Australia Sticks to Plan to Reduce JobKeeper Support for Now

(Bloomberg) -- Australia’s government still plans to start dialing back its JobKeeper wage subsidy at the end of next month, but will respond to developments as they arise, Finance Minister Mathias Cormann said.

The program, designed to keep idled workers linked to their employers, is set to decline from A$1,500 ($1,073) to A$1,200 a fortnight at the end of September. That’s soon after a lockdown in the nation’s second-largest city of Melbourne is scheduled to end.

“We do need to transition out of this historically unprecedented crisis-level fiscal support and get the economy in to the new normal in an appropriately phased transition,” Cormann said in an interview on Australian Broadcasting Corp’s Insiders program.

“What we have demonstrated throughout this period is that we are prepared to make decisions in the context of an evolving situation based on the information that comes before us,” Cormann said. “There will be swings and roundabouts.”

While Australia enjoyed early success in flattening the curve of infections, Victoria is at the center of a renewed outbreak. The state is experiencing some of the strictest social-distancing measures in the western world, crippling economic activity there and shaking confidence across the nation.

Victoria saw 394 new Covid-19 cases and 17 deaths, state Premier Daniel Andrews said in a media briefing on Sunday. Ten new cases were reported for New South Wales state in the 24 hours to 8 pm Saturday, the ABC reported.

The Victorian outbreak, along with the scheduled decline in JobKeeper payments, have fueled concern the economy may take another lurch lower, prolonging the recovery from the first recession in almost 30 years.

Prime Minister Scott Morrison has warned the lockdown across Victoria and even tighter measures in Melbourne to contain the outbreak will cut gross domestic product by 2.5% this quarter.

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