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The ‘weird’ windfalls and losses under JobKeeper

“The hit to employment is enormous but the government is doing a lot to insulate households from that pain to the extent that a lot of people actually have higher incomes now than they did pre-COVID, at least temporarily,” Mr Coates said.

The think tank modelled the effect of the JobKeeper payment on different households based on pre-pandemic income and the number of adults and children in the family. It took into account personal income tax, which is calculated individually, as well as increases in means-tested Family Tax Benefit as the family income falls.

The most recent figures from Australian Bureau of Statistics show the typical Australian household has a gross income of $1701 a week – or $88,452 a year. Half the households in the country earn below that threshold and half earn above.

The JobKeeper payment equates to $39,000 a year, about 70 per cent of the typical individual wage of $58,000. Grattan estimates four out of five affected part-time workers could receive a pay rise via JobKeeper.

Nadia Homem, 20, is among them. The university student is working three days a week as a paralegal for a small law firm and receiving the JobKeeper payment rather than her usual salary.

For Ms Homem, this is an increase after tax of about $200 a fortnight. “It’s definitely welcome but also unexpected,” she said.

Ms Homem lives with her family in Stanmore and since her parents have both retained their jobs, she is saving her money to go on a university exchange to Europe when the borders reopen.

It is a different experience for Ilina Lovely, who lives a 20-minute walk away in Marrickville.

Ms Lovely, a single mother of two children aged seven and nine, has a job in hospitality management and is receiving JobKeeper while the venue is closed under lockdown rules.

The payment is about half her normal income and only covers her rent and some of her bills. Despite help from her children’s father and her friends, Ms Lovely is slowly using up her small stash of savings and expects to wind up with credit card debt.

“It’s a bit scary,” she said. “I am at that stage where I make sure the kids eat before I do because I’m really trying to be super, super careful and I try not to drive around because it uses petrol.”

Ms Lovely owns an investment property and granted a rent reduction because one of her tenants lost their job. However, her own landlord refused to discuss it.

Mr Coates said JobKeeper was producing “windfall gains and losses that we probably wouldn’t normally tolerate in normal times” but it was reasonable in the circumstances.

Single mother of two Ilina Lovely only receives about half her usual income on JobKeeper.

Single mother of two Ilina Lovely only receives about half her usual income on JobKeeper.Credit:Dominic Lorrimer

“It’s just the necessary process if you want to get the money out the door quickly and avoid [another] Great Depression,” he said.

Mr Coates added giving money to low-income earners was an effective way to stimulate the economy because they tended to spend rather than save extra income.

The Australia Institute’s chief economist, Richard Denniss, said $130 billion was “the right number of zeroes” to stimulate the economy but it was “inequitable and inefficient” to leave out foreign workers and many casuals.

“It’s weird that we’re very happy to pay 750 bucks a week to someone that was earning 50 bucks a week, while doing nothing for some people who lost all their income,” Mr Denniss said. “Being generous to some people and stingy to others is imminently fixable.”

He said there were 6 million people being supported by JobKeeper but no one had predicted that many job losses, suggesting the payment was benefiting businesses more than boosting employment.

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There are already rumblings on the Coalition backbench about the cost of the program and Mr Denniss said a more targeted scheme would have greater political longevity.

Several economists have warned of the risk of a second downturn if the stimulus measures come to a sudden halt at the end of September as planned, rather than being phased out gradually.

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