Cuts to JobKeeper and JobSeeker payments will deliver a massive blow to household budgets in September.

But for many Australians, it won’t be as bad as it sounds.

For while JobKeeper will drop by $300 for full-time workers and $750 for part-time workers, thousands of recipients can also claim JobSeeker.

That’s because the unemployment benefit is available to anyone earning less than $1256 in fortnightly income, and both the full-time and part-time JobKeeper rates will drop below this threshold on September 28.

“And that means if you meet the various other rules for JobSeeker, your income might not fall very much, from what the previous JobKeeper rates were,” said Grattan Institute household finances director Brendan Coates.

In fact, Mr Coates has worked out exactly how much JobKeeper recipients can claim if they meet the assets test for JobSeeker.

As of September 28, workers receiving the part-time JobKeeper rate ($750 a fortnight) will also be able to claim $554 in JobSeeker payments – taking their gross income to $1304 a fortnight.

(Treasury estimates 245,000 Australians will be on both payments by the end of the year.)

Source: Grattan Institute

That equates to a drop in income of $196 – much less than the $750 change to JobKeeper.

And that’s without taking into account the Commonwealth Health Card and Rent Assistance.

Meanwhile, workers receiving the reduced full-time JobKeeper rate ($1200) will be able to claim $284 in JobSeeker payments – taking their gross income to $1484 a fortnight, or just $16 less than before.

But there’s a catch.

• Find out: How JobKeeper and JobSeeker will change from September

The government is reintroducing its assets test from September 25, meaning single JobKeeper recipients with $5000 in funds will have to wait one week before they can claim JobSeeker.

And those with $11,500 or more in funds will have to wait 13 weeks.

Even so, it’s a much better outlook than the one facing JobSeeker recipients.

From the end of September, the most they can get is $810 a fortnight – which, if they were previously receiving JobKeeper, equates to a loss in income of $690.

“What this means is there is a big wedge in our income support system, depending on whether the firm that you’ve previously worked for still qualifies for JobKeeper,” Mr Coates said.

What the changes mean for the economy

Transaction data shows that government stimulus has played a crucial role in propping up the economy, giving people the means and confidence to hit the shops.

This is important, as consumer spending accounts for almost 60 per cent of the economy.

Take it away, and you lose a major economic growth engine.

Which is exactly what the government is doing by slashing JobKeeper and JobSeeker, according to Australia Institute senior economist Matt Grudnoff.

“We know that the best people to give stimulus to are those on low incomes because they spend it all. At the same time, the worse people to cut income from are low-income earners, because you get the largest contraction,” Mr Grudnoff said.

“JobSeeker and JobKeeper recipients make up a lot of low-income earners. These people will have less money to spend at their local shops, [which] will have a negative impact on those local businesses.”

Meanwhile, IFM Investors chief economist Alex Joiner said it made sense to modify the payments to ensure the money only went to businesses that had yet to recover.

And he also understood the government’s desire to reduce the disincentive to work by decreasing the payments at some point.

“But to support household incomes at this time is probably paramount,” Dr Joiner said.

“It might have been more appropriate to recalibrate it, rather than reduce [the rate] … because clearly they decided in the first wave that there was a number that was appropriate, and you would ask the question, ‘Why isn’t that appropriate now?'”

Treasury estimates that extending JobKeeper until March 28 will cost the federal budget an extra $16.6 billion, while extending JobSeeker until December 31 will cost an extra $3.8 billion.

That’s based on the number of JobKeeper recipients falling from 3.5 million to 1.4 million at the end of September – before dropping to one million at the start of 2021 – and the number of JobSeeker recipients increasing by 345,000 by the end of December.

Treasurer Josh Frydenberg will release revised economic forecasts as part of a mini-budget on Thursday.