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In the face of mounting criticism, the Morrison government should consider reworking the hiring credit and introduce an employee headcount rebate to encourage uptake, says one mid-tier firm.
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JobMaker in need of a rethink: BDO
30 March 2021
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Australian businesses have been slow to take up the Morrison government’s JobMaker hiring credit, and as up to 150,000 Australians face unemployment in the wake of JobKeeper’s end, the government should consider rethinking the scheme, said Mark Molesworth, tax partner at BDO.
Introduced as part of the government’s federal budget in October last year, JobMaker rewards eligible employers with $200 a week for every person they hire under 35 who was previously on either JobSeeker, Youth Allowance or the Parenting Payment.
The program was initially estimated to cost $4 billion and support the jobs of about 450,000 young people.
Mr Molesworth suggests that, off the back of slow uptake, the government should rework the credit, and instead gear it towards quantitative hiring efforts.
“The government should consider making changes to the existing JobMaker scheme to focus it instead on business investment and,” he said, “as an alternative to a wage subsidy, introduce an employee headcount rebate.
“This could be paid as a tax benefit, in cash, per new full-time equivalent employee created by a business — based on the size of their payroll — which can be easily measured via the Single Touch Payroll process.”
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However, the Treasury last week signalled that the government might be a way off reworking the scheme, pointing to a waning need for the credit in light of February employment figures, which saw unemployment drop to 5.8 per cent, and the opposition’s staunch criticism of the scheme as potential drivers for low uptake.
Speaking to the economics committee last week, Finance Minister Simon Birmingham said “stronger employment outcomes reduced the likely demand for such a program”, before saying businesses might have been hesitant to engage with the scheme for fears doing so might expose them to criticism.
“The way the opposition greeted and attacked its establishment, and suggested those who would be using the program would be undermining existing employees, certainly did not help the reaction of business who perceived the program was politically contested and charged,” Mr Birmingham said.
“We want to send a message to Australian business[es] that the jobs created are additional jobs, so business should participate with confidence and should not be targeted or attacked for using this program to hire more young Australians.”
While Mr Birmingham did say the government would reconsider the scheme’s settings, the scheme would continue to target boosting employment among young people.
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