5.1
The COVID-19 pandemic and associated public health response had an immediate impact on the Australian and global economy.
5.2
As the Secretary of the Department of the Treasury, Dr Steven Kennedy PSM, reflected '[w]e have never seen an economic shock of this speed, magnitude and shape'.
5.3
The Australian Government's (government) COVID-19 economic response was announced across three separate packages over an 18-day period. The first package at $17.6 billion was designed without any serious consideration of the impact of escalating social restrictions to come.
5.4
Within just 10 days a second economic package was announced. At
$66.1 billion, it was three times the size of the first package, and doubled unemployment payments and other social security payments with the introduction of the Coronavirus Supplement of $550 per fortnight. The package also included measures encouraging Australians to withdraw some of their retirement savings early where sufficient financial support was absent from the government.
5.5
The third and final package in March, announced on the same day National Cabinet agreed to a stage 3 lockdown, was final recognition by the government that the economic consequences of the strict social distancing restrictions would cause economic meltdown across the domestic economy with massive job losses and widespread business closures unless the government introduced a wage subsidy—as many other countries had already done.
5.6
The Senate Select Committee on COVID-19 (committee) agrees that the combined effect of these responses have been crucial in saving jobs, providing much needed financial support to those surviving on the lowest of incomes and helping those businesses impacted by the COVID-19 restrictions to survive through the crisis.
5.7
Whilst welcoming the economic packages, the committee believes that there were issues with the timing and scale of the packages, and the government should have responded earlier to calls for a widespread wage subsidy.
5.8
The focus in early March on smaller fiscal measures and enabling access to hard-earned private savings for Australians experiencing financial hardship as the primary measure of stimulus, rather than the large scale fiscal intervention that was required, delayed the response and will carry long-term consequences for millions of Australians.
5.9
In this chapter, the committee considers:
the jobs crisis following the stage 3 lockdown;
the shift in the economic response during March;
the design of JobKeeper and the impact of exclusions;
the adequacy of JobSeeker and Centrelink's capacity to handle a sudden spike in the number of Australians on unemployment support payments;
ongoing issues in relation to the early access superannuation scheme; and
the delay in establishing a national system for paid pandemic leave.
The jobs impact of stage 3 lockdown
5.10
For many Australian businesses and workers, the fallout from public health measures from the pandemic was swift and brutal.
5.11
By the end of March, 66 per cent of businesses surveyed by the Australian Bureau of Statistics (ABS) had suffered a reduction in turnover or cash flow as a result of COVID-19. One in ten businesses reported not trading and of these, 70 per cent were closed due to COVID-19.
5.12
By April, the number of employed Australians had fallen by a total of 594 300—including 220 500 from full-time employment and 373 800 from part-time employment. 828 300 people were unemployed and the underemployment rate had increased to 13.7 per cent.
5.13
The severe decline of hours worked was unprecedented in the living memory of Australians. The total number of monthly hours worked fell by a staggering 164 million hours (8 per cent), and around 700 000 Australians were working 'zero hours for economic reasons' but were still counted as employed.
5.14
From February to May 2020, the number of Australians receiving income support through JobSeeker and Youth Allowance (other) doubled from around 815 000 to 1.64 million.
5.15
From April, JobKeeper—the wage subsidy scheme—was supporting 850 000 organisations to pay 3.3 million working Australians a wage to live on in the absence of normal business operating conditions.
5.16
Particular industries bore the full impact of the social distancing restrictions with tourism, accommodation and food services, arts and entertainment and aviation the first to feel the full economic impact of the lockdown, with hundreds of thousands of Australians losing their jobs and facing a very uncertain future, many for the first time in their working lives.
5.17
Within the industries that experienced the most rapid and severe declines in employment, women, young people and casuals were the hardest hit.
5.18
In just three weeks between 14 March and 4 April 2020, the number of Australian jobs fell by 25.6 per cent in accommodation and food services and 18.7 per cent in arts and recreation services. According to evidence from the Department of the Treasury:
Women and younger people have been over-represented in the falls, and a lot of that is around the structure of the industries that have been most affected—arts and recreation, retail, accommodation—areas where employment was more dominated by… women—and by young people.
The fiscal response to the economic crisis
Box 5.1: Interim finding
The Australian Government's reluctance and delay in adopting a large-scale wage subsidy distorted the design of its economic packages.
The Australian Government's decision to rely on the retirement savings system for economic stimulus will have long term consequences for millions of Australians.
5.19
The government responded to the first phase of the pandemic with three economic support packages in the space of three weeks:
First package—12 March, $17.6 billion to support business investment, boost cash flow to small and medium-sized business, provide a one-off $750 stimulus payment to eligible households, and assist regions, sectors and communities which had been disproportionately affected by the economic impacts of COVID-19.
Second package—22 March, $66.1 billion to temporarily double the rate of JobSeeker, provide a second $750 stimulus payment to eligible households, allow early access to superannuation and reduce social security deeming rates.
Third package—30 March, $130 billion to establish the JobKeeper payment, a wage subsidy available to eligible businesses and employees of a flat rate of $1500 per fortnight.
5.20
Parliament also approved an Advance to the Finance Minister (AFM) of
$40 billion—far exceeding the usual limit of $675 million—to ensure that the government could respond to urgent needs during the pandemic. This arrangement was conditional on an agreement by the government to seek approval from the Shadow Finance Minister for any proposed expenditure above $1 billion, and to report weekly on spending through the AFM.
5.21
The Grattan Institute noted that the size of the first package was 'relatively small' and suggested the government was 'still not seeing the size of the problem and the need to support rather than stimulate'. This view aligns with the clear reluctance of the government to embrace a hard lock down of the economy in late February and early March.
5.22
By mid-March many other nations around the world had begun to adopt large-scale wage subsidy programs. On 20 March, the Government of the United Kingdom announced the 'Coronavirus Job Retention Scheme' under which it would pay 80 per cent of workers' salaries, for all employers, up to £2500 per month.
5.23
Similarly, the Danish Government implemented a 'wage compensation scheme' to pay 75 per cent to 90 per cent of workers' wages for businesses that would have had to fire 30 per cent or more of their employees due to
COVID-19. The New Zealand Government adopted a 'targeted wage subsidy scheme for workers in adversely affected sectors' as early as 9 March.
5.24
In contrast, the government was not receptive to a wage subsidy until it was clear that there was no other option to saving jobs in light of the escalating social restrictions and their economic implications.
5.25
Five days before finally agreeing to calls for a large national wage subsidy scheme and announcing JobKeeper the Prime Minister, when asked if he would consider a scheme like the United Kingdom's, said:
We are already providing money to businesses through the BAS arrangements and one of the weaknesses of the system that you're advocating for is that it has to build an entirely new payment system for that to be achieved, which is never done quickly and is never done well.
5.26
In a hearing on 2 July, economists told the committee the government had not gone hard enough or early enough in its economic response.
Mr Stephen Koukoulas, Managing Director of Market Economics said the government's response to COVID-19 had been 'timid' and 'stingy'.
Dr Richard Denniss, Chief Economist of The Australia Institute, made the point that:
…the fact that unemployment is rising and that underemployment and hidden unemployment are so substantial is in itself proof that the stimulus isn't big enough.
5.27
The government was also slow to enact targeted measures designed to fill gaps in its immediate response packages. For example, following concerns about a significant proportion of the arts sector being ineligible for JobKeeper, on
27 March industry groups and the opposition called for a rescue package. On 25 June—three months after these calls—the government belatedly announced a $250 million package for the creative economy. In a hearing before the committee on 30 June, the Office for the Arts conceded that guidelines had not yet been developed and it would take 'several months' before the first payments would start going to affected organisations.
5.28
To understand why the government was initially reluctant to adopt large-scale fiscal intervention, the Chair wrote to the Department of the Treasury on
30 April requesting its economic modelling and scenario work on the response to COVID-19. The government refused to provide this important economic data, and have claimed public interest immunity over its release.
5.29
This refusal to provide key documents to the committee and to allow for appropriate scrutiny and transparency has significantly impacted on the committee's ability to interrogate some of these key decisions.
The design of JobKeeper
Box 5.2: Interim finding
The Australian Government designed JobKeeper in a way which unnecessarily and deliberately excluded over one million Australian workers from the scheme.
The Australian Government should have expanded JobKeeper eligibility to include more Australian workers when the $60 billion costing error was identified.
If JobKeeper had been designed to include more Australian workers, more jobs could have been saved.
5.30
On 30 March, the government announced JobKeeper, a wage subsidy program designed to help keep Australians employed as large parts of the economy went into 'hibernation'.
5.31
The decision to adopt a large-scale wage subsidy through JobKeeper received unanimous support across the Parliament and broad support amongst stakeholders including unions, businesses and community organisations, who acknowledged that it was designed and implemented quickly to meet an urgent need.
5.32
However, in the initial design of the program, the government made some deliberate exclusions primarily on the basis that, at a projected imposition of $130 billion on public finances, they needed to impose limits on the cost of the package. Many of these exclusions targeted workers and industries who had been the hardest hit by the pandemic.
5.33
These deliberate exclusions cost millions of Australian workers access to a crucial lifeline during an unprecedented jobs crisis, including:
casual employees who could not demonstrate 12 months of continuous employment with the same employer (approximately 1 000 000 people);
all temporary visa holders (approximately 750 000 people);
all employees of local government (194 000 people) – including workers in many childcare centres, libraries and arts and recreational facilities;
all employees of companies owned by foreign governments – including several thousand Dnata workers who were stood down in May; and
all employees of universities – while universities were not explicitly named as an exclusion, the government made multiple changes to the rules to deliberately exclude universities from receiving JobKeeper payments.
Casual employees
5.34
Many inquiry participants opposed the decision to exclude casuals who had not been with their employer for at least 12 months. The Australian Council of Trade Unions (ACTU) called the requirement 'arbitrary' and highlighted figures from the ABS suggesting that approximately one million casual employees (about 40 per cent of all casuals) were ineligible for JobKeeper.
5.35
The requirement also had a disproportionate effect on some of the industries hardest hit by the pandemic. For example, 64 per cent of employees in the accommodation and food sector are employed casually, while employees in the arts and entertainment industry typically move between jobs rather than stay with a single employer.
5.36
Submitters also commented that young people and women are more likely to be employed casually and are more vulnerable because they work in industries that have been hardest hit by the pandemic. This is discussed further at the end of this chapter.
Temporary visa holders
5.37
Temporary visa holders were directly excluded from JobKeeper, with three quarters of a million workers affected. The Australian Council of Social Service told the committee that many in this situation are not able to return to their country of origin because 'they cannot get a flight or it is unsafe to do so'.
5.38
This exclusion meant that temporary visa holders were left without any options for financial support from the government, leaving them to rely on friends or charities to help them meet their living costs.
Local government
5.39
Local governments employ 194 000 people, all of whom were excluded under JobKeeper eligibility rules. At least 20 per cent of these workers—around 39 000 people—work in jobs that are dependent on revenue from council business, rather than rates and grants. These jobs include local government run childcare services, arts and entertainment venues, and recreation centres.
5.40
Without any access to JobKeeper payments, the Australian Local Government Association estimated that up to 55 000 council jobs could be lost.
Australian companies owned by foreign sovereign entities
5.41
Employees of companies owned by sovereign entities were excluded from JobKeeper. As a direct result of this exclusion, thousands of Australian aviation workers faced job losses, including over 5500 staff in aviation catering and ground handling business Dnata.
University workers
5.42
No university was eligible for JobKeeper despite a revenue shortfall of
$3.1 billion to $4.8 billion in 2020, and announced job losses of 4729 staff. According to evidence tendered by Universities Australia:
The Government has repeatedly sought to craft legislative instruments specifically to exclude universities from the scheme, while publicly maintaining that universities would be eligible on the same terms as other businesses or not-for-profit organisations.
5.43
Universities Australia has solid evidence behind this claim, with the government making three separate amendments to JobKeeper rules relevant to the higher education sector–each of which excluded universities that had previously been hoping to successfully apply for JobKeeper.
5.44
In a decision on 5 April, the Treasurer announced that all charities registered with the Australian Charities and Not-for-profits Commission (ACNC) would be allowed to qualify for JobKeeper under a threshold test requiring a 15 per cent drop in revenue–as opposed to the threshold of 30 per cent for other businesses. Just three days later, the Education Minister announced that this 15 per cent rule would not apply to universities, despite their status as ACNC registered charities.
5.45
On 24 April, the government made further changes to JobKeeper rules which allowed it to reject a pending application from La Trobe University.
5.46
Finally, on 1 May the government announced a rule change forcing universities to use the six-month period between January and June for the JobKeeper turnover test. These restrictions did not apply to any other entities, which could use any month or quarter between April and September 2020.
Timing of JobKeeper
5.47
Employers accessing JobKeeper are required to pay their employees for each fortnight they intend to claim, and are then paid by the Australian Taxation Office (ATO) on a monthly basis in arrears. The fact that businesses receive JobKeeper in arrears has created major cash flow issues for many businesses.
5.48
These issues were exacerbated by the awkward initial timing of JobKeeper, perhaps as a consequence of the government deciding to adopt the wage subsidy program relatively late following its two earlier economic support packages.
5.49
The first week of JobKeeper payments came into effect on 30 March, but employer enrolment did not take place until 20 April and the first payments in arrears did not occur until early May. This timing was of major concern for businesses who were still trying to figure out if they were even eligible for the program.
5.50
Timing issues also created problems for seasonal tourism businesses that were affected by the requirement for staff to have been employed on 1 March 2020.
5.51
Had the government begun planning for a major wage subsidy like JobKeeper as part of its initial economic response, it could have avoided the chaos of trying to design and implement a wage subsidy to apply retrospectively. It also could have provided businesses with greater certainty over whether they would be successful in applying for the program.
Justification for exclusions
5.52
At no point did the committee receive any clear rationale for why so many categories of workers were excluded from JobKeeper, beyond the Treasurer's argument that 'we had to draw the line somewhere'.
5.53
The government also repeatedly used the claim that exclusions were a product of the limited time it had to develop the JobKeeper program, and that a review in June would revisit these decisions. However, this turned out to be nothing more than a false hope for excluded workers. The review conducted by the Department of the Treasury in June did not consider changes to the eligibility test for workers excluded from the scheme.
5.54
In the committee's view, unnecessarily excluding many of the people and sectors hardest-hit by the pandemic undermined the economic benefits of JobKeeper and its goal of keeping as many workers employed as possible.
5.55
The committee requested information from the Department of the Treasury on how many workers' jobs could have been saved by removing these exclusions, but never received any of the figures even after the JobKeeper review was released in July.
5.56
What is clear is that despite JobKeeper, the number of people on unemployment payments doubled in March and April and has remained at dramatically elevated levels to this day.
The $60 billion costing mistake
5.57
On 22 May, the government announced that there had been a massive costing error which had led to an overestimation in the expected cost of JobKeeper by 46 per cent or $60 billion.
5.58
Despite this mistake the government refused to expand eligibility requirements to cover workers who had been unfairly excluded.
5.59
The original government forecasts had suggested that about 6 million people would access JobKeeper, costing $130 billion. For a demand driven program this turned out to be a substantial overestimate.
5.60
Instead, the government announced that it expected about 3.5 million people to receive JobKeeper, at a reduced cost of around $70 billion.
5.61
The Department of the Treasury and the ATO explained there had been 'a reporting error in estimates of the number of employees likely to access the JobKeeper program'.
5.62
The correction came after the government had reiterated its initial forecast to the committee on multiple occasions, including at a committee hearing on 21 May 2020 where government officials did not provide any indication that the forecast was wrong and would be publicly corrected the following day.
5.63
The Treasurer had previously justified excluding more than one million casual workers from JobKeeper using the rationale that 'at $130 billion…we had to draw the line somewhere. This is a massive call on the public purse and it is a debt that the country will pay for years to come'.
5.64
The Grattan Institute observed that the revision 'arguably makes room to expand the eligibility of the scheme.'
5.65
However, despite being granted powers by the Parliament to expand eligibility for JobKeeper through regulation, the Treasurer decided not to use this $60 billion error as an opportunity to include some of the workers and businesses that had been unfairly excluded from JobKeeper and in doing so save more jobs.
5.66
Instead, the government maintained its hard-line position on
JobKeeper exclusions with the then Minister for Finance,
Senator the Hon Mathias Cormann, claiming the $130 billion forecast 'wasn't a spending target.'
5.67
The committee is concerned that, notwithstanding the urgency with which JobKeeper was designed, the Department of the Treasury forecasts were out by such magnitude. It resulted in the government making decisions based on information that turned out to be highly inaccurate.
5.68
On becoming aware of the error, the government had the opportunity to extend JobKeeper to workers who had unfairly been excluded but refused to do so.
Decision to remove JobKeeper and other relief from the childcare sector
5.69
When JobKeeper was announced on 30 March, eligible early childhood education and care (ECEC) services were to receive payments like any other JobKeeper recipient—over a six-month period from 30 March to 27 September.
5.70
On 2 April the government also announced the Early Childhood Education and Care Relief Package, which it said would provide free childcare services to around one million families during the COVID-19 pandemic as well as supporting the sector to 'make it through to the other side of this crisis'.
5.71
However, on 8 June the government decided to end both of these critical support measures. ECEC workers were told they would no longer be eligible for JobKeeper payments from 20 July, while struggling families were told their free childcare would come to an end on 12 July.
5.72
For ECEC workers this was perceived as 'a really low blow' as they had counted on receiving JobKeeper payments until 27 September, as the government had previously promised.
5.73
The ECEC sector was excluded once again when the government announced a six-month extension to the JobKeeper program but did not include the ECEC sector in the extension.
JobSeeker
Box 5.3: Interim finding
The rate of JobSeeker is inadequate at $40 per day.
The committee is concerned that the Australian Government is withdrawing fiscal support too early in the recovery phase by reducing the Coronavirus Supplement at the end of September 2020 and again in January 2021, and that this will have negative consequences for the economy.
5.74
The committee recommends that the Australian Government monitor the economic impact of reducing the Coronavirus Supplement and report back to the Senate with any data on the impact of the reductions.
5.75
The committee recommends that the Australian Government permanently raise the rate of JobSeeker at the Mid-Year Economic and Fiscal Outlook or in the 2021–22 Budget.
5.76
When new social distancing restrictions came in on 23 March, the government was unprepared for the volume of Australian workers across the country who had been stood down, made redundant and handed reduced hours.
5.77
Right across the country in cities and regional areas the queues at Centrelink offices snaked around the block as newly unemployed Australians tried to register with Centrelink.
5.78
Online, hundreds of thousands of people were unable to access the MyGov website when they tried to register due to insufficient capacity to deal with demand.
5.79
The images of Australians lining up at Centrelink shocked the nation and were a dramatic representation of the immediate economic and human cost of the social distancing restrictions in place to save lives.
5.80
As noted in paragraph 5.14, the number of Australians receiving unemployment payments doubled between February and May 2020 from around 815 000 to 1.64 million. It has remained roughly at this elevated level for the past 28 weeks.
5.81
Services Australia acknowledged issues around Australians accessing services in a hearing on 30 April, with the Chief Executive Officer testifying that 'there was some extreme poor performance early on.' This system failure caused unnecessary distress to hundreds of thousands of people at a time when they were already reeling from losing their jobs.
5.82
Services Australia did not directly answer questions about what advice it provided to government on the anticipated increase in demand. This is another example of the failure to provide key information to this committee during the course of this inquiry.
Coronavirus supplement
5.83
As part of the second economic response package, the government announced a Coronavirus Supplement which effectively doubled the JobSeeker payment to $1100 per fortnight. It also significantly boosted other payments including Youth Allowance, Parenting Payments, the Farm Household Allowance and Special Benefit payments.
5.84
The Coronavirus Supplement was due to finish on 24 September 2020 but on 21 July the government announced that it had decided to extend the payment at a reduced rate of $250 a fortnight until 31 December 2020.
5.85
The Minister for Families and Social Services, Senator the Hon Anne Ruston, was unable to answer the committee's questions on the economic impact of reducing the Coronavirus Supplement at a time when more than two million Australians are relying on it.
5.86
Despite the fact that JobKeeper was funded in the October budget to run until March 2021, the government decided at the time not to extend the Coronavirus Supplement beyond the end of December 2020. It is unclear why the government chose to single out recipients of social support payments in this way.
5.87
At the time, this decision not to extend the Coronavirus Supplement in line with the extension to JobKeeper appears to have been in direct conflict with evidence from the Secretary of the Department of the Treasury, Dr Kennedy who told the committee:
Jobseeker and JobKeeper have been designed to work together to put what I regard as a historically significant income floor under the whole community.
5.88
Requests from the committee for access to the modelling done to inform the government's decisions about the payment were also rejected on the basis they formed part of Cabinet deliberations.
5.89
On 11 November, just one month after the budget the government announced that the Coronavirus Supplement would be extended again at a reduced rate of $150 a fortnight until 31 March 2020.
Permanent increase for JobSeeker
5.90
It has been widely acknowledged for years, by business and community stakeholders alike that the permanent rate of JobSeeker at $40 a day is totally inadequate, often forcing recipients to live well below the poverty line.
5.91
The committee agrees that the original rate of JobSeeker is inadequate.
5.92
Research from the Australian National University's Centre for Social Research and Methods shows that the introduction of the Coronavirus Supplement and the JobKeeper payment 'reduced measures of poverty and housing stress, with both now below what they were prior to COVID-19'.
5.93
However, the researchers also found that this 'protective impact has been reduced somewhat by the July policy announcement to make these supplementary payments less generous'.
5.94
The Grattan Institute has argued for a sustained increase to the JobSeeker rate to around $750 a fortnight on the basis that the 'Coronavirus Supplement has been very important for sustaining spending and incomes through this period'.
5.95
The committee is concerned that the further reductions in the supplement just after Christmas will plunge almost two million recipients of the supplement into greater financial hardship at a time when the economy needs sustained fiscal stimulus to protect jobs and businesses.
5.96
The committee recommends that the government monitors the economic impact of reducing the coronavirus supplement and reports back to the Senate with any data on the impact of the reductions.
5.97
The committee urges the government to permanently increase the rate of JobSeeker from its current rate of just $40 a day at the earliest opportunity—either in the upcoming Mid-Year Economic and Fiscal Outlook or in the
2021–22 Federal Budget.
Economic impact on women
Box 5.4: Interim finding
The Australian Government should have undertaken analysis of the gendered impact of the decisions it made when responding to the pandemic. This would have improved the information available to decision makers and ensured that specific impacts were considered before finalising fiscal or policy measures.
5.98
Australian women have disproportionately borne the economic impact of the disruption caused by the COVID-19 pandemic. According to the National Foundation for Australian Women (NFAW), '[a]s early as June it was clearly going to be the case that women would bear the brunt of the COVID-19 pandemic'.
5.99
The Grattan Institute's submission found that women were economically worse off when compared to other notable demographic groups, while economic Security4Women (eS4W) highlighted that:
Women have been disproportionately affected during COVID-19. They make up the majority of front-line workers in care, and education and are overrepresented in precarious employment, including in the informal sector, where their benefits and protection are inadequate or lacking.
5.100
The Australia Institute identified that the economic data suggested a bias in the system towards dismissing women during the pandemic:
When you look at the figures, everyone's answer tends to be, 'Well, accommodation and retail are the areas most recessed, so it follows that women are going to be disproportionately hit.' But, in fact, when you look at the gender intensity of the industries and adjust for their decline, we should have seen more men hit than women. There's been a bias in the system towards dismissing women in preference to men—or bias towards men.
5.101
However, despite strong evidence early in the pandemic that women were being disadvantaged, neither the pre-existing economic inequality experienced by Australian women nor the pandemic's direct economic impact has been meaningfully considered in the government's economic response.
5.102
The NFAW told the committee in its opening statement on 22 September that there was an 'absence of anything like a gender lens in our national stimulus response'.
5.103
The Office for Women, the pre-eminent source of expert gender policy advice within government, provided evidence it was not consulted by the government on the design of the key early policy responses to COVID-19 including early access to superannuation, JobKeeper and the Coronavirus Supplement.
5.104
In addition to failing to consult key stakeholder groups on the design of stimulus measures, key policy agencies, including the Department of the Treasury, failed to conduct gender-based modelling of key policies being initiated under their purview.
5.105
For example, despite long-standing advice to successive governments in the Women's Economic Security Statement that women experience unequal outcomes in superannuation–typically retiring with half the balance of men – no modelling was conducted by government on the long-term gendered impact of the COVID-19 early release of superannuation program.
5.106
Failure to incorporate known inequities, such as those in superannuation outcomes, has promoted greater disparity. eS4W asserted in its submission that their analysis of Australian Prudential Regulation Authority and ATO data found women, who already retire with 47 per cent less super than men, withdrew 4.5 per cent of their balance on average compared to 2.5 per cent for men accessing the scheme.
5.107
Other long-running gender inequities were ignored in the formulation of stimulus measures, such as the gender pay gap, and the ongoing accessibility of affordable childcare.
5.108
Gendered employment patterns are well known to government, such as the higher proportion of women engaged in casual employment. However, these conditions were not incorporated into the government's wage-subsidy response which excluded over one million casuals.
5.109
The government's iterative changes to its economic response policies have also been criticised over the course of the committee's inquiry by participants for neglecting to correct for, or even adding to, disadvantage for women.
5.110
For example, sector-specific stimulus measures such as HomeBuilder have skewed heavily in favour of men, while calls for greater investment in sectors like childcare, which have an overrepresentation of both female workers and an impact on women's employment participation, have gone unheeded.
5.111
The government is still yet to correct its failures to properly identify and correct for the gender impact of COVID-19. Despite record expenditure in the 2020–21 Budget, industries with higher representation of women continue to be overlooked for targeted jobs stimulus. As Grattan Institute Chief Executive Officer Ms Danielle Wood has highlighted:
Women are the majority in a lot of those sectors: childcare, aged care and more than 50 per cent in hospitality, the arts and tourism. Those sectors are really hard hit and there are no direct measures to help them in the budget.
5.112
The committee strongly shares the view of eS4W that:
Moving forward we encourage the Government to apply a gender lens on all policies…
Women's economic empowerment will be essential if we are to ensure effective and sustainable economic recovery from COVID-19 in
Australia.
5.113
Australian women would benefit if the government committed to undertaking a comprehensive analysis of the gendered impact of its decisions, and incorporated that understanding into its responses, when designing and implementing policies in response to the pandemic.
Early access to superannuation
Box 5.5: Interim finding
In the first six months of the pandemic, the Australian economy was supported by the private savings of the people who were hit hardest by COVID-19 restrictions.
The early access superannuation scheme is Australia's largest economic response to the pandemic after JobKeeper. More than 2.7 million Australians have accessed the scheme and the Department of the Treasury estimates $41.9 billion will be withdrawn from superannuation accounts by December 2020. This will cost Australia's retirement income system more than $100 billion over the long term.
5.114
On 22 March, the government announced that individuals in financial stress from the pandemic would be able to access their superannuation early. Eligible citizens and permanent residents could make a tax free withdrawal of up to $10 000 before 30 June 2020, and a further $10 000 after 1 July 2020.
5.115
The committee was told that the scheme was designed to provide funds to applicants quickly, but it has also heard evidence about potentially fraudulent access to superannuation accounts. The ATO estimates that about 800 applications—or one in 5000—'are potentially fraudulent'.
5.116
The committee also heard from the ATO that it had relied on self-assessment to determine whether people were eligible to access their super and worked 'on the basis that most Australians are honest'.
5.117
However, modelling of real time transaction data by economics consultancy AlphaBeta and credit bureau illion found significant flaws with the way the scheme was being used. Across both rounds of super withdrawals, 38 per cent of people who accessed their super saw no drop in their income and
64 per cent of the money withdrawn was spent on discretionary items including gambling.
5.118
The government initially expected (before temporary visa holders were able to access the scheme) that 1.5 million people would withdraw $27 billion up to
24 September. By 30 July, the government had revised its estimate to
$41.9 billion in withdrawals before 31 December 2020.
5.119
These withdrawals will have a long term effect on Australians' retirement funds. On 2 July, Industry Super Australia estimated that '395,000 people under-35 have eroded their super balance', and that 'about 480,000 Australians across all age groups could have wiped out their super, even before the second tranche opens'. Dr Denniss told the Committee the effect of these withdrawals on young people 'would be devastating and cumulative'.
5.120
According to modelling by Industry Super Australia, a 25-year-old who accesses the full $20 000 available under the scheme could lose more than
$95 000 from their retirement balance.
5.121
Some people did not want to access their super, but felt they had no other choice due to a lack of other economic support. The committee heard from workers who were reluctant to withdraw from their super but felt it was necessary in the face of the loss of hours and work during the pandemic.
5.122
The ACTU submitted that the scheme 'forces workers who are already suffering the most to do the heaviest lifting to support themselves'. This claim is supported by analysis from AMP, the Department of the Treasury and Women in Super.
5.123
In the first two weeks of the scheme, AMP received applications from 52 379 of its clients for early release of their superannuation. Most of these were from people working in accommodation and food services, arts and recreation services and manufacturing. Seventy per cent of applicants had a super balance of $50 000 or less, and the average withdrawal amount was $8300.
5.124
Data provided by the Department of the Treasury in mid-July showed that approximately half of all people accessing their superannuation early were aged under 35. People aged 26 to 30 had the most applications approved
(425 300) and withdrew a total of $3.14 billion.
5.125
Women in Super analysed early release data for 32 per cent of the applications made to 30 June and found that 20 per cent of women in the 25 to 34 age group applied to withdraw their super, and that women who applied had lower average balances than men.
5.126
At an estimated $41.9 billion, the size of withdrawals relative to other economic measures shows that the Australian economy has been propped up by the retirement savings of the working people who were already shouldering much of the economic hardship during the pandemic.
5.127
This will come at an enormous long-term cost to Australia's retirement income system. The committee was surprised to learn the Department of the Treasury never modelled the impact of the early withdrawal super scheme on the retirement income system. However, financial modelling conducted in August by exchange-traded fund provider BetaShares showed that the $30 billion withdrawn at that point would cost the retirement system between
$100 to $130 billion.
Access to paid pandemic leave
Box 5.6: Interim finding
The Australian Government refused to put in place a paid pandemic leave scheme at the earliest opportunity in order to protect workers and protect lives.
The Australian Government only acted following the aged care crisis and in response to a concerted public campaign and significant evidence that low paid workers were continuing to attend work despite being unwell.
5.128
At the outset of the pandemic in Australia in March, the ACTU had called for the government to guarantee paid pandemic leave for all workers to ensure that workers would not be forced to make a difficult choice between 'going to work sick or being able to pay their bills and feed their family.'
5.129
Around 2.6 million people, or one quarter, of Australia's workforce are casual employees. Along with a significant number of contractors, these workers generally do not have access to paid sick leave. Despite this, the government did not put in place any scheme to look after workers without access to paid leave and to stop them attending work when they were sick.
5.130
The risks of spreading the virus by a casualised workforce continuing to work through the pandemic were well understood by the government.
5.131
Casual work is particularly prevalent in the retail trade and accommodation, food service industries, and in 'social assistance services, construction, health, education, road transport and other service industries'.
5.132
Even under the strictest lockdowns, many of these casual staff including cleaners, aged care workers and supermarket employees needed to attend work in person.
5.133
As social distancing measures eased and more Australians began returning to work, the risk of workplace transmission became one of the highest risk factors of a second wave. In July, the Victorian Premier, the Hon Dan Andrews MP was quoted as saying 'about 80 per cent' of the new infections in that state were from 'transmission in workplaces, including in aged care.'
5.134
It took the government five months from the onset of the pandemic to finally agree to a paid pandemic scheme and even then it only applied to Victoria. On 3 August the government announced a $1500 payment would be available to Victorian workers who were required to isolate due to COVID-19 and who did not have access to sick leave.
5.135
Two days later, on 5 August, the Prime Minister publicly announced that other states and territories could enter a paid pandemic leave arrangement with the government but it would be negotiated on a state by state basis.
5.136
The government's failure to implement a national paid pandemic leave scheme from the onset of the pandemic was unacceptable and put Australians lives at risk including those workers surviving on the lowest incomes. For many of those workers, staying home from work if they were unwell was not a choice they could afford.