A planned slashing of emergency COVID help for welfare recipients on New Year’s Day will put some 190,000 Australians – including 50,000 children – below the official poverty line, according to new modelling.
Cuts to the COVID supplement for JobSeeker have been criticised amid job data showing there are 10 people out of work for every vacant position in the market.
The COVID supplement, originally an extra $550 per fortnight for those on poverty-level welfare payments, was a key economic bulwark in the early stages of the pandemic as millions crashed onto unemployment queues.
But the government soon moved to wind back the supplement, slicing it to $250 a fortnight in September then planning to cancel it altogether and return to the original JobSeeker rate in December.
Last week, Prime Minister Scott Morrison and Social Services Minister Anne Ruston announced the supplement would be extended to March, but at the further reduced rate of $150 a fortnight.
The reduction means the total JobSeeker payment for a single person will be reduced to $357.50 a week.
That’s far below the national poverty line – as defined by the Australian Council of Social Service – of $457 a week.
Meanwhile, jobs figures find multiple jobseekers battling for each position.
Some entry-level jobs routinely see thousands of applications on employment websites.
ACOSS and other charities had warned of a wave of poverty from the welfare cut, begging the government to lock in a permanent rise to the unemployment payment.
Now, new modelling from The Australia Institute (TAI) has projected nearly 200,000 people will plummet below official poverty lines, with a quarter of them children.
“The JobSeeker supplement has been the only thing standing between many recently jobless Australians and poverty,” TAI senior economist Matt Grudnoff told The New Daily.
Previous modelling from the progressive think tank estimated the original rate of the COVID supplement had lifted 425,000 people out of poverty in the first place.
The September cut from $550 to $250 a fortnight put some 100,000 back into poverty, Mr Grudnoff’s previous analysis estimated.
TAI modelling forecasts that the new supplement cuts, to come in from January, will see 53,000 people in Queensland, 52,000 in Victoria and 51,000 in NSW plunge back below the poverty line.
Those figures will include 17,000 children in Queensland, 16,000 children in Victoria and 10,000 children in NSW, Mr Grudnoff said.
“This highlights how important these unemployment benefits have been for keeping people out of poverty,” he told TND.
“We need to be able to look after families, but continuously cutting unemployment payments is not doing that.
“It’s the opposite. It’s pushing people unnecessarily into poverty.”
TAI’s poverty figures include all people in families who would be affected by the change, not just the person actually receiving the payment.
The analysis used a technique called microsimulation modelling.
Using data from the Australian Bureau of Statistics’ Survey of Income and Housing as a base, analysts plugged in current figures from employment and payroll data to create what Mr Grudnoff said was a very accurate picture of the Australian population.
The base rate of JobSeeker for a single person with no children is clearly below the poverty line, but Mr Grudnoff said it was important to account for some families getting further government payments – such as rent assistance or family tax benefits – which would boost their income.
The government has also increased the amount of income welfare recipients can earn from paid employment before it affects their Centrelink payments.
The ‘Henderson poverty line’, measured by the Melbourne Institute, is also different for different family types, the figure rising with each extra person or child in the household.
All in all, TAI modelling found the COVID supplement cuts will see poverty rise by around:
- 53,000 in Qld, including 17,000 children
- 52,000 in Victoria, including 16,000 children
- 51,000 in NSW, including 10,000 children
- 19,000 in Western Australia, including 5000 children
- 12,000 in South Australia, including 2000 children
- 5000 in Tasmania, including 1000 children
Mr Grudnoff said that, due to small sample sizes in the Northern Territory and the Australian Capital Territory, those jurisdictions were not included in the analysis.
That means the true number of those going into poverty may be higher than the 190,000 cited.
Mr Morrison, asked by TND last week at a press conference about concerns over rising poverty, said the government had other programs to assist the vulnerable and those on low incomes.
“This is why we are doing all of the things we can to get Australians into jobs as we see the number of job advertisements and places become available again,” he said.
“We can’t stay stuck in neutral. We do need to move forward and there is other forms of cash and emergency assistance … that is available to people through the normal channels.
“Australia has a strong social safety net. What we did at the start of the crisis was to strengthen that even further for how strong the blow was that we would have to withstand.”
Mr Grudnoff said the changes would hurt those on low incomes.
“Punishing the unemployed during a recession, when there are more than 10 unemployed people competing for every one job vacancy, is simply cruel,” he said.
“Now is the time to support the unemployed, not punish them for losing their job.
“People are losing jobs through no fault of their own.”