Prime Minister Scott Morrison has announced the extension of the JobKeeper scheme until March 2021, which will introduce a two-tier payment system after September.

There are an estimated 3.5 million Australians on JobKeeper.

Mr Morrison said he has been told the scheme has saved businesses and saved livelihoods.

He said while the wage subsidies can’t “go on forever” there were businesses and employers facing incredible financial hardship.

“It has been a game changer for them,” he said.

The payment will be reduced to $1200 per fortnight after September, and there will be a lower payment for those working less than 20 hours a week, down to $750.

He also announced changes to the JobSeeker payment.

The JobSeeker unemployment benefit will be reduced from $1115 a fortnight to $815 from the end of September.

The six-month extension of JobKeeper will cost $16 billion, Treasurer Josh Frydenberg said.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell told Deborah Knight it is welcome news.

“The dilemma of part-time people being paid more than they used to be paid to work was really causing some problems in lots of businesses.”

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