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25 May, 2020

Government’s $60bn JobKeeper cost error could see program extended for tourism sector

By Christian Fleetwood

Underspending on the federal government’s JobKeeper scheme could see it extended beyond six months for the tourism sector.

The estimated cost of the program has now been cut nearly in half, falling from $130 billion to around $70 billion.

It comes as the number of people on JobKeeper was revised by three million after the Department of the Treasury and tax office revealed “significant errors” by businesses.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg (pictured above) have taken responsibility for the forecasting mistake.

However, Treasurer Frydenberg told the ABC’s News Breakfast he could use the unspent money to extend JobKeeper payments beyond six months for tourism operators, with the program expected to be reviewed next month.

“The tourism sector could be one sector in need of further support,” he said.

“That’s what we’ll look at in the context of the economic situation at the time.”

Treasurer @JoshFrydenberg says the Government won't make "wholesale changes" to the JobKeeper program after the $60 billion miscalculation was revealed.

He also reiterated the doubling of the subsidy for job seekers is temporary. pic.twitter.com/qTUB2j5bWm

— News Breakfast (@BreakfastNews) May 24, 2020

There are now calls for JobKeeper to be expanded to cover arts and entertainment workers, university staff and many casual workers, who have been deliberately excluded from the scheme, the Australian Associated Press reported.

While economists say the windfall must be spent to prevent another wave of job losses, amid the coalition’s framing of the JobKeeper bungle as cost-saving and “good news” for taxpayers.

“Maybe we’re not looking at a 10 per cent drop in GDP, maybe we’re looking at 5 per cent, but that’s still significant – so the economy still needs support to get going again,” Angela Jackson, an economist at Equity Economics, told The New Daily.

However, Treasurer Frydenberg told News Breakfast he has no plans to make “wholesale changes” to the scheme.

Bunnik Tours chief executive Dennis Bunnik had called for JobKeeper payments to be extended beyond September before federal treasury revealed the cost error for the program.

He believes that until international borders re-open – with Tourism Minister Simon Birmingham suggesting they could remain closed until the end of the year and into 2021 – the industry will remain in a “severe crisis”.

“Having JobKeeper stop in September is not an option, especially for the tourism industry,” Bunnik told Travel Weekly. “It needs to be extended.”

The consequence of not extending the program beyond the six-month cut-off would be two-fold, Bunnik said, with financial collapse running alongside the risk that talented tourism professionals will leak out of the industry.

“Overall, the industry will lose a massive amount of talent,” he said.

“And then when the recovery does come, we’ll have the issue that there’s a massive skill shortage.”

Bunnik, who is also the chair of the Council of Australian Tour Operators (CATO), said his association is now involved in a concerted effort to get that message through to government.

The Tourism & Transport Forum (TTF) said that if small to large tourism businesses are to survive, the industry would need ongoing support to retain critical staff.

“The industry will be terrifically damaged if we cannot retain the businesses, particularly in regional areas, that provide the content and experiences that travellers expect,” TTF chief executive Margy Osmond said.

“From a business traveller perspective with limited aviation opportunity, border uncertainty and no clear view of when major business events may be viable again the need in the conferencing and events sector is also acute.”

According to research commissioned by the TTF, Australia’s tourism industry is bleeding more than $9.6 billion per month and will see the loss of over 400,000 jobs.

“To survive this perfect storm the industry must have critical support and the surplus in the JobKeeper funding fits that bill,” Osmond said.

Domestic tourism, which may return country-wide by July, could play a part in offsetting some losses due to travel restrictions, with net tourism imports to Australia worth $20 billion per year.

The Travel Corporation is one company banking on a domestic tourism boom and has expanded its line-up of Australian product, while the caravan industry is preparing for a rebirth of the road tripper.

Bunnik believes the opening up of domestic borders “is a small step”, but not the answer to tourism’s problems.

“The answer for the industry is the opening up of international borders, and Australians being able to travel overseas again,” he said.

“And until that happens, the industry is going to remain in a pretty severe crisis.”

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bunnik tours Dennis Bunnik JobKeeper Josh Frydenberg margy osmond scott morrison tourism & transport forum