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Impact of Commonwealth policy on Victoria

Victorians are significant beneficiaries of Commonwealth economic support deployed in the wake of the pandemic.

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Support such as JobKeeper and cash flow assistance have been important for keeping businesses open, stimulating economic activity and keeping Victorians employed. Furthermore, the Coronavirus Supplement to JobSeeker and Youth Allowance recipients, and one-off payments to pensioners have supported household incomes, consumer spending and economic activity.

Commonwealth economic support has been welcome. However, the JobKeeper wage subsidy excludes some of the groups most affected during the pandemic, including casuals who were with their employer for fewer than 12 months, and temporary residents.

A substantial proportion of casual employees are likely to have missed out on JobKeeper and lost work. Nationally, nearly two-thirds of the total decline in employment from February to August was from casual employees. And in 2019, 43% of all Victorian casual employees were with their employer for fewer than 12 months.

The JobKeeper exclusion for shorter term casual employees exacerbates the disproportionate economic impact of the pandemic on women. In 2019, 56% of casual employees were female.

There were over 160,000 temporary residents employed in Victoria in 2019, many of them employed in industries most affected during the pandemic − including accommodation and food services, which is one of the two largest employers of temporary residents in Victoria. Unfortunately, temporary residents are ineligible for Commonwealth support from either the JobKeeper or JobSeeker payments.

Victoria’s education sector represents approximately 3% of the Victorian economy and 22% of our exports, making it our largest service export sector. Unfortunately, universities were also excluded from the JobKeeper wage subsidy program despite the international student intake for Victoria’s education sector dropping by 49% during the pandemic.

The reduction to fortnightly JobKeeper – by $300 for full time workers and $750 for part time workers – from 28 September 2020 came as Victoria introduced necessary public health restrictions in response to the second wave of the coronavirus (COVID-19). The coronavirus supplement for JobSeeker recipients was also reduced by $300 a fortnight. These cuts have disproportionately affected Victoria’s economy and lower income Victorians, right when support was needed the most.

The Commonwealth Budget 2020-21 continues the trend of Victorians not receiving their fair share of infrastructure investment. Despite more than 26% of Australia’s population living in Victoria, it is estimated that the State will receive less than 22% of Commonwealth infrastructure investment over the five years to 2023-24.

As detailed in Budget Paper 2, Chapter 4, the Commonwealth Grants Commission’s 2020 Methodology Review significantly reduced the GST relativity for Victoria and the methodology change is expected to redistribute approximately $1 billion per year in GST revenue away from Victoria.

Reviewed 20 November 2020

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