A review has found tough measures to claw back JobKeeper funds would have undermined the scheme. 

A review by former senior treasury official Nigel Ray has revealed the costly design flaws in Australia’s COVID-19 responses.

The review reportedly concluded that introducing a clawback mechanism to make profitable companies repay JobKeeper wage subsidies could have undermined the COVID-19 pandemic-era support scheme and damaged confidence. 

The report highlighted that the $88.8 billion JobKeeper program played a crucial role in steering the Australian economy through the pandemic, despite some costly design flaws. The report recommended that JobKeeper should only be revived in a severe economic crisis.

When JobKeeper was introduced in March 2020, firms had to demonstrate a projected turnover decline of over 30 or 50 per cent by September 2020 to qualify. 

Some businesses that received payments subsequently experienced increased turnover, leading to calls for repayments by profitable firms. The report argued that a clawback mechanism could have undermined the program's role in underpinning confidence and reducing uncertainty.

Instead, the report suggested that JobKeeper should have been more flexible, allowing eligibility to switch from prospective to retrospective revenue criteria after three months. 

This would have enabled better targeting of payments beyond the initial three months and reduced the program's cost. The decision not to include a clawback mechanism was made in 2021 to support confidence, maximise uptake, and reduce uncertainty.

The report also recommended greater transparency regarding who received JobKeeper payments. 

It noted that at least $267 million in JobKeeper payments were voluntarily repaid by some of Australia's largest public companies.

The review identified several design features of JobKeeper that should not be repeated, including the initial flat payment structure of $1,500 per employee per fortnight. 

The report suggested that future wage subsidies should be proportionate to earnings. 

The review was critical of the exclusion of short-term migrants from JobKeeper, arguing it constrained the recovery in some sectors. However, it supported the exclusion of schools and universities from the program, suggesting that sector-specific support was more appropriate.

The report recommended that any future government implementing a wage subsidy should include a public register to enhance transparency, a feature that was lacking in the JobKeeper program. 

A spokesman for Treasurer Jim Chalmers stated that the report showed JobKeeper was a “good program that was badly implemented by the Morrison government”.

In opposition, the Labor Party had opposed the government's plans to taper back the scheme's most generous rate, advocating for at least three months of full payments to support businesses in sectors like tourism.