Scott Morrison pledges to upgrade business incentives if jobs don’t appear

Small business is cautious about hiring more people during the pandemic, despite incentives in the federal budget aimed at a business-led recovery from the recession.

Prime Minister Scott Morrison has promised to be "highly responsive" if the stimulus doesn't prompt enough job creation. Treasurer Josh Frydenberg has hinted at a long-lasting increase to unemployment payments with more people set to be out of work for a longer period.

Prime Minister Scott Morrison, pictured at a Gold Coast manufacturing facility, is banking on his budget measures prompting businesses to hire more workers.Credit:Paul Harris

Last Tuesday's budget offered incentives to businesses to hire young workers when they added new staff and big tax breaks for investing in new equipment and assets.

"A key part of our plan to get Australia out of the COVID-19 recession is to bring forward the decisions that would otherwise not be made, decisions to hire, decisions to invest," Mr Morrison said on Sunday.

More than a million people are officially unemployed, with the unofficial rate higher and more expected to join the jobless queue by the end of the year. Treasury expects the unemployment rate to peak at eight per cent in the December quarter.

The government hopes its measures will drive the creation of nearly a million new jobs – 450,000 of these alone from the youth hiring credit.

But Peter Strong, head of small business advocates COSBOA, says the $4 billion measure is not a "huge motivator".

"It's not to be sneezed at, but the business person is still going to say I'm only going to employ someone if I can use them," he said.

While some small businesses in the suburbs were doing well, such as butchers and small supermarkets, many were not, especially those in business districts and anywhere reliant on hospitality and tourism, he said.

"If someone's had people on JobKeeper … the last three months, they've had no work so come the end of JobKeeper they might have 10 staff but they'll only have enough for three when they do their business plan and look at distancing and all those sorts of things," Mr Strong said.



"You're not going to put someone on unless you have the work."

Even those businesses that were doing OK still had a big question mark over whether they would hire staff in the uncertain times.

Opposition Leader Anthony Albanese said hoping businesses would invest wasn't a serious strategy to grow the economy.

"Businesses, particularly small business, are just trying to get by at the moment. They're not looking at employing extra people, they're not looking at investing in new capital equipment, what they are looking at is trying to survive," he said.

However, big business was more positive about the budget's ability to drive growth.

Business Council of Australia chief executive Jennifer Westacott said it would keep people working and give businesses the cashflow needed to hire more workers.

"The budget recognises through the investment incentive and loss carry-back initiative that business will do the heavy lifting in recharging the economy by giving them the confidence they need to immediately expand, innovate, and buy new plant and equipment," she said.

Mr Morrison promised to "respond fast" if the hoped-for jobs didn't eventuate.

"We will continue to implement our plans but be careful to monitor the situation very carefully and to respond and upgrade as necessary," he said.

Mr Frydenberg acknowledged the pandemic and recession had radically altered the nation's labour market and indicated the government would reflect on this as it decided what to do with the JobSeeker unemployment payment once the COVID-19 supplement ceased at the end of December.

"Pre-COVID, two-thirds of people who were on the old Newstart were moving off that rate within 12 months," he told ABC's Insiders.

"That is clearly not happening at the moment because you don't have the same number of jobs that are available."

The fortnightly coronavirus supplement was cut from $550 to $250 last month.

Economists, business and welfare groups have been lobbying for a permanent increase to JobSeeker to ensure it does not "snap back" to the $40 a-day-base rate that has long been criticised as inadequate.

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