Fronting a parliamentary inquiry into the government’s response to COVID-19, Dr Lowe warned that with the JobKeeper program ending in September, coupled with the end of mortgage repayments and other payment deferrals by the banks, it would prove to be a “critical point” for the economy.
“It will be important to review the parameters of that scheme. It may be in six months’ time we bounce back well and the economy is doing reasonably well, and these schemes, which were temporary in nature, can be withdrawn without problems,” Dr Lowe said.
“But if the economy is not recovered reasonably well by then, as part of that review, we should be looking at, perhaps, the extension of that scheme or the modification in some way.
“But I think at this point, I think it’s too hard to say because the outlook remains very uncertain, but it’s going to be a very critical point in the economy.”
The six-month JobKeeper program, which has since been revised down to $70 billion, is set to undergo a review in June, with Treasurer Josh Frydenberg raising the possibility of expanding support to industries that have been hit harder by the crisis, such as the tourism sector.
Dr Lowe believes the smaller than anticipated take-up of the JobKeeper program should be viewed positively, with the impact on the economy less severe than expected.
“The economy is doing a bit better than was earlier feared. People were talking about a six-month hibernation. But businesses are opening up now,” Dr Lowe said.
“It’s really good news that that amount of money doesn’t have to be spent.
“Right now, I don’t think they do need to spend more, but the issue will be in three to four months’ time.
“At the moment, it is plausible this scheme could taper off.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.