$60 billion stuff-up: Treasurer admits huge JobKeeper error

Treasurer Josh Frydenberg has admitted Australia's $1500 JobKeeper program is covering less than half the 6 million employees claimed.

Treasury officials have confirmed today that a 'reporting error' based on bosses' estimates of how many workers are eligible has led to the incredible stuff up.

The Prime Minister and Treasurer have repeatedly claimed the scheme is covering 6 million workers. It is budgeted to cost $130 billion.

But there appear to be no immediate plans to extend the scheme to one million casuals locked out of the $1500 a fortnight payments.

Treasurer Josh Frydenberg has admitted to a ‘reporting error’ in the JobKeeper program. Picture: Mick Tsikas/AAP
Treasurer Josh Frydenberg has admitted to a ‘reporting error’ in the JobKeeper program. Picture: Mick Tsikas/AAP

 

As a result, the cost of the $130 billion scheme will be slashed to just $70 billion.

"The Australian Taxation Office (ATO) and the Treasury have informed the Government of a reporting error inadvertently made by some businesses in their enrolment forms for the program,'' Mr Frydenberg told news.com.au.

 

"Importantly, as the ATO and Treasury have said, the reporting error has 'no consequences for JobKeeper payments that have already been made to eligible businesses as payments under the scheme'.

"The JobKeeper program is now expected to support around 3.5 million Australians and remains a demand-driven program and available for businesses to enrol in at any time until its conclusion.

"As the ATO and Treasury statement outlines, the revised cost is due to 'some improvement to the outlook for the economy since the original estimate' and the 'level and impact of health restrictions not having been as severe as expected'.

Around 3.5 million Australians are now believed to be on the payments. Picture: John Grainger
Around 3.5 million Australians are now believed to be on the payments. Picture: John Grainger

 

It is welcome news that the impact on the public purse from the program will not be as great as initially estimated. "

In a statement, the ATO blamed a reporting error for the stuff up.

"The enrolment forms completed by 910,055 businesses who have self‑assessed as eligible under the scheme had indicated that this program would cover around 6.5 million eligible employees,'' the statement said.

"The most common error was that instead of reporting the number of employees they expected to be eligible, they reported the amount of assistance they expected to receive. For example, over 500 businesses with '1' eligible employee reported a figure of '1,500' (which is the amount of JobKeeper payment they would expect to receive for each fortnight for that employee)."

This reporting error emerged as the ATO and Treasury commenced analysing the amounts being paid out under the scheme.

 

"It was not picked up by the ATO earlier as their primary focus in the first fortnight of JobKeeper payments was on ensuring that JobKeeper payments were paid promptly to those eligible for them, and not paid to those who were ineligible. These initial estimates from businesses of employees covered are not linked to payments, and so were not as carefully analysed,'' the ATO said.

"Importantly this reporting error has no consequences for JobKeeper payments that have already been made to eligible businesses, as payments under the scheme depend on the subsequent declaration that an eligible business makes in relation to each and every eligible employee. This declaration does not involve estimates and requires an employer to provide the tax file number for each eligible employee. By contrast, the only use of the information collected in respect of the reporting error was to provide an early estimate of the number of expected employees likely to access the JobKeeper program."

Currently, 910,055 businesses are enrolled in the JobKeeper program. Of these, 759,654 have made claims in relation to their eligible employees and had their applications processed.

This resulted in $8.7 billion of approved payments to those 759,654 businesses, covering around 2.9 million employees.

Originally published as Treasurer admits massive JobKeeper error


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