Finance Welfare Pressure builds on Coalition to announce permanent JobSeeker increase
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Pressure builds on Coalition to announce permanent JobSeeker increase

Pressure is building on the Coalition to announce a permanent increase to JobSeeker. Photo: TND
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Treasurer Josh Frydenberg is expected to bring forward billions of dollars in tax cuts in the October budget, but millions of Australians hope he lends a hand to the jobless.

The unemployment benefit JobSeeker was doubled at the start of the pandemic but is scheduled to fall back to $40 a day on January 1.

Economists and welfare groups say that would wreak havoc for job seekers and rip billions of dollars from cash registers around the country.

And they want the government to provide certainty and announce a permanent increase as soon as possible.

In an address to the National Press Club on Wednesday, Deloitte Access Economics partner Chris Richardson said the pandemic had added to what was already a “very good” case for permanently lifting the nation’s unemployment benefits.

“Previously, 5 per cent of Australians were unemployed. Now that’s about to hit 10 per cent. So were we to return to an unemployment benefit of $40 a day, this nation’s fairness fail would hit twice as many people as before,” he said.

“[And] ironically, because the economy is in so much trouble, giving money to the unemployed is also a bigger job generator than it has ever been.”

Australian Council of Social Service chief executive Cassandra Goldie also took to the press club stage on Wednesday.

She told the audience the unemployment benefit before the pandemic had become “a brutal reality of deprivation”, after successive governments failed to increase the payment in real terms for 26 years.

The decision by the federal government to double the rate of Newstart now called JobSeeker came as a huge relief and received widespread support,” she said. 

“Overnight, for the first time in decades, people hit by unemployment in Australia could finally cover the basics, the essentials of life.”

Deloitte Access Economics partner Chris Richardson and ACOSS CEO Cassandra Goldie believe a permanent increase to JobKeeper is essential. Photo: AAP

Dr Goldie said announcing a permanent increase to the unemployment benefit beyond the end of December would stimulate the economy more effectively than bringing forward income tax cuts.

This is because tax cuts would reward higher-income earners who can afford to save more than lower-income earners who would only spend.

“There are many things that are out of our control in this pandemic. But fixing JobSeeker, fixing our social security protections to give people certainty and safety is not one of them,” Dr Goldie said. 

“Lifting the rate of JobSeeker permanently … is something we can all agree on, from ACOSS to the retailers association, from Deloitte to KPMG, from left-leaning think tanks to right-leaning ones.”

Data from economic consultants AlphaBeta supports Dr Goldie’s claims.

It shows that low-income earners increased their discretionary spending by 10 per cent above normal levels when the Coronavirus Supplement hit their bank accounts.

But during the same time, Australians earning above $104,000 a year slashed their spending by more than a third (36 per cent).

As it stands, the unemployment benefit comprises of a JobSeeker base rate of roughly $560 a fortnight and a temporary Coronavirus Supplement of $550 a fortnight. (As of July, 1.45 million Australians were receiving JobSeeker.)

But changes announced in July will see the Coronavirus Supplement fall to $250 a fortnight on September 25 and removed completely on January 1.

That would take the overall JobSeeker rate back to $40 a day at a time when more than 1.3 million Australians are expected to have no job.

Shadow treasurer Jim Chalmers told The New Daily “it makes no sense to withdraw support while the economy is still weak and unemployment is rising”.

But Australians will likely have to wait until October 6 to find out if the government has included a permanent increase in its budget.

Prime Minister Scott Morrison said in July that the federal government was “favourably disposed” towards increasing the unemployment benefit rate in 2021, but Treasurer Josh Frydenberg’s office declined to speculate on the issue when asked by The New Daily on Wednesday.