JobKeeper has been stimulating in multiple ways – evidence from Lush Marcoola

Well done to Matty Holdsworth from the Sunshine Coast Daily for some excellent reporting on the Lush Marcoola brothel which was re-printed in today’s print edition of the Courier-Mail on p. 47:

YOUNG men cashed up on JobKeeper payments kept business flowing at a Sunshine Coast brothel that suffered through the peak of the pandemic, its owner says.

From an economic stimulus perspective, this is good news, as spending on an activity with a relatively high labour input will deliver more bang-for-buck to the local economy than spending on imported products such as Smart TVs.

It’s apparent now that JobKeeper was probably too generous and too easy to obtain. One illustration of that was the surge in Gross Mixed Income in the June and September quarter National Accounts (see chart below). Gross Mixed Income includes the income of self-employed people (e.g. tradies, consultants) and unincorporated small-business owners and has been substantially boosted by JobKeeper.

I should note JobKeeper ends at the end of March, and there’s a lot of concern about what happens to many businesses and their workers once it’s ended. There are calls for JobKeeper to be extended for specific sectors such as aviation and tourism or hospitality more broadly – i.e. a “Hospo-Keeper” program. If it’s true that international travel really won’t resume until 2022, and various interstate travel restrictions are imposed until a large proportion of the population is vaccinated against COVID, then the federal government may have no choice but to extend JobKeeper on a limited basis. While federal Treasurer Josh Frydenberg has written “we are not contemplating a ‘Hospo-Keeper’ package at this time” (as reported by InDaily), in the coming months, he could always argue things have turned out worse than expected and such assistance is now deemed necessary. Of course, the Treasurer is concerned about the impacts on deficits and debt, and he probably now regrets making JobKeeper so generous and easy to access in the first place.

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