Government extends JobKeeper, JobSeeker while slashing the rate of both. Here’s what it has planned.

Welfare recipients will see their payments cut while wage subsidies will kick on until March under the government’s new support shakeup.

The federal government confirmed on Tuesday that it will extend the so-called coronavirus supplement but slash it from $550 to $250 per fortnight.

“For JobSeeker, we’re increasing the income-free area that is available to those who are on JobSeeker to $300. That means you can earn $300 without it affecting any of your JobSeeker payments,” Prime Minister Scott Morrison said.

“We’re adjusting the COVID supplement down to $250.”

The readjustment means that JobSeeker recipients will receive around $815 per fortnight as a base rate, but are permitted to earn $300 on top.

However, if recipients earn over that threshold, they will still see their JobSeeker allowance tapered down.

The revised payments will be in place for three months, reducing from September and running until December.

After that point, it is expected the 1.6 million Australians who currently receive the payment will lose the remainder of the coronavirus supplement.

That would see them reverted back to the old Newstart base rate of around $600 a fortnight, despite strong lobbying from welfare groups and activists.

The full JobKeeper wage subsidy will also be cut by $300 a fortnight but extended for another six months taking it through to March. From September, businesses will have their eligibility assessed quarterly in order to receive one of two subsidies.

“From 28 September until 3 January next year, the two payments will be $1,200 and $750 with the lower payment for employees who work less than 20 hours a week in the month of February pre-COVID,” Treasurer Josh Frydenberg said.

From 4 January to 28 March those payments will fall again.

“That will be revised again for the March quarter down to $1,000 for a full rate at 20 hours a week or more and $650 for less than 20 hours a week,” Morrison said.

The six-month extension is costed at $16 billion, bringing the total cost of the JobKeeper alone to $86 billion, making it by far the biggest economic policy in Australian history.

“Already just over $30 billion has been provided in support through the JobKeeper program to almost a million businesses – 960,000, thereabouts – supporting some 3.5 million employees,” Morrison said.

“It has been effective in stemming the loss of business closures and job losses, that it has saved businesses and it has saved livelihoods,” he added.

Both changes come as the government tries to walk Australia back from the so-called ‘fiscal cliff’ it was headed towards in September.

While these extensions won’t avert it entirely, the Morrison government hopes they will at least soften the fall.

This article first appeared on Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.