Close watch needed on disincentive impacts of Covid support arrangements

“The Federal Government will need to keep a close watch on the disincentive effects of the COVID-19 Disaster Payment which will be similar to the disincentives influencing many employees under JobKeeper,” Innes Willox, Chief Executive of the national employer organisation Ai Group said today.

“When construction opened in NSW in a limited way this week Ai Group members reported that due to the ‘generosity’ of the $750 assistance payment many of their workers did not want to come back when the construction lockdown was lifted.

“Many other employers report having similar problems. This will likely intensify given the newly-determined tax-free nature of the disaster payment which makes it more generous than JobKeeper. Many employees are now in a perverse position where they can increase their total income by working less.

“Strictly speaking, the COVID-19 Disaster Payment can be withdrawn if an employee receives an offer of work from their employer and refuses shifts. However, it is unclear how this requirement is being implemented in practice and the information on the Services Australia website downplays the requirement for employees to inform Services Australia if they have received an offer of work from their employer.

“There needs to be a clear arrangement so that Services Australia can give effect to the obligation to work if work is available and to withdraw the payment if an offer of work is not taken up.

“Assistance is greatly needed and welcome by the many. However, it should not be abused to the detriment of taxpayers, the economy, and businesses.

“Skill shortages are already intense in the current economic environment and the rules around government support and their implementation should avoid the risk of making those shortages even worse,” Mr Willox said.

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