March 2022 – Please be aware of scammers falsely representing AMP Capital. AMP Capital is aware of an ongoing scam operation targeting customers and the broader community, offering inflated interest returns, available through fictitious investment vehicles, titled AMP Capital High Yield Fixed Return Global Market Fund. Through the use of phishing emails and phone calls, malicious operators are attempting to entice them to invest in a false product that features AMP Capital’s branding. Please be aware this is a not a legitimate product from AMP Capital.

AMP Capital does not approach potential customers via electronic direct mail (EDM) nor does the company solicit personal or financial information via email. If you are concerned that you may have been targeted by scammers, please contact us on 1800 658 404 from 8.30am to 5.30pm Monday to Friday (Sydney time). More information on scams can also be found on the ACCC’s website Scamwatch.

Economics & Markets

Fiscal cliff or fiscal slope? Refreshed stimulus measures and the Australian economy

By Diana Mousina
Economist - Investment Strategy & Dynamic Markets Sydney, Australia

One of the big learnings from events in history, like The Great Depression, is that tightening the purse strings during a financial crisis can serve to put the brakes on the economy. In that sense, stimulus becomes one of the vital mechanisms to keep the economy ticking, until it can start to function normally on its own.

With that in mind, it’s hard to over-play the importance of income support measures. For example, we estimate that were it not for JobKeeper, the effective unemployment rate would be over 15% versus what it currently is at 11.3%.

As speculated and expected, the federal government has confirmed it will extend its JobKeeper and JobSeeker programs, which were originally scheduled to end in September. Even though the cost of continuing these stimulus measures may appear immense, income support is essential to sustain economic activity and prevent the unemployment rate from rocketing.

What the refreshed package looks like

The JobKeeper payment has been extended to 28 March 2021, but with payments stepping down from the current rate of $1,500 per fortnight to:

  • $1,200 per fortnight between 28 September 2020 and 4 January 2021; and then to $1,000 between 4 January and 28 March 2021 for those who worked 20 hours or more per week in February this year; and
  • to $750 per fortnight then $650 for the same periods for those who worked less than 20 hours per week in February 2020.

For JobSeeker, the supplement will be extended from 25 September to 31 December 2020, but at the reduced rate of $250 per fortnight (down from $550) with reinstated means testing but an adjusted-income taper test. This takes the daily payment under JobSeeker down to $57.90 (compared to the pre-coronavirus level of $40).

Implications for the Australian economy

The Government estimates the cost of extending JobKeeper to be ~$16 billion and the extension to the JobSeeker supplement at ~$3.8 billion. This combined with an extra $2 billion of Federal spending on apprentice subsidies and JobTrainer announced last week means a total extra stimulus of ~$22 billion, or 1.2% of GDP.

The numbers are big, but they serve to both support the economy and prevent a fiscal cliff, which could have otherwise occurred from October if the income support programs had abruptly ended. With this softening and staging down, that fiscal cliff is looking more like a fiscal slope.

Share this article
Subscribe to SMSF News

Subscribe today to receive a must-read weekly publication for any SMSF trustee

You may also be interested in...

You may also be interested in...

You may also be interested in...

You may also be interested in...

Our Privacy Policy explains how we handle personal information and use cookies and website tracking. We will follow the cookie and tracking settings you have selected in your browser.

Important notes

While every care has been taken in the preparation of these articles, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) makes no representation or warranty as to the accuracy or completeness of any statement in them including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. Performance goals are merely goals. There is no guarantee that the strategy will achieve that level of performance. The information in this document contains statements that are the author’s beliefs and/or opinions. Any beliefs and/or opinions shared are as at the date shown and are subject to change without notice. These articles have been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. They should not be construed as investment advice or investment recommendations. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs.

This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

Cookies & Tracking on our website.  We use basic cookies to help remember selections you make on the website and to make the site work. We also use non-essential cookies, website tracking as well as analytics - so we can amongst other things, show which of our products and services may be relevant for you, and tailor marketing (if you have agreed to this). More details about our use of cookies and website analytics can be found here
You can turn off cookie collection and/or website tracking by updating your cookies & tracking preferences in your browser settings.