the costing of the JobKeeper program was “based on a worst-case scenario”.

He called it “a usual estimates variation in relation to a demand-driven program”, the size of which was a function of the program’s scope and the uncertainty around the health crisis when it was first rolled out.

Alongside Treasury secretary Dr Steven Kennedy and tax commissioner Chris Jordan, Cormann was defending two mistakes – a miscalculated Treasury forecast and an administrative error in the way the Australian Tax Office determined the program’s likely uptake, due to employers making mistakes on the application form.

Because the ATO had reached a similar figure to the Treasury – 6.6 million likely recipients – each reinforced the other.

Cormann told the committee it was the ATO’s discovery that some employers had wrongly substituted the dollar amount to be claimed – 1500 – for the number of claimant employees, that had triggered the downward forecast revision.

Committee chair Labor’s Katy Gallagher questioned the time line.

Kennedy said Treasury had been tracking the difference between the estimate of recipients and actual payments for more than a week before the errors were confirmed.

Jordan said the ATO had done a “deep dive” into the figures on May 20 and advised Treasury and the treasurer’s office on the afternoon of May 21 – the same day Treasury officials appeared before the Covid-19 committee and insisted the forecast was unchanged.

Kennedy said he was notified about the issue after he had appeared before the committee, about 3pm.

“So it was a matter of an hour later,” Gallagher said.

“That’s right,” Kennedy confirmed.

Kennedy took responsibility for the forecast error – which is the largest on record – but also sought to deliver news of other underestimates: unemployment now likely to peak at 8 per cent, not 10 per cent as forecast, and gross domestic product falling nowhere near the feared 25 per cent in the June quarter.

The opposition is accusing Prime Minister Scott Morrison of changing his own forecast related to JobKeeper, after he said on Friday last week that the program would continue until September.

Three days later, Education Minister Dan Tehan announced a midJuly end to subsidised childcare and to the JobKeeper payment in that sector.

“The JobKeeper legislation does remain in place until the end of September,” Morrison told parliament on Wednesday. “But, where there is a better way to do things, we won’t step aside.”

He has declined to expand JobKeeper’s reach to those who missed out, despite the $60 billion underspend.

“Will other sectors lose JobKeeper before September?” Gallagher asked in the committee hearing.

Cormann said he was not aware of other sectors “being in the scope”.

• “We have not made any decisions.”