Government support for business, December quarter 2020

Released

3/03/2021

Source

Australian National Accounts: National Income, Expenditure and Product, December 2020

The Government’s economic response to the COVID-19 pandemic continued into the December 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 largest subsidies recorded in the history of the national accounts. For further information on the classification of these policies, see Economic measurement during COVID-19: Selected issues in the economic accounts.

JobKeeper payments accounted for $11.9 billion in December quarter, down from $35.8 billion in the September quarter. Boosting cash flow for employers contributed $6.7 billion, down from $13.5 billion in the September quarter. Other COVID-19 related subsidies, including those made by state governments, added an additional $3.7 billion in the December quarter.

Figure 1: Government support for business in response to COVID-19
	Non COVID-19 (bn)	Other COVID-19 related (bn)	Boosting cashflow for employers (bn)	JobKeeper (bn)
Jun-18	1.7
Sep-18	1.7
Dec-18	1.7
Mar-19	1.6
Jun-19	1.5
Sep-19	1.6
Dec-19	1.6
Mar-20	1.5
Jun-20	1.4	3.6	14.6	35.1
Sep-20	1.5	3.4	13.5	35.8
Dec-20	1.5	3.7	6.7	11.9

Figure 1: Government support for business in response to COVID-19

["","Non COVID-19","Other COVID-19 related","Boosting cashflow for employers","JobKeeper"]

[["Jun-18","Sep-18","Dec-18","Mar-19","Jun-19","Sep-19","Dec-19","Mar-20","Jun-20","Sep-20","Dec-20"],[[1.7],[1.7],[1.7],[1.6000000000000001],[1.5],[1.6000000000000001],[1.6000000000000001],[1.5],[1.3999999999999999],[1.5],[1.5]],[[null],[null],[null],[null],[null],[null],[null],[null],[3.6000000000000001],[3.3999999999999999],[3.7000000000000002]],[[null],[null],[null],[null],[null],[null],[null],[null],[14.6],[13.5],[6.7000000000000002]],[[null],[null],[null],[null],[null],[null],[null],[null],[35.100000000000001],[35.799999999999997],[11.9]]]

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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.

Eligibility for the JobKeeper extension was assessed on the change in turnover from September quarter 2019 to September quarter 2020. This eligibility criterion differed from the original JobKeeper employer eligibility test which was based on expected performance as opposed to past performance.

Large businesses (turnover of $1b or more) were required to show a 50% decline in turnover, small to medium businesses (turnover less than $1b) were required to show a 30% decline and Australian Charities and Not-for-profits Commission registered charities required to show a 15% decline.

Compared to the original JobKeeper payment of $1500 per fortnight, the two-tiered payment system introduced payments of $1200 per fortnight for eligible employees working 80 hours or more (tier 1) while all other eligible employees received $750 per fortnight (tier 2).

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

JobKeeper payments by industry

In the December 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) were highest in Arts and Recreation Services (25.0%), down from 51.3% in the September quarter. Accommodation and Food Services (16.6%) recorded the second-highest share of JobKeeper relative to COE, down from 45.0% in the September quarter.

The falls in relative shares reflect the decline in JobKeeper payments and increased economic activity. The JobKeeper payments fell with the introduction of new eligibility rules and lower payment rates. The easing of COVID-19 containment measures led to increased economic activity, growth in employment and hours worked.

Figure 2: JobKeeper payments by industry relative to compensation of employees
	JobKeeper relative to COE (RHS) (%)	JobKeeper level (LHS) ($b)
Construction	9.1	1.668
Professional, scientific and technical services	5.5	1.468
Accommodation and food services	16.6	1.208
Administrative and support services	7.1	1.026
Other services	14.8	0.885
Transport, postal and warehousing	7.7	0.847
Manufacturing	4.7	0.803
Retail trade	5.6	0.776
Health care and social assistance	1.6	0.540
Arts and recreation services	25.0	0.534
Education and training	2.1	0.476
Rental, hiring and real estate services	9.2	0.443
Wholesale trade	3.4	0.413
Financial and insurance services	2.0	0.263
Agriculture, forestry and fishing	10.6	0.259
Information media and telecommunications	4.3	0.188
Public administration and safety	0.3	0.058
Mining	0.5	0.038
Electricity, gas, water and waste services	0.8	0.031

Figure 2: JobKeeper payments by industry relative to compensation of employees

["","JobKeeper relative to COE (RHS)","JobKeeper level (LHS)"]

[["Construction","Professional,\u00a0scientific\u00a0and\u00a0technical\u00a0services","Accommodation\u00a0and\u00a0food\u00a0services","Administrative\u00a0and\u00a0support\u00a0services","Other\u00a0services","Transport,\u00a0postal\u00a0and\u00a0warehousing","Manufacturing","Retail\u00a0trade","Health\u00a0care\u00a0and\u00a0social\u00a0assistance","Arts\u00a0and\u00a0recreation\u00a0services","Education\u00a0and\u00a0training","Rental,\u00a0hiring\u00a0and\u00a0real\u00a0estate\u00a0services","Wholesale\u00a0trade","Financial\u00a0and\u00a0insurance\u00a0services","Agriculture,\u00a0forestry\u00a0and\u00a0fishing","Information\u00a0media\u00a0and\u00a0telecommunications","Public\u00a0administration\u00a0and\u00a0safety","Mining","Electricity,\u00a0gas,\u00a0water\u00a0and\u00a0waste\u00a0services"],[[9.0999999999999996],[5.5],[16.600000000000001],[7.0999999999999996],[14.800000000000001],[7.7000000000000002],[4.7000000000000002],[5.5999999999999996],[1.6000000000000001],[25],[2.1000000000000001],[9.1999999999999993],[3.3999999999999999],[2],[10.6],[4.2999999999999998],[0.29999999999999999],[0.5],[0.80000000000000004]],[[1.6679999999999999],[1.468],[1.208],[1.026],[0.88500000000000001],[0.84699999999999998],[0.80300000000000005],[0.77600000000000002],[0.54000000000000004],[0.53400000000000003],[0.47599999999999998],[0.443],[0.41299999999999998],[0.26300000000000001],[0.25900000000000001],[0.188],[0.058000000000000003],[0.037999999999999999],[0.031]]]

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Of total JobKeeper, 86.6% were tier 1 and 13.4% 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 Services, Education and Training, Accommodation and Food Services, and Retail Trade.

Figure 3: JobKeeper tiers relative to total payment by industry
	Tier 1 Proportion (%)	Tier 2 Proportion (%)
Agriculture, forestry and fishing	92.2	7.8
Mining	96.0	4.0
Manufacturing	93.6	6.4
Electricity, gas, water and waste services	94.1	5.9
Construction	93.3	6.7
Wholesale trade	92.1	7.9
Retail trade	82.4	17.6
Accommodation and food services	81.5	18.5
Transport, postal and warehousing	92.3	7.7
Information media and telecommunications	81.3	18.7
Financial and insurance services	91.0	9.0
Rental, hiring and real estate services	89.8	10.2
Professional, scientific and technical services	87.8	12.2
Administrative and support services	87.6	12.4
Public administration and safety	88.4	11.6
Education and training	75.6	24.4
Health care and social assistance	78.8	21.2
Arts and recreation services	74.1	25.9
Other services	83.7	16.3

Figure 3: JobKeeper tiers relative to total payment by industry

["","Tier 1 Proportion","Tier 2 Proportion"]

[["Agriculture,\u00a0forestry\u00a0and\u00a0fishing","Mining","Manufacturing","Electricity,\u00a0gas,\u00a0water\u00a0and\u00a0waste\u00a0services","Construction","Wholesale\u00a0trade","Retail\u00a0trade","Accommodation\u00a0and\u00a0food\u00a0services","Transport,\u00a0postal\u00a0and\u00a0warehousing","Information\u00a0media\u00a0and\u00a0telecommunications","Financial\u00a0and\u00a0insurance\u00a0services","Rental,\u00a0hiring\u00a0and\u00a0real\u00a0estate\u00a0services","Professional,\u00a0scientific\u00a0and\u00a0technical\u00a0services","Administrative\u00a0and\u00a0support\u00a0services","Public\u00a0administration\u00a0and\u00a0safety","Education\u00a0and\u00a0training","Health\u00a0care\u00a0and\u00a0social\u00a0assistance","Arts\u00a0and\u00a0recreation\u00a0services","Other\u00a0services"],[[92.200000000000003],[96],[93.599999999999994],[94.099999999999994],[93.299999999999997],[92.099999999999994],[82.400000000000006],[81.5],[92.299999999999997],[81.299999999999997],[91],[89.799999999999997],[87.799999999999997],[87.599999999999994],[88.400000000000006],[75.599999999999994],[78.799999999999997],[74.099999999999994],[83.700000000000003]],[[7.7999999999999998],[4],[6.4000000000000004],[5.9000000000000004],[6.7000000000000002],[7.9000000000000004],[17.600000000000001],[18.5],[7.7000000000000002],[18.699999999999999],[9],[10.199999999999999],[12.199999999999999],[12.4],[11.6],[24.399999999999999],[21.199999999999999],[25.899999999999999],[16.300000000000001]]]

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JobKeeper by state

Victoria recorded the highest level of JobKeeper relative to COE of all states and territories (7.9%) as the most stringent restrictions were eased in late October and eligibility for payments remained higher than in other states. For Australia excluding Victoria, JobKeeper relative to COE was 3.9% in the December quarter, down from 13.7% in the September quarter.

Figure 4: JobKeeper payments relative to compensation of employees by state
	Jun-20 (%)	Sep-20 (%)	Dec-20 (%)
NSW	15.6	15.2	4.7
Vic.	17.5	18.7	7.9
Qld	15.3	14.1	4.0
WA	14.8	14.9	3.8
SA	10.8	10.9	2.5
Tas.	13.8	13.8	3.9
NT	6.1	5.9	1.6
ACT	6.1	6.0	1.7

Figure 4: JobKeeper payments relative to compensation of employees by state

["","Jun-20","Sep-20","Dec-20"]

[["NSW","Vic.","Qld","WA","SA","Tas.","NT","ACT"],[[15.6],[17.5],[15.300000000000001],[14.800000000000001],[10.800000000000001],[13.800000000000001],[6.0999999999999996],[6.0999999999999996]],[[15.199999999999999],[18.699999999999999],[14.1],[14.9],[10.9],[13.800000000000001],[5.9000000000000004],[6]],[[4.7000000000000002],[7.9000000000000004],[4],[3.7999999999999998],[2.5],[3.8999999999999999],[1.6000000000000001],[1.7]]]

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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.

Figure 5: Boosting cash flow for employers relative to operating surplus by industry
	Boosting cash flow for employers relative to operating surplus (RHS) (%)	Boosting cash flow for employers (LHS) ($b)
Construction	6.3	1.184
Professional, scientific and technical services	10.5	1.103
Health care and social assistance	10.4	0.571
Retail trade	5.7	0.482
Other services	19.4	0.462
Accommodation and food services	11.9	0.433
Manufacturing	3.2	0.379
Administrative and support services	15.2	0.315
Wholesale trade	3.3	0.310
Agriculture, forestry and fishing	3.1	0.275
Rental, hiring and real estate services	3.2	0.270
Transport, postal and warehousing	2.2	0.267
Financial and insurance services	0.9	0.252
Education and training	5.0	0.144
Arts and recreation services	3.5	0.095
Information media and telecommunications	0.8	0.063
Public administration and safety	0.6	0.031
Electricity, gas, water and waste services	0.4	0.026
Mining	0.1	0.025

Figure 5: Boosting cash flow for employers relative to operating surplus by industry

["","Boosting cash flow for employers relative to operating surplus (RHS)","Boosting cash flow for employers (LHS)"]

[["Construction","Professional,\u00a0scientific\u00a0and\u00a0technical\u00a0services","Health\u00a0care\u00a0and\u00a0social\u00a0assistance","Retail\u00a0trade","Other\u00a0services","Accommodation\u00a0and\u00a0food\u00a0services","Manufacturing","Administrative\u00a0and\u00a0support\u00a0services","Wholesale\u00a0trade","Agriculture,\u00a0forestry\u00a0and\u00a0fishing","Rental,\u00a0hiring\u00a0and\u00a0real\u00a0estate\u00a0services","Transport,\u00a0postal\u00a0and\u00a0warehousing","Financial\u00a0and\u00a0insurance\u00a0services","Education\u00a0and\u00a0training","Arts\u00a0and\u00a0recreation\u00a0services","Information\u00a0media\u00a0and\u00a0telecommunications","Public\u00a0administration\u00a0and\u00a0safety","Electricity,\u00a0gas,\u00a0water\u00a0and\u00a0waste\u00a0services","Mining"],[[6.3280000000000003],[10.509],[10.384],[5.6669999999999998],[19.440999999999999],[11.927],[3.2029999999999998],[15.183],[3.319],[3.1240000000000001],[3.1629999999999998],[2.238],[0.90300000000000002],[4.9669999999999996],[3.536],[0.79000000000000004],[0.626],[0.40799999999999997],[0.057000000000000002]],[[1.1839999999999999],[1.103],[0.57099999999999995],[0.48199999999999998],[0.46200000000000002],[0.433],[0.379],[0.315],[0.31],[0.27500000000000002],[0.27000000000000002],[0.26700000000000002],[0.252],[0.14399999999999999],[0.095000000000000001],[0.063],[0.031],[0.025999999999999999],[0.025000000000000001]]]

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Industries with a high shares of small and medium-sized businesses received the largest portion of Boosting cash flow for employers payments. These industries included Administrative and Support Services, Healthcare and Social Assistance, and Other Services.

Boosting cash flow for employers relative to operating surplus was highest in the Administrative and Support Services (15.2%), Accommodation and Food Services (11.9%), and Other Services (19.4%) industries.

For the Health Care and Social Assistance industry, boosting cash flow for employers relative to operating surplus was 10.4%, down from 20.9% in the September quarter, reflecting recovery in this industry with easing of COVID-19 related restrictions and high demand for these services.

Taxes less subsidies on production and imports

Taxes less subsidies on production and imports rose 727.5%, following falls in both the June and September quarters 2020. Taxes on production and imports rose 2.9%, driven by goods and services tax (4.6%), taxes on financial and capital transactions (11.3%) and taxes on gambling (30.0%). Subsidies on production and imports fell from the record high levels driven by falls in JobKeeper and Boosting cash flow for employers.

Figure 6: Taxes less subsidies on production and imports
	Taxes less subsidies on production ($b)	Taxes on production and imports ($b)	Less subsidies on production ($b)
Dec-10	33.6	38.0	-4.4
Mar-11	34.3	38.6	-4.3
Jun-11	33.8	38.5	-4.7
Sep-11	33.9	38.7	-4.7
Dec-11	34.3	38.9	-4.6
Mar-12	35.0	39.7	-4.8
Jun-12	35.1	39.8	-4.8
Sep-12	36.4	42.0	-5.5
Dec-12	36.9	42.5	-5.7
Mar-13	36.9	42.6	-5.7
Jun-13	38.1	43.9	-5.7
Sep-13	38.9	45.1	-6.1
Dec-13	39.2	45.3	-6.1
Mar-14	39.9	45.8	-6.0
Jun-14	40.1	46.4	-6.2
Sep-14	39.3	44.8	-5.5
Dec-14	39.9	45.2	-5.3
Mar-15	40.8	46.3	-5.6
Jun-15	40.7	46.4	-5.6
Sep-15	42.5	48.2	-5.4
Dec-15	42.6	48.3	-5.5
Mar-16	42.8	48.4	-5.7
Jun-16	43.3	49.1	-5.7
Sep-16	43.0	48.7	-5.7
Dec-16	44.0	49.7	-5.7
Mar-17	45.4	51.0	-5.6
Jun-17	45.6	51.5	-5.8
Sep-17	46.0	51.9	-5.8
Dec-17	47.1	52.7	-5.8
Mar-18	47.4	53.0	-5.6
Jun-18	47.9	53.8	-5.8
Sep-18	48.3	54.2	-5.8
Dec-18	48.4	54.0	-5.9
Mar-19	48.3	54.2	-5.9
Jun-19	49.7	55.3	-5.6
Sep-19	50.2	56.2	-5.8
Dec-19	49.6	55.2	-5.8
Mar-20	50.3	56.1	-5.7
Jun-20	-9.4	49.3	-58.7
Sep-20	-4.4	53.6	-57.8
Dec-20	27.7	55.1	-27.6

Figure 6: Taxes less subsidies on production and imports

["","Taxes less subsidies on production","Taxes on production and imports","Less subsidies on production"]

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