At the same time, it is considering fighting to force the government to increase the rate of the wage subsidy, arguing that the new two-tiered system will withdraw $40 billion from the economy when it is introduced on September 28, creating a “cliff”.
The new two-tiered JobKeeper will cost about $32 billion over six months, compared with the $70 billion cost of the first iteration of the scheme which paid a flat $1500-per-fortnight subsidy to workers.
There have been discussions at senior levels in the Opposition about fighting for higher rates for both tiers, which are $750 and $1200 respectively, when the legislation hits the Parliament the week after next.
Labor believes supports should not be pulled from the economy when there are nothing to replace them with, especially given the increased volatility caused by the Victorian coronavirus catastrophe.
But the government is set to reject any such move, with a senior source saying the payment needs to start tapering away as the economy recovers.
Federal cabinet met on Wednesday to discuss the October 8 budget which will be dominated by medium-and long-term reforms measure which are intended to supplant income supports and create jobs.
While the public focus has reverted to emergency assistance due to the Victorian outbreak, which included having to bolster JobKeeper by $15.6 billion, the government says that has not dimmed the focus on the need for reforms to grow the economy.
One source confirmed the budget would focus on policies that were politically achievable. For example, it is almost certain there will be an investment allowance for business, which is a policy supported by Labor, rather than an attempt to cut company taxes, which would struggle in the Senate.
With nine out of 10 jobs created by the private sector, “we need to give business the confidence and incentives to invest in their future success,” one source said.
While the budget will also focus on long-term changes to industrial relations, the legislation for the new JobKeeper payment will include another six months exemption from the Fair Work Act which will enable employers to reduce hours and vary duties performed.
Controversially, the legislation will extend this exemption to employers who were on the first round of JobKeeper but have recovered sufficiently not to qualify for the second round.
The government argues many of these businesses will still be distressed and unable to put workers back on to full-time hours and duties, more so given the impact on the economy of the Victorian outbreak.
The exemptions will be tied to the JobKeeper bill, and the Senate will be presented with a take it or leave it scenario.
“This is exactly what Labor warned about. The government is using the pandemic as an excuse to bring in extreme changes that will leave workers worse off,” Labor’s industrial relations spokesman Tony Burke said.
While Labor is unhappy, one source conceded it could not stand in the way of the second round of JobKeeper and would most likely attempt to amend the bill to exclude the Fair Work Act Exemption and then pass it if unsuccessful.
The Greens said they would not accept the Fair Work Act exemptions.
“Supporting workers in one business shouldn’t be dependent on taking away workers’ rights in another business,” leader Adam Bandt said.