People working less than 20 hours a week will have their JobKeeper payment cut to $750 a fortnight.
Most businesses will have to requalify for JobKeeper by demonstrating a 30 per cent loss in revenue, with the threshold 50 per cent for major companies.
The new rates will run between September and January next year, with the revenue test to be reapplied at the start of each stage.
From January, JobKeeper will be $1000 for full-time employees and $650 for people working less than 20 hours.
JobSeeker unemployment benefit recipients will be able to earn $300 a fortnight without it affecting their payment.
The coronavirus supplement for JobSeeker recipients will drop from a current $550 to $250 at the end of September, and remain at that rate until the end of the year.
Prime Minister Scott Morrison announced the changes in Canberra on Tuesday.
The future of the permanent dole rate is expected to be revealed in the October 6 budget.
“I am leaning heavily in to the notion that we would anticipate on what we know right now that there obviously would need to be some continuation of the COVID supplement post-December,” Morrison said.
Mutual obligation requirements for people on JobSeeker will return from August 4, with the assets test to be reintroduced from the end of September.
Morrison said Australians understood both programs were temporary.
“They know a current scheme that is burning cash, their cash, taxpayers’ cash to the tune of some $11 billion a month cannot go on forever,” he said.
Treasury estimates the number of JobKeeper recipients will fall to 1.4 million in the December quarter and one million in the March 2021 quarter.
Around 3.5 million workers have received wage subsidies designed to keep employees linked to employers during the pandemic.
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