Finance Welfare Government urged to walk back cuts to JobSeeker and JobKeeper

Government urged to walk back cuts to JobSeeker and JobKeeper

The government is under pressure to maintain the current rates of JobKeeper and JobSeeker. Photo: TND
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The Coalition is being urged to keep JobKeeper and JobSeeker at their current rates after Treasury said another 450,000 workers would be stood down within months.

The JobKeeper wage subsidy is scheduled to fall from $1500 to $1200 a fortnight on September 28, while the unemployment benefit JobSeeker is scheduled to fall from $1100 to $800 a fortnight on September 25.

But welfare groups have seized on new unemployment data from Treasury to call on government “to do the right thing by people” and walk back the planned cuts to both payments.

As the Australian Bureau of Statistics released data showing Australians mostly used the stimulus to pay for household bills, Australian Council of Social Service CEO Cassandra Goldie said the government should maintain the payments so that people “can cover the basics”.

“Instead of cutting $300 per fortnight from millions of people’s already sparse incomes next month, we need Parliament to put in place a permanent, adequate JobSeeker rate, which before the temporary COVID increase, [had] not been increased in over 25 years,” Dr Goldie said.

“There are 2.3 million people facing the $300 per fortnight cut on September 25 unless Parliament acts in these two weeks.

“Troublingly, more than 1.1 million children are living in households that stand to have their incomes cut on September 25.”

Days after the government announced the extension and reduction of JobKeeper and JobSeeker on July 21, the Australia Institute think tank published research claiming the $300-a-fortnight cut to JobSeeker would push 370,000 people into poverty, including 80,000 children.

Weeks later, the Victorian government responded to a second wave of infections by introducing tougher Stage 4 restrictions – a move that Treasury predicts will result in an extra 450,000 people losing their jobs or being stood down in August and September.

Released late on Sunday evening, the latest figures from Treasury show the national effective unemployment rate fell from a peak of 14.9 per cent in April to 9.9 per cent in July.

But the combined effect of state border closures and Victoria’s second lockdown is expected to reverse that trend and push the effective unemployment rate above 13 per cent within months.

Asked by The New Daily in light of the revised unemployment forecasts whether the government should maintain the current rates of JobKeeper and JobSeeker beyond September, University of New South Wales economics professor Richard Holden said “yes”. 

“It is too soon to be tapering those off,” Dr Holden said.

He believes the government should take advantage of record-low interest rates and low levels of public debt to spend money to boost demand, while also cutting taxes to reduce the impost on business.

Reserve Bank governor Philip Lowe’s suggestion that state governments spend an extra $40 billion on infrastructure, housing and training over the next two years was also “a good idea,” he added.

But “there are capacity constraints in construction and one needs to be mindful of how much can actually be done at once,” he said.

“[Projects] need to be shovel ready, scalable and have high social returns and benefits.”

Angela Jackson, lead economist at Equity Economics, also backed Dr Lowe’s calls for more government spending, noting infrastructure spending should be a joint effort between the states and Commonwealth.

She said smaller projects were better than big-ticket items, as they could be rolled out more quickly and spread across the country, so that regional communities also benefitted.

“[The stimulus] wants to form part of government’s strategic objectives over the next 10 to 20 years, rather than being very short-sighted and just about jobs today … so [more] around where the jobs of the future are going to be, so health and social care, and green jobs,” she told The New Daily.

“And they do need to think about increasing funding for health, mental health, aged care and education, as well. We need to be thinking about infrastructure, yes, but we also need to be thinking about the general resilience of the economy and investing in people.

“I think that would make it a stronger recovery and also support female jobs.”

Ms Jackson added, however, that the government’s plan to gradually wind back the payments from September was “warranted” – partly because the initial design of JobKeeper meant many people were effectively receiving a pay rise under the scheme, and partly because it is “meant to be a wage subsidy, not a wage replacement”.

“There’s a question around JobSeeker, clearly the base rate is not adequate. The [first] step down is probably going down to an adequate level ($800 a fortnight), but I would be worried about the further decrease in December,” Ms Jackson added.

“I think that shouldn’t go ahead, and that they should continue with a higher rate of JobSeeker going forward.”

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