Australians relying on unemployment payment JobSeeker will be left below the poverty line even after the new increase is taken into account, with social services groups warning the loss of the coronavirus supplement will leave households struggling to afford necessities.
Research from the Bankwest Curtin Economics Centre has found the federal government’s lift in the fortnightly dole to $615.70 from $565.70, excluding an upcoming increase for inflation, will mean single people who do not have children will be left $166 short of the poverty line on the base rate. For this analysis the researchers defined the poverty level as half the average income for comparable households.
The Morrison government revealed a permanent increase in JobSeeker worth $50 a fortnight on Tuesday, which was below the expectations of many welfare groups. The base rate increase means households currently relying on the dole will see a cut in their household budget due to the simultaneous loss of the more generous $150 a fortnight coronavirus supplement after March.
The extra fortnightly amount will cost taxpayers $528 million in the three months from April 2021 and $1.8 billion over the first 12 months of the scheme, the Curtin researchers found. The total cost of the scheme, including the full base rate, was estimated to cost $20.5 billion in the first year.
Retaining the $150 a fortnight coronavirus supplement would have cost $4.1 billion over the year to March 2022 on these calculations and would still leave households below the poverty line. The federal government estimates the extra cost of the new measures will be about $9 billion over the forward estimates.
The government has said there are very few people who receive the base rate alone, with Commonwealth rent assistance and an energy supplement also available to the 1.3 million people who rely on these benefits, and the increase is the first meaningful rise since the 1990s. When inflation is taken into account the new rate is worth $620.80 a fortnight. Those receiving the welfare payment are able to earn up to $150 a fortnight without affecting their Centrelink payments. While this is an increase from pre-pandemic levels it is half the temporarily-increased income-free threshold introduced in 2020.
But welfare groups including the Australian Council of Social Service, UnitingCare, Brotherhood of St. Laurence and Jesuit Social Services are warning Australians will be left struggling with the $3.60 a day increase.
Anglicare Australia executive director Kasy Chambers criticised the decision as a cut to “almost half of the poverty line”.
“After plunging people back into poverty after months of uncertainty, the political process has failed people out of work. We need an independent body to set and raise the rate of these payments,” Ms Chambers said.
Grattan Institute program director for household finances Brendan Coates said the increase was “disappointingly small” given the coronavirus pandemic had demonstrated the importance of the social safety net and provided an opportunity for the base rate to be increased.
“When JobSeeker was increased with the supplement it pulled most people out of poverty,” Mr Coates said. “The degree to which people are given [welfare compared to the standard wage] affects their ability to participate in society. This includes community expectations on how you should be dressed, which affects your ability to get a job.”
A major factor behind the sluggish rate of increase in the JobSeeker rate is the way it is increased in line with inflation. Mr Coates said the unemployment benefit has not, in fact, risen fast enough to keep up with the costs of jobless households.
“Job seekers have less discretionary spending and the price of essentials has risen faster than non-essentials. Their costs have risen faster than CPI,” he said. “There is a cost to raising JobSeeker but it’s a budgetary cost that’s warranted if you want an unemployment benefit that actually lets people look for work.”
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.