July 16, 2020 / 3:51 AM / a month ago

Australia expands wage subsidy scheme as COVID-19 cases surge

SYDNEY (Reuters) - The Australian government is injecting a further A$1.5 billion ($1.1 billion) into a wage subsidy programme to counter rising unemployment as the country posted the biggest rise in coronavirus cases since early April.

A sanitation worker cleans a bench outside the single remaining public housing tower under a lockdown in response to an outbreak of the coronavirus disease (COVID-19), in Melbourne, Australia July 10, 2020. REUTERS/Sandra Sanders

Australian officials reported 327 new COVID-19 cases on Thursday, a surge that was almost entirely due to the state of Victoria, which posted its biggest ever one-day rise in infections.

Victoria, Australia’s second-most populous state, has been isolated from the rest of the country for more than a week following a fresh outbreak of the disease. The 4.9 million residents in its capital, Melbourne, have been ordered to stay home except for essential business.

“If you want to get out of these sort of restrictions as fast as possible, then we all have to play our part,” Victoria state Premier Daniel Andrews said, urging people to get tested and limit exposure to others.

Australia has recorded nearly 11,000 cases of COVID-19, including 113 deaths. That remains well below many other countries, but a spike in the number of cases in recent days has worried officials.

The economy has taken a substantial hit and is headed for the country’s first recession in almost three decades. A further shutdown in Victoria would tighten the screws further.

The government on Thursday announced it would spend A$1.5 billion ($1.1 billion) to substantially extend a program to subsidise the wages of apprentices. The funds will more than double the number of apprentice workers covered, to around 180,000 across all industries and to run until March next year, instead of September as originally planned.

That decision gives the first indication of how Prime Minister Scott Morrison plans to prop up the economy beyond September when a broader A$60 billion wage subsidy package is still due to expire.

Morrison welcomed data out on Thursday showing that jobs grew by more than expected in June - rising by 210,000, compared with declines in April and May and analyst expectations of a 112,000 increase - as evidence his government’s support packages were working.

“The Australian economy is fighting back,” Morrison told reporters in Canberra. “We are ensuring there will be additional support to ensure those unable to get themselves into a new position.”

A further A$500 million would be invested to help re-train Australians to re-enter the work force, Morrison said.

However, the data released by the Australian Bureau of Statistics also showed that unemployment rose to 7.4% in June, from 7.1% in May, the highest level since November 1998, as the rise in jobs was not enough to offset a rise in job hunters.

Morrison has said previously the broader wage subsidy scheme would not be extended, but replaced with industry specific support. Full details are expected to be announced on July 23 when the government gives an economic and fiscal update.

The Reserve Bank of Australia called for more fiscal support, cautioning that the economy will need “considerable” support for some time.

($1 = 1.4269 Australian dollars)

Reporting by Colin Packham; editing by Jane Wardell

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