$92 billion more than thought pumped into economy during pandemic, analysis finds

Murphy, who said government spending had stabilised unemployment and inflation through 2020 and 2021, found longer-term economic repercussions from the total $429 billion in stimulus were still being felt.

“Overall, the excessive nature of the macro policy response to COVID makes unemployment and inflation considerably more variable during the post-COVID era from 2022 to mid-2025,” he found.


“In future pandemics, a higher level of stability in unemployment and inflation can be achieved
if fiscal policy is designed to compensate, rather than overcompensate, for the income losses
from social distancing.”

Murphy found businesses were overcompensated through JobKeeper. For every $1 businesses lost in income due to COVID-related shutdowns, they received $2 in government support.

Qantas, which last week reported a $2.5 billion profit for the just-completed financial year, received $856 million in JobKeeper payments, along with other assistance aimed specifically at the airline industry. Unlike some high-profile businesses including Cochlear, Premier Investments and Nick Scali, it has refused to repay any of its JobKeeper payments.

Murphy said part-time workers were overcompensated on JobKeeper during the initial phase where everyone received the same payment, which meant they were better off staying inactive with their existing employer rather than finding a new job.

The ACTU used its submission to the inquiry to argue that while JobKeeper was crucial to supporting the jobs market and economy, the program had disadvantaged women, people in certain industries and casual workers.

It also noted that government debt, which on Friday reached $898.4 billion, was higher than necessary because of “wasted” spending under JobKeeper.

In its submission, the Business Council of Australia said JobKeeper had been an important piece of public policy that had been put together during an extremely difficult period.

It said a permanent program, that could be put in place during a state of emergency or natural disaster, should be designed and made law by the parliament.


“The main lesson from this experience is that the federal government should plan and possibly legislate for future responses to severe economic shocks that can be implemented quickly, while also being better targeted,” it said.

The council also rejected arguments that JobKeeper should have been repaid by businesses, arguing this ignored the program’s original design and would have added to uncertainty facing the sector.

“These demands also threaten to undermine the take-up of similar schemes that might be introduced in response to future negative shocks,” it said.

Ray is expected to finalise his report in the coming months.

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