tag:theconversation.com,2011:/id/topics/newstart-2707/articlesNewstart – The Conversation2023-07-06T20:22:14Ztag:theconversation.com,2011:article/2089162023-07-06T20:22:14Z2023-07-06T20:22:14ZThe Robodebt royal commission will tell us who’s to blame, but that’s just the start<p>Today will be a moment of truth for hundreds of thousands of Australians and for what the federal court has condemned as a
“<a href="https://www.hrlc.org.au/human-rights-case-summaries/2021/9/30/the-federal-court-approves-a-112-million-settlement-for-the-failures-of-the-robodebt-system">shameful chapter</a>” in Australian public administration.</p>
<p>This morning, the Governor-General will be presented with the final report of the <a href="https://robodebt.royalcommission.gov.au/">royal commission</a> into the automated debt-recovery system known as Robodebt.</p>
<p>Announced in the lead-up to the 2016 federal election by the then treasurer, Scott Morrison, and then social security minister Christian Porter, the scheme promised to save the budget $2 billion with <a href="https://webarchive.nla.gov.au/awa/20170420232837/https://www.liberal.org.au/latest-news/2016/06/28/coalitions-plan-better-management-social-welfare-system">smarter use of technology</a> to “better manage our social welfare system and ensure that every dollar goes to those who need it most”.</p>
<p>Instead, the court found the Commonwealth simply asserted that some <a href="https://gordonlegal.com.au/media/1366/prygodicz-v-commonwealth-of-australia-no-2-2021-fca-634-summary.pdf">433,000</a> Australian benefit recipients owed it back money – calculations it later admitted “did not have a proper legal basis”.</p>
<h2>Unlawful, yet it happened</h2>
<p>What Robodebt did was assume that people receiving benefits while earning income received stable income over a whole year, allowing it to average an entire year’s income to estimate how much they earned per fortnight.</p>
<p>A report I prepared for the royal commission, using data provided by the department of social services, found that in reality <a href="https://robodebt.royalcommission.gov.au/system/files/2023-03/professor-whiteford-report-rrc.pdf">very few</a> benefit recipients who received income did so at a steady rate.</p>
<p>More than 93% of those with earnings while on youth payments did so unevenly, as did 95% of those receiving income while on Newstart or Austudy, and 90% of those receiving income while getting parenting payments.</p>
<p>Robodebt was unlawful both because the Social Security Act requires payments to be calculated on the basis of the income <a href="https://www.legislation.gov.au/Details/C2022C00048">received</a> in the fortnight for which the payment was made, and because it <a href="https://www.theguardian.com/australia-news/2018/dec/18/expert-attacks-centrelink-robo-debt-and-moral-bankruptcy-that-allows-it">reversed the onus of proof</a>, effectively requiring people to prove they didn’t owe what it said they owed.</p>
<h2>Looking beyond who’s to blame</h2>
<p>Today’s report will rightly prompt lots of discussion about who was to blame, as well as the impact of the scheme on people made to <a href="https://www.abc.net.au/news/2023-04-15/qld-robodebt-suicide-prevention-royal-commission/102217156">repay money</a> they did not owe and <a href="https://9now.nine.com.au/a-current-affair/robotdebt-royal-commission-centrelink-whistleblower-speaks-out/f21ac934-68c3-40a0-9d47-a1ffc709c5c0">those who administered it</a>. </p>
<p>But we must also look at how we repair the systems that allowed it to happen.</p>
<p>I have argued elsewhere that while the decisions leading to Robodebt were made by individuals, they were also made within a layered context of precedents, established processes, and social, economic, and political environments. </p>
<p>The most important aspects of this deeper political environment included</p>
<ul>
<li><p>the strong commitment of political parties to reduce budget deficits</p></li>
<li><p>the formal and informal budgetary rules about spending and savings</p></li>
<li><p>the size of social security and welfare (around 35% of Commonwealth spending)</p></li>
<li><p>the highly targeted nature of the social security system</p></li>
<li><p>and political and popular judgements about social security recipients and their “deservingness”.</p></li>
</ul>
<p>This encouraged the government to present a scheme intended to cut the budget deficit as one that would ensure integrity in the social security system, using – as it turned out - very imperfect methods of matching data.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-robodebts-use-of-income-averaging-lacked-basic-common-sense-201296">Why robodebt's use of 'income averaging' lacked basic common sense</a>
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<p>What was pushed aside was that the Social Security Act is intended to be <a href="https://guides.dss.gov.au/social-security-guide/1/3/1">beneficial legislation</a>. It’s supposed to ensure support is provided to people <a href="https://insidestory.org.au/them-and-us-the-enduring-power-of-welfare-myths/">during periods of reduced income due to job loss, family breakdown, illness or disability, or when caring for others or retired from work or when studying</a>.</p>
<p>Providing that support when needed made it a powerful instrument for stabilising the economy and society and reducing inequality.</p>
<p>Robodebt undermined trust in that system. It will need to be rebuilt.</p>
<p>Identifying the reforms to public administration and political practice that are needed will be the most important things to look for in the report. </p>
<p>We have to make sure Robodebt can’t happen again.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-culmination-of-years-of-suffering-what-can-we-expect-from-the-robodebt-royal-commissions-final-report-202337">‘The culmination of years of suffering’: what can we expect from the robodebt royal commission’s final report?</a>
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<img src="https://counter.theconversation.com/content/208916/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford receives funding from the Australian Research Council. He is a member of the Interim Economic Inclusion Advisory Committee. He prepared a report for the Royal Commission into Robodebt on the policy and research issues raised by the program. This report was prepared without charge.</span></em></p>Robodebt affected hundreds of thousands of people and undercut trust in our political and social welfare systems. Unless we act on today’s royal commission report, something like it will happen again.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2047542023-05-02T05:43:54Z2023-05-02T05:43:54ZPresented with a JobSeeker finding too clear to ignore, he changed the subject: how Jim Chalmers is shaping the budget<p>What was Treasurer Jim Chalmers thinking?</p>
<p>Late last year he set up a committee he <a href="https://cdn.theconversation.com/static_files/files/2657/EIAC_Terms_of_Reference.pdf">specifically asked</a> to tell him how bad JobSeeker was.</p>
<p>The exact words in its <a href="https://cdn.theconversation.com/static_files/files/2657/EIAC_Terms_of_Reference.pdf">terms of reference</a> required it to advise him on the “adequacy, effectiveness and sustainability of income support payments”.</p>
<p>It is true that he was sort of forced to. Independent Senator David Pocock made the committee a <a href="https://www.afr.com/politics/federal/labor-to-face-pressure-to-increase-jobseeker-under-ir-horse-trading-20221127-p5c1m5">condition</a> of supporting an unrelated industrial relations bill in the Senate. Its findings had to be published a fortnight before each budget.</p>
<p>Yet Chalmers chose to set a group whose findings would be hard to ignore. He put on it one of Australia’s pre-eminent experts in the adequacy of payments, Professor <a href="https://theconversation.com/profiles/peter-whiteford-2016/articles">Peter Whiteford</a>; one of Australia’s pre-eminent experts in labour markets, Professor <a href="https://theconversation.com/profiles/jeff-borland-1079/articles">Jeff Borland</a>; and one of Australia’s pre-eminent experts in calculating disadvantage, Associate Professor <a href="https://theconversation.com/profiles/ben-phillips-98866/articles">Ben Phillips</a>.</p>
<p>To give the “interim economic inclusion advisory committee” extra heft, he added the head of the trade union movement, the head of the Businesses Council, the head of the Council of Social Service and the head of the Treasury.</p>
<p>In short, Chalmers set up a committee he couldn’t ignore. So why is he now so keen to talk about everything but its number one recommendation?</p>
<h2>Impossible to ignore</h2>
<p>Sometimes committees like these end up making so many recommendations that a minister can pick and choose from them.</p>
<p>And this committee did make 37 recommendations, as Finance Minister Katy Gallagher noted this week saying she was “<a href="https://ministers.pmc.gov.au/gallagher/2023/radio-interview-rn-breakfast">not going to be able to do everything</a>”. </p>
<p>But, unusually, this committee went out of its way to make sure one recommendation stood out above all others. </p>
<p>It reported that, given its short timeframe, it had: </p>
<blockquote>
<p>decided to concentrate on the needs of the largest
number of Australians experiencing poverty and disadvantage today, namely people
on JobSeeker, Youth Allowance and related working-age payments.</p>
</blockquote>
<p>It found <a href="https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2023-04/eiac-report.pdf">every available indicator</a> showed the current rates of JobSeeker and related payments were seriously inadequate, whether measured against payments overseas, against the minimum wage, against pensions, or against poverty lines.</p>
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<img alt="" src="https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523701/original/file-20230502-20-8uy8k3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="source" href="https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2023-04/eiac-report.pdf">Report of the Interim Economic Inclusion Advisory Committee</a></span>
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<p>Measured against <a href="https://www.oecd.org/about/members-and-partners/">other members</a> of the Organisation for Economic Co-operation and Development, Australia’s JobSeeker payment for a newly-unemployed single was the third worst. </p>
<p>When the higher rates of rent assistance available overseas were taken into account, it became the absolute worst.</p>
<p>Whereas a quarter of a century ago Australia’s unemployment payment was roughly in line with the pension, decades of lifting one in line with prices and the other in line with wages have left us with a base JobSeeker rate of <a href="https://www.servicesaustralia.gov.au/how-much-jobseeker-payment-you-can-get">$347</a> a week ($49.50 per day), compared to a base age pension of <a href="https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get">$485</a> a week ($69 per day).</p>
<h2>Too little to get medicines or work</h2>
<p>Job seekers told the committee that $347 per week is so low, they kept looking around their homes for things to sell. Some had to choose between medicines and electricity. Some could fill only some of their prescriptions. Others could barely afford the petrol to get to medical appointments.</p>
<p>The committee’s findings echoed those of the OECD, which found <a href="https://cdn.theconversation.com/static_files/files/2658/OECD_Economic_Surveys__Australia_2010.pdf">12 years ago</a> Australia’s unemployment payment had fallen so low compared to costs as to raise “issues about its effectiveness” in helping the unemployed find jobs.</p>
<p>The committee’s number one recommendation – more important than any other – was that the government </p>
<blockquote>
<p>as a first priority, commit to a substantial increase in the base rates of the JobSeeker Payment and related working-age payments</p>
</blockquote>
<p>It didn’t ask for JobSeeker and associated payments to be lifted to the pension rate straight away, although it did suggest that the ultimate goal should be 90% of the pension. Ben Phillips has calculated that would cost <a href="https://theconversation.com/boosting-jobseeker-is-the-most-effective-way-to-tackle-poverty-what-the-treasurers-committee-told-him-204045">$5.7 billion per year</a>, which is less than 1% of total government spending.</p>
<p>What the committee didn’t want was a tiny increase along the lines of the <a href="https://www.9news.com.au/national/jobseeker-payment-increase-treasurer-defends-50-rise-amid-criticism-it-means-little-to-welfare-recipients/1852c373-46f8-482a-bc40-206de0d6af86">$25</a> a week ($3.60 per day) the Coalition delivered when the coronavirus payments ended in 2021, without a commitment to build to something substantial.</p>
<p>So what is the government now doing in response? Chalmers and Gallagher appear to have decided it’s best to talk about something else.</p>
<h2>Changing the subject</h2>
<p><a href="https://twitter.com/7NewsMelbourne/status/1652949862521139200">Seven News</a> has reported that, while it won’t touch the base rate of JobSeeker and associated payments, the Albanese government will increase the rate for Australians aged 55 and over who have been out of work for some time. </p>
<p>That’s even less of a commitment than it seems.</p>
<p>There are 920,640 Australians on <a href="https://www.servicesaustralia.gov.au/jobseeker-payment">JobSeeker</a> and <a href="https://www.servicesaustralia.gov.au/youth-allowance">Youth Allowance</a> (which is a lower rate of JobSeeker for young Australians and is also paid to apprentices and students). Only <a href="https://data.gov.au/data/dataset/jobseeker-payment-and-youth-allowance-recipients-monthly-profile">236,280</a> of them are aged 55 and over. </p>
<p>Many of those 236,280 are aged 60 and over, and <a href="https://www.servicesaustralia.gov.au/how-much-jobseeker-payment-you-can-get?context=51411">already get</a> a boosted JobSeeker payment; an extra $26 per week ($3.70 per day) after they have been out of work for nine months. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-want-jobseeker-boosted-100-per-week-tied-to-wages-150364">Top economists want JobSeeker boosted $100+ per week, tied to wages</a>
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<p>If all Chalmers is planning is to extend the extra for the long-term unemployed aged 60 and over to the long-term unemployed aged 55 and over, it will cost little, and deny the vast bulk of those on $49.51 per day hope that things will improve.</p>
<p>Chalmers appeared to <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-patricia-karvelas-rn-breakfast-abc-17">verbal</a> his committee on Tuesday by saying it had found women over 55 are the most vulnerable group amongst unemployed Australians. </p>
<p>While the committee did say that (and while 56% of the Australians on JobSeeker in that age group are women), it could not have been clearer in recommending that the base rate of JobSeeker and associated payments be lifted for <em>all</em> Australians. </p>
<p>Chalmers says we ought to wait to see what is in the budget, which is fair enough. But if a commitment to do what his personally-selected expert committee has recommended isn’t in this budget, that committee is likely to recommend it again two weeks before the next budget, and again two weeks before the next.</p>
<p>The treasurer has put himself on notice.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/boosting-jobseeker-is-the-most-effective-way-to-tackle-poverty-what-the-treasurers-committee-told-him-204045">Boosting JobSeeker is the most effective way to tackle poverty: what the treasurer's committee told him</a>
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<img src="https://counter.theconversation.com/content/204754/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The treasurer’s handpicked advisory committee recommended he lift the base rate of JobSeeker for everyone. He is acting as if it didn’t.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2012962023-03-16T03:51:02Z2023-03-16T03:51:02ZWhy robodebt’s use of ‘income averaging’ lacked basic common sense<p>The practice of “income averaging” to calculate debts in the robodebt scheme was completely flawed. This is what I confirmed in <a href="https://robodebt.royalcommission.gov.au/publications/professor-peter-whiteford-report-robodebt-royal-commission">my new report</a> conducted for the robodebt royal commission published last Friday, the final day of the commission’s public hearings.</p>
<p>This process effectively assumed many people receiving social security benefits had stable earnings throughout a whole year. </p>
<p>But this is unlikely to be accurate for the many people who don’t work standard <a href="https://theconversation.com/note-to-centrelink-australian-workers-lives-have-changed-70946">full-time hours</a>, and particularly for students, since the tax year and the academic year don’t coincide. </p>
<p>My report finds averaging of incomes is completely inconsistent with social security policies that have been developed by governments since the 1980s.</p>
<p>Since 1980, social security legislation has been amended more than 20 times to encourage recipients to take up part-time and casual work. These include the <a href="https://www.servicesaustralia.gov.au/working-credit">Working Credit</a> for people receiving unemployment and other payments, and a similar but more generous <a href="https://www.servicesaustralia.gov.au/income-bank">Income Bank</a> for students.</p>
<p>These measures are specifically designed to <a href="https://formerministers.dss.gov.au/189/australians-working-together/">encourage people to take up more work</a>, including part-time and irregular casual work, and keep more of their social security payments.</p>
<p>Robodebt’s lack of consistency with long-standing policies should have been obvious from the start. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1634075269140033536"}"></div></p>
<h2>What is income averaging?</h2>
<p>In the robodebt scheme, income averaging involved data-matching historic records of social security benefit payments with past income tax returns, identifying discrepancies between these records.</p>
<p>It reduced human investigation of the discrepancies. The automatic calculation of “overpayments” for many people was based on a simple calculation that averaged income over the financial year.</p>
<p>The “debts” were based on the difference between this averaged income and the income that people actually reported while they were receiving payments.</p>
<p>I wrote <a href="https://theconversation.com/note-to-centrelink-australian-workers-lives-have-changed-70946">an article</a> for The Conversation on this in 2017. At the time, I thought, Centrelink couldn’t possibly have done that. </p>
<p>Well, as the royal commission has found, that’s <a href="https://www.abc.net.au/news/2023-02-20/robodebt-scheme-government-royal-commission-fraud-income/101998782">precisely what it was doing</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/note-to-centrelink-australian-workers-lives-have-changed-70946">Note to Centrelink: Australian workers' lives have changed</a>
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</em>
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<hr>
<p>A victim of robodebt, Deanna Amato, brought a <a href="https://www.legalaid.vic.gov.au/explainer-deanna-amatos-robo-debt-case">test case</a> to the Federal Court in 2019, which caused the government to admit robodebt was unlawful.</p>
<p>Amato also gave evidence at the <a href="https://robodebt.royalcommission.gov.au/publications/transcript-hearing-day-36-24-february-2023">royal commission in late February this year</a>. She described how it was obvious her debt was in error:</p>
<blockquote>
<p>It was averaged over the […] whole financial year. Study usually starts at the beginning of a calendar year. So I had been working full-time for the first six months of that year and then I had stopped working full-time to study. So it was really obvious that they had averaged out over the whole year rather than the six months I was actually only claiming Austudy for.</p>
</blockquote>
<h2>What I found</h2>
<p>It’s well known Australia has a high proportion of casual workers. </p>
<p>Because they’re employed on an “as needed” basis, their hours can vary substantially. Therefore, their income can too. </p>
<p>ABS data showed that in 2014 <a href="https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/characteristics-employment-australia">nearly 40%</a> of casual workers didn’t work the same hours each week. Also, around 53% had pay that varied from one pay period to another. These figures have been broadly stable since 2008.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/robodebt-was-a-fiasco-with-a-cost-we-have-yet-to-fully-appreciate-150169">Robodebt was a fiasco with a cost we have yet to fully appreciate</a>
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<p>My report analyses new data provided by the Department of Social Services to the royal commission. It looks in detail at the circumstances of people who received social security payments between 2010-11 and 2018-19. These payments included Austudy, Newstart, Parenting Payment Partnered, Parenting Payment Single and Youth Allowance.</p>
<p>These payments accounted <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Centrelinkcompliance/Submissions">for around 91%</a> of the people subject to the reviews that identified discrepancies and potential “overpayments” between 2016 and 2019 under the different phases of robodebt. </p>
<p>For Newstart and Youth Allowance recipients – who accounted for <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Centrelinkcompliance/Submissions">75% of those affected by robodebt</a> – between 20% and 40% had earnings while receiving these benefits.</p>
<p>The share of people with income who had stable incomes over the course of the financial year was extremely low. In the Department of Social Services data, it ranged from less than 3% of people receiving youth payments, to around 5% of those receiving Newstart or Austudy, and 5%-10% of those receiving Parenting Payments. </p>
<h2>Share of people on social security payments with stable income over the course of each financial year, 2010-11 to 2018-19</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=321&fit=crop&dpr=1 600w, https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=321&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=321&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=404&fit=crop&dpr=1 754w, https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=404&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/515377/original/file-20230315-24-i6ezz2.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=404&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Supplied</span>, <span class="license">Author provided</span></span>
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<p>For most of these people with variable income, the variations were large. More than 90% had periods when their income was more than $100 per fortnight different from their average, and more than 80% had variations greater than $200 per fortnight.</p>
<p>Average earnings varied substantially for people receiving social security payments for only part of a financial year. Receiving social security benefits for many people is <a href="https://theconversation.com/our-research-shows-more-australians-receive-unemployment-payments-than-you-think-151289">a short-term and sometimes recurring experience</a>.</p>
<p>To take the example of Newstart, in 2015-16 there were around 783,000 people who received payments at the start of the financial year. About 500,000 people entered the payment system during the year, and 325,000 exited the system. So, in total, nearly 1.2 million people received Newstart payments at some point during the financial year. Flows into and out of the other social security payments were similar. </p>
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<strong>
Read more:
<a href="https://theconversation.com/the-robodebt-scheme-failed-tests-of-lawfulness-impartiality-integrity-and-trust-193832">The Robodebt scheme failed tests of lawfulness, impartiality, integrity and trust</a>
</strong>
</em>
</p>
<hr>
<p>For the unemployed and students, most people received payments for only part of the year. Almost nobody who received income had completely stable income over the robodebt period. What’s more, significant numbers of people who received social security payments were on such payments for only part of any financial year.</p>
<p>It’s completely inaccurate to assume that income over the course of a financial year can be averaged to produce an accurate figure for the actual patterns of people’s earnings.</p>
<p>Using this to then calculate “overpayments” isn’t only inconsistent with the social security policy directions adopted by government for decades, it also lacks basic common sense.</p><img src="https://counter.theconversation.com/content/201296/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford receives funding from the Australian Research Council. He is a member of the Economic Inclusion Advisory Committee. This report for the Royal Commission into Robodebt was prepared without charge.</span></em></p>My new report for the royal commission examines why the practice of income averaging is so problematic.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1884402022-09-14T20:03:33Z2022-09-14T20:03:33ZWhat happened when we gave unemployed Australians early access to their super? We’ve just found out<figure><img src="https://images.theconversation.com/files/484512/original/file-20220914-18-6nr6ho.jpg?ixlib=rb-1.1.0&rect=10%2C129%2C3583%2C1433&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>One of the most <a href="https://cdn.theconversation.com/static_files/files/2310/references.pdf">well-established</a> practical observations in economics is that when we give an unemployed person a payment, it tends to <a href="https://www.jstor.org/stable/2523111">delay their return to work</a>.</p>
<p>Rightly or wrongly, it is an argument used to justify a rate of JobSeeker <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Newstartrelatedpayments/Report/section?id=committees%2freportsen%2f024323%2f72958">one third</a> below the pension.</p>
<p>How well does the finding apply if the payment is a A$10,000 lump sum delivered at the height of a pandemic, funded through a corresponding reduction in someone’s retirement savings? </p>
<p>That is what we and colleague Timothy Watson at the ANU Tax and Transfer Institute set out to examine as part of <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2022-06/complete_wp_sainsbury_breunig_watson_jun_2022.pdf">new research</a>. </p>
<h2>The early release of super</h2>
<p>By way of recap, the COVID early access to superannuation announced on <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">Sunday 22 March 2020</a> was available to people who faced a 20% decline in working hours (or turnover for sole traders), were made unemployed or redundant, or received JobSeeker or related benefit. </p>
<p>These people were able to take out lump sums of up to $10,000 between April and June 2020, and a further $10,000 between July and December 2020.</p>
<p>The maximum $10,000 represented approximately 13 weeks of (effectively <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">doubled</a>)
unemployment benefit, and eight weeks of the minimum wage.</p>
<p>In essence, the government offered a bargain like this: </p>
<blockquote>
<p>You know those superannuation savings you probably won’t be able to access until your late 60s? Well, life’s scary and uncertain. So here’s a chance to take out $10,000! You can only make use of it in the next three months though. That said, there’s a second chance in the next six months if you still qualify.</p>
</blockquote>
<p>Three million Australians responded, close to one fifth of the population aged 16 to 65 with super accounts. Seven in ten took out the maximum $10,000.</p>
<p>This made the $38 billion withdrawn the second largest stimulus measure in 2020 behind the $88 billion JobKeeper wage subsidy, and one of the biggest stimulus measures in Australian history. </p>
<hr>
<h2>Weekly applications: a rush both times</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=362&fit=crop&dpr=1 600w, https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=362&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=362&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=455&fit=crop&dpr=1 754w, https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=455&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/484493/original/file-20220914-14-ynxc4a.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=455&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2022-06/complete_wp_sainsbury_breunig_watson_jun_2022.pdf">Author calculations based on superannuation COVID-19 early release program records</a></span>
</figcaption>
</figure>
<hr>
<h2>Withdrawals delayed the return to work</h2>
<p>We were given access to de-identified administrative records that link takeup of the offer to the length of stay on the unemployment benefit.</p>
<p>Focusing on the half a million Australians who arrived on payments as economic and social conditions deteriorated in the initial months 2020, we compared the length of time on benefits of the more than 230,000 who took advantage of early release with the 300,000 individuals who did not.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/early-access-to-super-doesnt-justify-higher-compulsory-contributions-143087">Early access to super doesn’t justify higher compulsory contributions</a>
</strong>
</em>
</p>
<hr>
<p>We calculate that the withdrawers who completed their time on benefits by June 2021 (about 162,000) spent about seven weeks longer on benefits than similarly-placed recipients who didn’t withdraw.</p>
<p>The chart below shows the story. A big gap in the rate of exit from benefits opens up between those who took advantage of the opportunity to access their super and those who did not, with those who used more likely to stay on benefits. </p>
<p>The gap grows over the first 13 weeks on benefits, then narrows only slowly, taking 18 months to come close to closing.</p>
<hr>
<h2>Probability of staying on benefits, first lot of withdrawals</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/484497/original/file-20220914-26-lmcdbi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2022-06/complete_wp_sainsbury_breunig_watson_jun_2022.pdf">1 = 100% probability</a></span>
</figcaption>
</figure>
<hr>
<p>Interestingly, those who withdrew are also those we would ordinarily have expected to spend less time on benefits. </p>
<p>They tended to have higher pre-COVID wages and superannuation balances, and were more likely to be married, male, and have children. </p>
<hr>
<h2>Probability of staying on benefits, second lot of withdrawals</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/484516/original/file-20220914-14-s4n9n6.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2022-06/complete_wp_sainsbury_breunig_watson_jun_2022.pdf">1 = 100% probability</a></span>
</figcaption>
</figure>
<hr>
<p>Factor in an extensive collection of population characteristics, and – after a battery of sensitivity and robustness checks – we found that the large lump sums had large effects in extending benefit tenures. </p>
<p>This isn’t necessarily a bad thing. Being pushed into work too soon can push people into the wrong jobs. But we find no evidence that those who stayed out longer because of withdrawing their super found higher-paying jobs.</p>
<h2>Implications</h2>
<p>From today’s standpoint, two years on, with unemployment the lowest in almost 50 years, it is clear that early access to super delayed rather than prevented unemployed Australians returning to work.</p>
<p>But that mightn’t have been the case if the early withdrawal measure had been introduced at a different time, when the labour market wasn’t about to pick up.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/raiding-super-early-has-already-left-women-worse-off-lets-not-repeat-the-mistake-for-home-deposits-183351">Raiding super early has already left women worse off. Let's not repeat the mistake for home deposits</a>
</strong>
</em>
</p>
<hr>
<p>It is also clear that the measure helped people when they needed it, although it is too early to assess its impact on their rest-of-life incomes and super balances.</p>
<p>A further thing we can say is that early withdrawals should not be considered private “off balance sheet” matters without an impact on public finances.</p>
<p>A back-of-the-envelope calculation puts the cost of additional benefit payments to the 162,000 withdrawers we studied at $600 million, a figure that might climb to $1 billion if applied to everyone who used the scheme.</p><img src="https://counter.theconversation.com/content/188440/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Unemployed Australians who accessed their super during COVID stayed on benefits seven weeks longer than similarly-placed recipients who did not.Tristram Sainsbury, Research fellow, Tax and Transfer Policy Institute, Australian National UniversityRobert Breunig, Professor of Economics and Director, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1899542022-09-06T10:42:38Z2022-09-06T10:42:38ZAustralians on unemployment benefits are set for two record paydays – but it’s a sign of a broken system, long overdue for a fix<figure><img src="https://images.theconversation.com/files/482917/original/file-20220906-14-fn12u2.png?ixlib=rb-1.1.0&rect=363%2C570%2C2550%2C1311&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Julian Smith/AAP</span></span></figcaption></figure><p>Australians on our humiliatingly-low unemployment benefit are about to get their biggest payday ever.</p>
<p>On September 20, the single rate of JobSeeker will climb <a href="https://www.dss.gov.au/sites/default/files/documents/08_2022/rates_list_20_september_2022_-_upload_1.pdf">A$25.70</a> per fortnight from $642.70 to $668.40. That’s the biggest automatic increase since the payment began at the turn of the 1990s, and twice as big as the next-biggest.</p>
<p>But it will still be a pitiful <a href="https://www.dss.gov.au/sites/default/files/documents/08_2022/rates_list_20_september_2022_-_upload_1.pdf">$17,378</a> a year – not even two-thirds of the way to meeting the Melbourne Institute’s poverty line of around <a href="https://theconversation.com/there-are-lots-of-poverty-lines-and-jobseeker-isnt-above-any-of-them-158068">$28,600 a year</a>.</p>
<p>If the official forecasts turn out to be correct, the next increase (on March 20) will be of a similar order, meaning JobSeeker will have jumped 7.75% in a year, which ought not to be surprising, because <a href="https://theconversation.com/the-chalmers-graphs-7-75-inflation-plunging-real-wages-weak-growth-187851">inflation</a> will have reached 7.75%.</p>
<h2>Until now, pensioners have had a better deal</h2>
<p>JobSeeker is linked to inflation, <a href="https://www.abs.gov.au/websitedbs/D3310114.nsf/home/Consumer+Price+Index+FAQs">the rate of increase in prices</a>, which has been low since the early 1990s. Wages and national income per person have climbed faster.</p>
<p>Pensioners, including age pensioners, have had a better deal. Since the 1990s, their incomes have been linked to <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2014/April/Pension-indexation">male total average earnings</a>, with a bonus clause that gives them inflation if male earnings don’t climb enough.</p>
<p>The difference between the growth in male earnings and inflation hasn’t amounted to much in any given year – typically 0.6 percentage points, meaning that if inflation was 2.5%, wages were likely to climb 3.1%.</p>
<p>But because wages nearly always grew by more than inflation, even if not by much, over time the compounding of those differences came to matter a lot.</p>
<hr>
<p><iframe id="YMrPE" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/YMrPE/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>JobSeeker (when it was called Newstart) used to be close to the age pension. In 1997 JobSeeker was A$321.50 per fortnight, and the age pension was $347.80.</p>
<p>But an accumulation of larger percentage increases in the pension (and a one-off increase in the pension) meant that by 2019, on the eve of COVID, the pension was 50% bigger. </p>
<p>Projections based on the then-prevailing rates of inflation and wages growth suggested that, unless something changed, the pension would be <a href="https://theconversation.com/its-newstart-pay-rise-day-youre-in-line-for-24-cents-which-is-peanuts-123856">twice as much</a> as JobSeeker by 2070.</p>
<p>So weak had JobSeeker become in relation to general living standards (well below the <a href="https://theconversation.com/albanese-has-dropped-labors-pledge-to-boost-jobseeker-with-unemployment-low-is-that-actually-fair-enough-181256">poverty line</a>) that early in COVID in 2020 the Coalition effectively doubled it by adding on a $550 per fortnight <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">coronavirus supplement</a>.</p>
<h2>Not enough to ‘meet the cost of groceries’</h2>
<p>In an implicit acknowledgement that JobSeeker was no longer enough to feed and house people, then Treasurer Josh Frydenberg said the temporary bonus would allow unemployed people to “<a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/interview-karl-stefanovic-and-allison-langdon-today-5">meet the costs of their groceries and other bills</a>”.</p>
<p>When the temporary supplement ended, the treasurer lifted JobSeeker by only a little – $50 a fortnight, making the point that unemployment was meant to be <a href="https://www.9news.com.au/national/jobseeker-payment-increase-treasurer-defends-50-rise-amid-criticism-it-means-little-to-welfare-recipients/1852c373-46f8-482a-bc40-206de0d6af86">temporary</a>, whereas the age pension was for the remainder of a pensioner’s life.</p>
<p>There are two other important differences. </p>
<p>One is that the age pension goes to an identifiable voting bloc – <a href="https://www.aihw.gov.au/reports/australias-welfare/age-pension">three in every five</a> of the Australians aged 65 and older. Dudding them would cost votes. There aren’t as many unemployed, and many of them are just passing through unemployment.</p>
<h2>Matching JobSeeker to the pension would cost billions</h2>
<p>The other difference is that JobSeeker is now so low relative to the pension that boosting it from its present $642.70 per fortnight to anything like the pension rate of $901 per fortnight would cost multiples of the <a href="https://images.theconversation.com/files/482878/original/file-20220906-5961-vyz04y.JPG">$2.2 billion</a> per year the government budgeted for the $50 increase.</p>
<p>Unemployed Australians (and those on <a href="https://www.dss.gov.au/sites/default/files/documents/08_2022/rates_list_20_september_2022_-_upload_1.pdf">Youth Allowance</a> and other payments that have only increased in line with the consumer price index) seemed condemned to live an income so low as to <a href="https://cdn.theconversation.com/static_files/files/2284/42554271-OECD-on-NewStart.pdf">raise concerns</a> even 12 years ago about:</p>
<blockquote>
<p>its effectiveness in providing sufficient support for those experiencing a job loss, or enabling someone to look for a suitable job</p>
</blockquote>
<p>And no, those concerns about Australia’s comparatively low unemployment benefits weren’t raised from the Australian Council of Social Service – it was from the hardly radical Organization for Economic Co-operation and Development (OECD), in 2010. </p>
<p>These days the OECD is headed by former Liberal minister <a href="https://www.oecd.org/about/oecd-secretary-general-mathias-cormann-biography.htm">Mathias Cormann</a>.</p>
<p>Former prime minister John Howard has expressed <a href="https://www.smh.com.au/politics/federal/freeze-has-gone-on-too-long-john-howard-calls-for-a-dole-increase-20180509-p4ze83.html">regret</a> about allowing JobSeeker to fall so low relative to the pension. </p>
<p>In opposition, Anthony Albanese said it was <a href="https://twitter.com/AlboMP/status/1156456019771289601">not enough to live on</a>.</p>
<h2>Abbott tried to put pensions in line with jobless benefits</h2>
<p>Just for now, the collapse in wages growth and the resurgence in inflation has frustrated what seems to have been a deliberate decision to allow JobSeeker to grow more slowly than the pension.</p>
<p>But it ought to be frustrated for good. Whatever the arguments for setting JobSeeker lower than the pension (the Centre for Independent Studies says pensions are for those out of work for “<a href="https://www.cis.org.au/commentary/opinion/perhaps-newstart-doesnt-require-a-new-start/">legitimate reasons</a>”) there’s no defensible argument for a system that allows one to keep falling relative to the other.</p>
<p>Tony Abbott’s Coalition government deserves credit, sort of, for acknowledging this. In its first “<a href="https://www.theguardian.com/australia-news/2015/sep/21/joe-hockey-books-a-loss-as-malcolm-turnbull-seeks-to-move-on-from-budget-blunders">horror budget</a>” in 2014, it promised to put pension increases on the <a href="https://images.theconversation.com/files/482878/original/file-20220906-5961-vyz04y.JPG">same footing</a> as increases in the unemployment benefit.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/there-are-lots-of-poverty-lines-and-jobseeker-isnt-above-any-of-them-158068">There are lots of poverty lines, and JobSeeker isn't above any of them</a>
</strong>
</em>
</p>
<hr>
<p>“We promised at the last election not to change pensions in this term of government
and we won’t,” his treasurer told parliament.</p>
<p>But beyond the next election, from <a href="https://archive.budget.gov.au/2014-15/speech/Budget_speech.pdf">September 2017</a>, pensions would only increase in line with inflation, in tandem with unemployment benefits. </p>
<p>Like much of the rest of that budget, the measure didn’t survive a change of treasurer and prime minister.</p>
<h2>Cheaper than the Stage 3 tax cuts</h2>
<p>In the lead-up to the 2019 election, Labor promised an independent review of JobSeeker. Albanese withdrew the promise ahead of the 2022 election, saying the <a href="https://www.abc.net.au/news/2022-04-13/labor-no-commitment-jobseeker-rate-rise-federal-election/100987112">budget could not withstand it</a>.</p>
<p>His commitments were about priorities. The starting cost of the previous government’s legislated Stage 3 tax cuts, supported by Labor, is <a href="https://cdn.theconversation.com/static_files/files/2283/Stage_3_tax_cuts_distributional_analysis_PDF.pdf">$17.7 billion</a> per year, which is less than making JobSeeker match the rate of the pension.</p>
<p>Half of the Stage 3 benefits accrue to Australians earning <a href="https://cdn.theconversation.com/static_files/files/2283/Stage_3_tax_cuts_distributional_analysis_PDF.pdf">$180,000 or more</a>.</p>
<p>Beyond the September 20 increase, lifting JobSeeker further in future would change the lives of Australians on <a href="https://www.dss.gov.au/sites/default/files/documents/08_2022/rates_list_20_september_2022_-_upload_1.pdf">$17,378</a>.</p>
<p>In a Radio National interview on Monday, Albanese sounded as if he was open to <a href="https://www.abc.net.au/radionational/programs/breakfast/pm-won-t-rule-out-mandatory-multi-employer-bargaining/101405178">doing something soon</a>.</p>
<p>When inflation comes down, he won’t be able to rely on unusually high price rises to do the work for him.</p><img src="https://counter.theconversation.com/content/189954/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>On September 20, the single rate of JobSeeker will climb $25.70, to $668.40 a fortnight – its biggest-ever automatic jump. Yet that’s only $17,378 a year: not even two-thirds of the poverty line.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1835452022-06-15T20:01:00Z2022-06-15T20:01:00ZHow we invented ‘unemployment’ – and why we’re outgrowing it<figure><img src="https://images.theconversation.com/files/468921/original/file-20220615-26-zrdu9m.png?ixlib=rb-1.1.0&rect=574%2C497%2C2239%2C1173&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>When Labor leader Anthony Albanese couldn’t quote Australia’s unemployment rate in the first week of the election campaign, many said it didn’t matter: the Australian Bureau of Statistics figure was “<a href="https://www.theage.com.au/national/victoria/employing-the-numbers-when-the-official-rate-is-rendered-meaningless-20220412-p5acyv.html">meaningless</a>”; “<a href="https://nitter.net/headshaker2/status/1513344714640003073#m">fudged</a>”; “<a href="https://headtopics.com/au/i-m-not-sure-what-it-is-albanese-stumbles-on-unemployment-rate-and-cash-rate-25505788">manipulated</a>”; and didn’t count <a href="https://twitter.com/antipovertycent/status/1483973901252456454">all those who had registered for JobSeeker</a>.</p>
<p>The truth is the official measure of unemployment does what it says on the box. It counts those without any work who are available to work and looking for work.</p>
<p>The result of an astonishingly large survey of <a href="https://theconversation.com/forget-the-election-gaffes-australias-unemployment-rate-is-good-news-and-set-to-get-even-better-by-polling-day-181141">26,000 households</a> covering 50,000 people each month, there’s little reason to question its accuracy.</p>
<p>But there are good reasons to question why the bureau does it in the way it does.</p>
<p>“Unemployment” as we have come to understand it is a fairly new concept. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Until the 1900s much work was intermittent.</span>
<span class="attribution"><span class="source">Rachel Claire/Pexels</span></span>
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</figure>
<p>As I outline in my book, <a href="https://www.bloomsbury.com/uk/inventing-unemployment-9781509952717/">Inventing Unemployment</a>, before the second world war censuses tended to divide the population differently – into breadwinners and dependants. </p>
<p>A breadwinner who wasn’t employed would be recorded as a breadwinner rather than unemployed (with their usual occupation noted). </p>
<p>That’s probably because until the 20th century, irregular work was the norm. </p>
<p>Late-19th-century Sydney had no extensive manufacturing. Work such as wool washing, tanning, meat preserving and loading sea cargo was seasonal and tied to <a href="https://www.jstor.org/stable/10.5263/labourhistory.108.0071">rural rhythms</a>. </p>
<p>Even in more stable occupations, many workers were little more than or sub-contractors or day labourers, their work intermittent.</p>
<h2>Unemployment as we know it</h2>
<p>The 1947 census introduced three distinct categories: employed, “unemployed” and “not in the labour force”. To be “unemployed” you had to describe yourself as willing and able to work, but without work.</p>
<p>Carried into the quarterly labour force surveys which started in the 1960s and continue monthly to this day, the change enabled the creation of an <a href="https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-types.html">unemployment rate</a>, which is the number of unemployed divided by the total of the number of employed and unemployed, which is called the “labour force”.</p>
<p>The categorisation made more sense by then as work was becoming full-time and ongoing. Being “unemployed” (workless but in the workforce) had come to be seen as unusual and worthy of government support. The Curtin Labor government introduced <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2019/August/Creating-unemployment-benefits">unemployment benefits</a> in 1945. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/memories-in-1961-labor-promised-to-boost-the-deficit-to-fight-unemployment-the-promise-won-115376">Memories. In 1961 Labor promised to boost the deficit to fight unemployment. The promise won</a>
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<p>The changes were in line with International Labour Organisation recommendations which themselves followed changes in the United States which in 1937 had asked all non-workers who’d expressed a desire to work whether they were able to work and were actively seeking work. </p>
<p>The context was United States President Franklin D Roosevelt’s determination to fight unemployment through job creation schemes. The advantage of the new measures was that they gave a measure of immediate unmet demand for work. </p>
<p>Excluding both those who were unwilling to work at present and those who had any work at all yielded a measure of the minimum number of jobs needed. Policy drove the definition rather than the other way around.</p>
<h2>Messy by design</h2>
<p>But the definitions were messy. Labour markets confound easy distinctions between working and not working, and there’s no particular degree of desire for work that clearly distinguishes the “unemployed” from “not in the labour force”. </p>
<p>Looking back, what was exceptional about the post-war decades is that most of the time the new definitions were easy to apply. If you were in work, the chances were you were in full-time work; if you weren’t in full-time work the chances were you weren’t working at all, and that you were either wanting work or none.</p>
<p>And the idea of the “labour force” summed up fairly stable social categories: men who entered at 15 years and were expected to work or look for work for 50 years, and women who also entered in their mid-teens only to permanently withdraw upon marriage or childbirth.</p>
<p>Not now. As social researcher <a href="https://www.radstats.org.uk/no088/Threlfall88.pdf">Monica Threlfall</a> points out, whereas once the labour force was an identifiable category,</p>
<blockquote>
<p>today it is more like an unbounded space that a variety of people of different ages enter, leave and re-enter at a variety of rates.</p>
</blockquote>
<p>When the headline monthly unemployment rate changes, what has moved is often not the numerator – the number of unemployed – but the shape-shifting denominator, which depends on whether people define themselves as looking and available for paid work at the particular time they are asked.</p>
<p>And the main questions don’t pick up underemployment. Australia has one of the largest part-time work forces in the OECD, which is why the Bureau of Statistics also asks workers whether they would like more hours, and reports the answers alongside the unemployment rate.</p>
<p>It also measures “discouraged workers”, people who are available for and wanting work but have given up the search and so aren’t counted as “unemployed”.</p>
<p>The only way to really understand whether we are succeeding or failing in providing paid work is to take all three measures together – unemployment, underemployment and the count of discouraged workers.</p>
<h2>Messier by the month</h2>
<p>What this total tells us will be quite different to the count of the number of Australians on unemployment benefits. </p>
<p>After tracking each other closely, the number of “unemployed” and the number on unemployment benefits has diverged over the past 25 years and that divergence became even more pronounced during COVID.</p>
<p>Australian experts <a href="https://theconversation.com/how-can-more-people-be-on-unemployment-benefits-than-before-covid-with-fewer-unemployed-australians-heres-how-181733">Peter Whiteford and Bruce Bradbury</a> point out most unemployed people aren’t on benefits, and increasingly unemployment benefits are available to people who are not unemployed.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/how-can-more-people-be-on-unemployment-benefits-than-before-covid-with-fewer-unemployed-australians-heres-how-181733">How can more people be on unemployment benefits than before COVID, with fewer unemployed Australians? Here's how</a>
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<p>These days unemployment benefits are available to people not seeking paid work but engaged in voluntary work, study, or providing home schooling.</p>
<p>And people who once would not have been considered unemployed – such as single parents and people with disabilities – are now put on unemployment benefits and required to search for work in order to get them.</p>
<p>After holding together for decades, the post-war administrative and legal construction of unemployment is failing us. We’re outgrowing it.</p><img src="https://counter.theconversation.com/content/183545/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony O'Donnell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The concept of unemployment and an unemployment rate is fairly new, dating back to the end of the second world war. It’s increasingly unfit for purpose.Anthony O'Donnell, Adjunct Senior Lecturer, School of Law, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1817332022-04-26T00:57:02Z2022-04-26T00:57:02ZHow can more people be on unemployment benefits than before COVID, with fewer unemployed Australians? Here’s how<figure><img src="https://images.theconversation.com/files/459632/original/file-20220426-12-8gb6hg.png?ixlib=rb-1.1.0&rect=653%2C248%2C2021%2C1183&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>So low is Australia’s unemployment rate, the <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release">official count</a> says there are now just 580,300 people unemployed – the least since 2009, when Australia’s population was one-sixth smaller than it is today. Compared to just before the start of the pandemic, 184,800 fewer Australians are now unemployed.</p>
<p>Yet surprisingly, the number of Australians on unemployment benefits (now known as <a href="https://data.gov.au/data/dataset/jobseeker-payment-and-youth-allowance-recipients-monthly-profile/resource/d8e5e223-5614-476c-abe4-cefde9a35521">JobSeeker and Youth Allowance Other</a>) remains higher than at any point before the pandemic, at 935,300. This is 49,100 more than before COVID.</p>
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<p>The apparent paradox has some people <a href="https://twitter.com/antipovertycent/status/1483973901252456454">questioning the unemployment figures</a>, while others are asking whether there are <a href="https://www.dailytelegraph.com.au/coronavirus/hospitality-industry-leaders-are-baffled-as-young-people-snub-good-jobs/news-story/83fdd64ab81a0664f2ba17c55866cd22">people getting benefits who should not</a>. </p>
<p>We think we have worked out a lot of what’s happened, and – to jump straight to one of our important findings – it isn’t the unemployment figures that are at fault.</p>
<p>You might be surprised to discover that many Australians who are unemployed are not on unemployment benefits. </p>
<p>Prior to COVID, the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2019/December/Overlap_between_unemployed_and_the_dole">Parliamentary Library</a> found only about 30% of unemployed Australians were on benefits. It used the <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6105.0Feature%20Article54July%202014">Bureau of Statistics</a> survey of income and housing to estimate the overlap between benefits and unemployment.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">Technically unemployment now begins with a '3'. How to keep it there?</a>
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<p>Even odder, many of the Australians on those benefits (paid to those with the “<a href="http://www5.austlii.edu.au/au/legis/cth/bill_em/sslarb2017500/memo_0.html">capacity to work now or in the near future</a>”) are not unemployed as defined by the Bureau of Statistics and international statistical agencies. </p>
<p>Some are not seeking and not available for work. Others are in part-time work, able to get benefits because their employment income is low – but therefore not unemployed.</p>
<h2>Unemployment and benefits used to move together</h2>
<p>For most of the past 40 years, the number of people on unemployment benefits and the number unemployed have generally tracked each other, although since 1994 there have been more people on benefits than unemployed.</p>
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<p>So what explains <a href="https://socialpolicy.crawford.anu.edu.au/sites/default/files/events/attachments/2021-10/whats_going_on_presentation_october.pdf">what’s happened since COVID?</a></p>
<p>One thing to note is that it is perfectly legal to receive unemployment benefits if you have a part-time job. In fact, Australian governments have been trying to encourage this since the 1980s. </p>
<p>The Bureau of Statistics and international statistical agencies define “employed” as at least <a href="https://www.abs.gov.au/websitedbs/D3310114.nsf/home/labour+force+explained">one hour per week</a>. Yet the Department of Social Services makes JobSeeker available to low-income Australians working <a href="https://www.servicesaustralia.gov.au/who-can-get-jobseeker-payment?context=51411">casual and part-time</a>.</p>
<p>Before COVID, in December 2019, about 140,000 people – 7% of those on benefits – were also working part-time.</p>
<p>Also in December 2019, 407,000 people (about half those receiving unemployment benefits) were classified as “non-jobseekers”. </p>
<p>“Non-jobseekers” can receive JobSeeker in a range of circumstances, including</p>
<ul>
<li><p>undertaking approved full-time voluntary work or a combination of voluntary and part-time work</p></li>
<li><p>undertaking one or more other activities including training, education and self-employment development that are not job search</p></li>
<li><p>being temporarily ill or incapacitated</p></li>
<li><p>being a single principal carer (such as a single parent) granted an exemption from the requirement to search for work for reasons including foster care and home schooling</p></li>
</ul>
<p>How many people there are in these situations now is hard to determine, not least because the Department of Social Services stopped publishing the number of “non-jobseekers” when the benefit started being called JobSeeker in early 2020.</p>
<p>It is likely that before COVID, in December 2019, around 267,000 people were both unemployed and receiving the main unemployment benefit. Given that 667,000 people were classified as unemployed at the time, this suggests that only around 40% of those classified as unemployed were receiving benefits.</p>
<p>Among those not receiving unemployment benefits would have been</p>
<ul>
<li><p>people excluded by the partner income test (before COVID an unemployed person whose partner earned more than $925 per week was ineligible, making more than <a href="https://theconversation.com/coronavirus-supplement-your-guide-to-the-australian-payments-that-will-go-to-the-extra-million-on-welfare-134358">two-thirds</a> of second earners ineligible)</p></li>
<li><p><a href="https://www.servicesaustralia.gov.au/sole-trader-or-partnership-income?context=5141">sole traders</a> who face more complex income-testing procedures intended to limit access to payments</p></li>
<li><p>people with $5,500 or more in <a href="https://www.servicesaustralia.gov.au/liquid-assets-waiting-period?context=51411">available liquid assets</a>, who have to wait between one and 13 weeks. If they find a job before then, they will have been counted as unemployed without receiving payments</p></li>
<li><p><a href="https://www.servicesaustralia.gov.au/seasonal-work-preclusion-period?context=51411">seasonal workers</a> excluded by preclusion periods applying to people who have earned more than average earnings in the six months before they claim. This applies to “fly-in, fly-out workers”, <a href="https://www.adelaidenow.com.au/news/south-australia/eyre-peninsula-abalone-divers-can-earn-up-to-120000-in-just-50-days/news-story/c7e824a285de12ba6b2585fb76d6f0ac#">lobster and abalone fishermen</a>, people working in arts and entertainment, and people doing relief work </p></li>
<li><p>people who lost their job facing a preclusion period because they were paid a <a href="https://www.servicesaustralia.gov.au/income-maintenance-period?context=51411">lump sum</a> that was intended to cover sick leave, annual leave, long service leave, a termination payment or a redundancy payment </p></li>
<li><p>newly arrived permanent residents in Australia for less than four years face a waiting period (<a href="https://guides.dss.gov.au/social-security-guide/3/1/2/40">NARWP</a>). This was 26 weeks when imposed in 1993, then extended to 104 weeks in 1997 and 208 weeks in 2019</p></li>
<li><p>temporary foreign visa holders. Students, backpackers, skilled visa holders and many people from New Zealand are not eligible for benefits. In the last census, there were 104,700 temporary visa holders unemployed, making up 13.5% of all the unemployed people in Australia</p></li>
<li><p>people receiving other payments including parenting payment single, carers payment and the disability support pension. Our calculations suggest there were around 75,000 people unemployed but receiving one of these other payments in 2017-18, about 10% of the unemployed in that year.</p></li>
</ul>
<h2>Many chose not to claim – and then came COVID</h2>
<p>Not all people eligible for unemployment benefits claim them.</p>
<p>Among the reasons identified in <a href="https://www.oecd.org/els/soc/30901173.pdf">international studies</a> are lack of information, the level of benefits (some can be so low it is not seen as worth the effort) and stigma.</p>
<p>Since 2015, there has been considerable publicity given to a government program presented as recovering overpayments known as “<a href="https://theconversation.com/robodebt-was-a-fiasco-with-a-cost-we-have-yet-to-fully-appreciate-150169">Robodebt</a>”. This might have discouraged people from claiming, at least until the widespread distribution of benefits during COVID.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/your-guide-to-coronavirus-payments-for-the-extra-million-on-welfare-134358">Your guide to coronavirus payments for the extra million on welfare</a>
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<p>And then came COVID. In just four months between March and July 2020, the number of unemployed people shot up 220,000, the number on unemployment benefits soared 735,000 and the number employed plunged 533,000.</p>
<p>During those months, the highly-publicised <a href="https://theconversation.com/coronavirus-supplement-your-guide-to-the-australian-payments-that-will-go-to-the-extra-million-on-welfare-134358">Coronavirus Supplement</a> effectively doubled the size of unemployment benefits and removed much of the stigma associated with claiming them.</p>
<p>As well, many of the conditions that limited access to the benefits were <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp2021/ChangesCOVID-19SocialSecurity">temporarily suspended</a>.</p>
<p>These included preclusion periods, making instantly eligible not only the people who lost their jobs, but also people already unemployed who had been ineligible.</p>
<p>Receiving benefits became easier and more normal, and also more worthwhile.</p>
<h2>More people have stayed on benefits</h2>
<p>These more generous eligibility conditions were wound back between September and December 2020. While the number of recipients declined substantially, it remained and still remains well above the number unemployed.</p>
<p>We have calculated what we call “net coverage” of the JobSeeker and Youth Allowance (Other) unemployment benefits.</p>
<p>This excludes from the total people who the Bureau of Statistics would not define as unemployed (those with earnings from work, and those with only a partial capacity to work) and presents it as a proportion of the total unemployed.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/government-slashes-covid-payment-when-people-need-it-most-175146">Government slashes COVID payment when people need it most</a>
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<p>It suggests that pre-COVID, only 44% to 52% of people the bureau counted as unemployed were on unemployment benefits. </p>
<p>As COVID payments peaked, this shot up to around 100% of all unemployed people being on benefits.</p>
<p>Even now, with special payments stopped, it remains higher than it was before COVID, at about 75%.</p>
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<p>Put differently, on our (admittedly imperfect) measure, about one in four of Australia’s unemployed are not receiving benefits, whereas before COVID it was one in two.</p>
<h2>The missing data we still need</h2>
<p>What we do know is that the share of those on unemployment benefits with earnings has climbed from 17% to 21% since COVID, possibly as a result of greater take-up. </p>
<p>There are about 60,000 more people in part-time work and on payments than before COVID.</p>
<p>We also know that the number of people aged 65 years and over receiving JobSeeker has roughly tripled in the past three years (from a low base), with roughly 23,000 more people over 65 on JobSeeker.</p>
<p>In 2021 the age pension age rose from 66 years to 66 years and six months. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/arts-need-a-covid-stimulus-package-heres-what-it-should-look-like-133803">Arts need a COVID stimulus package. Here's what it should look like</a>
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<p>And we know that rules limiting the access of relatively highly paid seasonal workers to JobSeeker will have worked differently during COVID, as many will not have had the opportunity to work they had before. </p>
<p>This would be especially true for workers in <a href="https://australiainstitute.org.au/post/when-the-show-cannot-go-on-rebooting-australias-arts-entertainment-sector-after-covid-19/#:%7E:text=%E2%80%9CCOVID%2D19%20has%20badly%20damaged,the%20pandemic%2C%E2%80%9D%20Eltham%20said">arts and entertainment</a>.</p>
<p>Also, people excluded by the residence waiting periods and temporary foreign workers are likely to form a lower share of the Australian population than before borders were closed.</p>
<p>But all of our explanations are tentative, since we don’t have the data to be definitive. We would know more if the Department of Social Services and the Australian Bureau of Statistics improved the quality of their data and the Department of Social Services made public more of the data it has.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/albanese-has-dropped-labors-pledge-to-boost-jobseeker-with-unemployment-low-is-that-actually-fair-enough-181256">Albanese has dropped Labor's pledge to boost JobSeeker. With unemployment low, is that actually fair enough?</a>
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<p>But what we’ve uncovered suggests that the unusually high number of people on unemployment benefits is neither a sign that there are more people on benefits <a href="https://www.abc.net.au/news/2022-04-24/ignore-people-pushing-the-dole-bludger-narrative/101003752">who don’t want to work</a> than before, nor a sign that the official unemployment rate is less reliable than before. </p>
<p>Decisions made on the assumption that the unemployment rate is unreliable or that the nearly one million Australians on unemployment benefits don’t want to work would do us a disservice.</p><img src="https://counter.theconversation.com/content/181733/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford receives funding from the Australian Research Council. He is a Fellow of the Centre for Policy Development.</span></em></p><p class="fine-print"><em><span>Bruce Bradbury receives funding from the Australian Research Council, conducts contract research for other government bodies and is involved in a Poverty and Inequality research collaboration between UNSW and ACOSS. </span></em></p>You might be surprised to know that many unemployed Australians are not on unemployment benefits. And then came COVID – which saw a big shift in how many people were able and willing to claim.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityBruce Bradbury, Associate Professor, Social Policy Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1812562022-04-21T06:10:36Z2022-04-21T06:10:36ZAlbanese has dropped Labor’s pledge to boost JobSeeker. With unemployment low, is that actually fair enough?<p>One of the first things Labor’s Bob Hawke did on being swept to office in March 1983 was to <a href="https://images.theconversation.com/files/458070/original/file-20220414-20-lhyool.GIF">lift the unemployment benefit</a> in April, seven weeks later, without even waiting for his first budget.</p>
<p>One of the first things Labor’s Anthony Albanese did during the first week of this election campaign was to let it be known that Labor was <a href="https://www.sbs.com.au/news/article/labor-hasnt-committed-to-jobseeker-increase-and-has-no-plan-to-review-payment-if-it-wins-election/287i8merx">no longer committed</a> to lifting the unemployment benefit at any time up to and including his first budget.</p>
<p>A promise to review the payment made in the last election by then Labor leader Bill Shorten was no longer operative.</p>
<p>Hawke’s 1983 increase was the first of many. Over 12 years the Hawke and Keating governments lifted the real value of unemployment benefits <a href="https://guides.dss.gov.au/social-security-guide/5/2/1/10">27%</a>.</p>
<p>Albanese said last week Labor had no plan to lift what is now called JobSeeker in its first budget. Government debt was “<a href="https://www.afr.com/politics/federal/albanese-says-1t-debt-makes-jobseeker-rise-untenable-20220413-p5ad53">heading toward a trillion dollars</a>”.</p>
<p>The single rate of JobSeeker is A$642.70 a fortnight, about <a href="https://www.servicesaustralia.gov.au/how-much-jobseeker-payment-you-can-get?context=51411">$46 a day</a>. </p>
<h2>Is JobSeeker enough?</h2>
<p>Some JobSeekers get more. Single parents and those aged 60 and over who have been on payments for nine months can get up to $691 per fortnight. Partnered jobseekers can get $585.30 each. </p>
<p>There is also a small <a href="https://www.servicesaustralia.gov.au/payment-rates-for-energy-supplement-pension-or-allowance?context=22286">Energy Supplement</a> of 63 cents to 86 cents per day, and <a href="https://www.servicesaustralia.gov.au/how-much-rent-assistance-you-can-get?context=22206#a1">rent assistance</a> offering single people renting privately up to $145.80 per fortnight and renters sharing with other people up to $97.20 per fortnight.</p>
<p>And for some months during the pandemic the temporary <a href="https://www.servicesaustralia.gov.au/coronavirus-supplement">Coronavirus Supplement</a> introduced in March 2020 almost doubled the base rate. </p>
<p>Calculations by the ANU Centre for Social Research and Methods suggest this cut the share of Jobseeker recipients in poverty from 67% to <a href="https://csrm.cass.anu.edu.au/research/publications/covid-19-jobkeeper-and-jobseeker-impacts-poverty-and-housing-stress-under">just under 7%</a>. </p>
<hr>
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<hr>
<p>But the boost was short-lived. By 2021 the supplement had been removed entirely and replaced with a much smaller increase of $50 a fortnight.</p>
<p>Research by Anglicare found that, <a href="https://www.anglicarewa.org.au/docs/default-source/advocacy/anglicare-wa---jobseeker-summary.pdf?sfvrsn=39bfbc60_2">while it lasted</a>, the supplement allowed families to pay rent, access nutritious food and avoid emergency relief services</p>
<p>As shown in the chart, that $50 a fortnight has done little to redress the extent to which the living standards of people on unemployment benefits have been falling behind. For the last three decades, they have done little more than increase in line with prices, while the living standards of wage earners have grown strongly.</p>
<p>The base rate has fallen from 84% to 66% of the poverty line, defined as half the median income over that time, even taking account of the latest increase. </p>
<p>And Jobseeker has also fallen further behind the <a href="https://povertyandinequality.acoss.org.au/income-support-since-2000/">minimum wage</a></p>
<hr>
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<hr>
<p>Even for those able to receive the maximum rate of rent assistance, unemployment payments have fallen from 57% of the net minimum wage at the start of the 2000s to 50% now. This is on top of a fall of four percentage points during the 1990s. </p>
<p>This makes it difficult to make a case that unemployment payments are generous enough to discourage jobseekers from seeking the minimum wage.</p>
<p>Compared to the high-income countries Australia normally compares itself with, the JobSeeker “net replacement rate” is low, about the lowest in the OECD.</p>
<p>The net replacement rate is the assistance provided to a single person aged 40 who has been unemployed for two months as a proportion of the average wage. </p>
<hr>
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<hr>
<p>Australia’s minister for social services has argued these comparisons are not relevant, because Australia’s social security system is based on <a href="https://ministers.dss.gov.au/transcripts/6756">different principles</a> than those in most other countries. </p>
<p>Australian income support is unrelated to previous earnings. This is correct, but it does not change the fact that when Australian workers lose their job, their income drops by far more than workers in other OECD countries.</p>
<p>Moreover, when the government announced the $50 a fortnight increase in February 2021, the prime minister justified it by saying that this would move the replacement rate <a href="https://www.pm.gov.au/media/press-conference-australian-parliament-house-act-230221#:%7E:text=41.2%25%20of%20the%20national%20minimum,had%20fallen%20down%20to%2037.5%25.">back to where it had been</a> under the Howard Government.</p>
<p>It would be:</p>
<blockquote>
<p>41.2% of the national minimum wage, which puts us back in the realm of where we had been previously</p>
</blockquote>
<p>While this is similar to the replacement rate at the end of Howard’s term, it is nothing like the replacement rate at the start of the term. </p>
<h2>But unemployment has fallen…</h2>
<p>At just 4%, unemployment is now much lower than the 5.2% that prevailed at the time of the 2019 election when Labor promised to review JobSeeker.</p>
<p>But the number of people receiving Jobseeker and Youth Allowance (Other) is actually higher than it was back then; there were <a href="https://data.gov.au/data/dataset/jobseeker-payment-and-youth-allowance-recipients-monthly-profile">935,000</a> people receiving these payments in February 2022, compared to 765,000 in May 2019.</p>
<p>The reasons for this difference are complex, but a significant factor is that a very large share of people receiving unemployment payments are not required to seek jobs and have a reduced capacity to work. </p>
<p>Among them are people whose access to the <a href="https://www.bsl.org.au/research/publications/dead-ends-social-security/">disability support pension</a> has been cut and Australians who would have been of pension age before the age was lifted.</p>
<h2>What would Labor actually do?</h2>
<p>On almost any measure, JobSeeker is too low, as the inquiry promised by Labor in 2019 would have discovered.</p>
<p>Labor’s <a href="https://alp.org.au/media/2594/2021-alp-national-platform-final-endorsed-platform.pdf">present national platform</a> talks about rewarding </p>
<blockquote>
<p>those who work hard to create a better life for themselves. Labor is the party for those who want to get ahead, as well as the party of compassion for those doing it tough</p>
</blockquote>
<p>It goes on to pledge that </p>
<blockquote>
<p>Labor will make sure people who are looking for work get the financial support they need to live a life of dignity through a strong social security system as well as the support they need to find and keep a job</p>
</blockquote>
<p>This offers some hope, but, unlike in 2019, no guarantees.</p><img src="https://counter.theconversation.com/content/181256/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford receives funding from the Australian Research Council and has undertaken research for the Department of Social Services. He is a Fellow of the Centre for Policy Development and an advisor to the Australian Council of Social Service.</span></em></p><p class="fine-print"><em><span>Bruce Bradbury receives funding from the Australian Research Council and conducts contract research for other government bodies. This article is based in part on research conducted as part of the Poverty and Inequality Partnership between UNSW Sydney and the Australian Council of Social Service. </span></em></p>Even with the latest small increase, JobSeeker remains low by overseas standards – and, on one measure, it’s the lowest in the OECD.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityBruce Bradbury, Associate Professor, Social Policy Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1673432021-09-06T04:05:19Z2021-09-06T04:05:19ZYoung Australian women in financial hardship are twice to three times as likely to experience violence<p>New research undertaken for this week’s <a href="https://regonsite.eventsair.com/national-summit-on-womens-safety/">National Summit on Women’s Safety</a> finds violence and unwanted sexual activity are far more common among young women experiencing financial hardship than women who are not.</p>
<p>It comes as the federal government has <a href="https://theconversation.com/australia-was-a-model-for-protecting-people-from-covid-19-and-then-we-dumped-half-a-million-people-back-into-poverty-165813">denied</a> Australians locked down and living only on benefits such as JobSeeker the sort of extra support it offered last year, when it effectively doubled JobSeeker during the early months of the pandemic.</p>
<p>Our findings of a higher risk of violence for women living in financial hardship is a real concern, especially when coupled with 2020 research from the Australian <a href="https://www.aic.gov.au/sites/default/files/2020-07/sb28_prevalence_of_domestic_violence_among_women_during_covid-19_pandemic.pdf">Institute of Criminology</a>.</p>
<p>That research found that of the Australian women who reported physical or sexual violence from a partner during the early months of the COVID-19 pandemic, 65% experienced an increase in the severity or frequency of violence, or experienced it for the first time.</p>
<h2>Abuse twice to three times as likely</h2>
<p>Our research, using data from women aged 21-28 collected for the 2017 Australian <a href="https://alswh.org.au/">Longitudinal Study on Women’s Health</a>, found 14.4% had experienced some form of abuse at the hands of a current or former partner in the previous 12 months. </p>
<p>The definition of abuse includes physical, emotional and sexual abuse, coercive control, harassment and stalking.</p>
<p>Among young women not reporting financial hardship, the rate was 12.9%. Among young women in financial hardship, it was 25.3%.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
</figcaption>
</figure>
<hr>
<p>We characterised women as experiencing financial hardship if they reported they had been “very” or “extremely” stressed about money in the past 12 months and also said it was “difficult all the time” or “impossible” to manage on their income.</p>
<p>Overall, 4.6% of young women said they had been the victim of unwanted sexual activity in the previous 12 months. </p>
<p>Among young women not reporting financial hardship, the rate was 4%. Among young women in financial hardship, it was 9.4%.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
</figcaption>
</figure>
<hr>
<p>Overall, 3.7% had experienced at least one form of severe abuse at the hands of a current or former partner in the previous 12 months.</p>
<p>The definition includes being threatened or assaulted with a gun, knife or other weapon, being locked in a room, and being choked.</p>
<p>Among young women not reporting financial hardship, the rate was 2.9%. Among young women in financial hardship, it was 9.3%.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
</figcaption>
</figure>
<hr>
<p>Abuse also leads to financial hardship.</p>
<p>To examine this we compared rates of abuse among young women who had been free of hardship the year before.</p>
<p>Among young Australian women aged 21-28 who were not experiencing financial hardship in 2016, the risk of moving into financial hardship in 2017 was 5.6% for women who had experienced no abuse in the past year.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-was-a-model-for-protecting-people-from-covid-19-and-then-we-dumped-half-a-million-people-back-into-poverty-165813">Australia was a model for protecting people from COVID-19 — and then we dumped half a million people back into poverty</a>
</strong>
</em>
</p>
<hr>
<p>Among women who had experienced unwanted sexual activity, the rate was three times as big — 16.1%, compared to 5.6%.</p>
<p>Among women who had experienced severe partner abuse, the rate was almost four times as big — 20%, compared to 5.6%.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=202&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=202&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=202&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=254&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=254&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=254&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rates of moving into financial hardship by nature of abuse over the past year.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
</figcaption>
</figure>
<hr>
<p>The research builds a strong case for governments to continue to invest in programs including helplines and counselling to address violence against women, a case made stronger by COVID-19.</p>
<p>COVID has created new opportunities for agencies to move quickly with innovative, fast-moving partnerships, such as those seen between police and health departments.</p>
<p>But to enact real change, it will be necessary to look beyond dealing with perpetrators and supporting victims.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-morrison-finds-strong-women-can-be-tough-players-158648">Grattan on Friday: Morrison finds strong women can be tough players</a>
</strong>
</em>
</p>
<hr>
<p>The causes of partner violence against women include broader power imbalances, among them the idea of “women’s work”, uneven family responsibilities, paying women differently, and ignoring unpaid care work.</p>
<p>In Australia, institutionalised gender divisions of labour in the home and at work entrench disadvantage. <a href="https://www.weforum.org/reports/ab6795a1-960c-42b2-b3d5-587eccda6023">World Economic Forum</a> data shows Australia’s overall score on gender disadvantage going backwards.</p><img src="https://counter.theconversation.com/content/167343/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alice Campbell receives funding from the Australian Research Council (ARC) Centre of Excellence for Children and Families over the Life Course.</span></em></p><p class="fine-print"><em><span>Janeen Baxter receives funding from The Australian Research Council. </span></em></p>Research undertaken for the National Summit on Women’s Safety has found one in four young Australian women in financial hardship experienced abuse from a current or former partner.Alice Campbell, Postdoctoral Research Fellow, Life Course Centre and Institute for Social Science Research, The University of QueenslandJaneen Baxter, Director, Life Course Centre, Institute for Social Science Research, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592182021-04-19T20:14:12Z2021-04-19T20:14:12ZFinancial stress in 3 graphs: there’s fewer of us in it, but for those who are, it’s worse<figure><img src="https://images.theconversation.com/files/395677/original/file-20210419-15-1aulvz8.jpg?ixlib=rb-1.1.0&rect=67%2C0%2C2928%2C1594&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">HARRYZH/Shutterstock</span></span></figcaption></figure><p>The good news from new research conducted by the Australian National University for Social Ventures Australia and the Brotherhood of St Laurence is that <a href="https://csrm.cass.anu.edu.au/research/publications/financial-stress-and-social-security-settings-australia">fewer of us</a> are in severe financial stress, by which we mean missing meals, seeking help from charities or being unable to heat our homes.</p>
<p>The bad news is that for certain types of households the proportion in stress is growing, and for many the stress is getting worse.</p>
<p>It is well <a href="https://csrm.cass.anu.edu.au/research/publications/covid-19-jobkeeper-and-jobseeker-impacts-poverty-and-housing-stress-under">documented</a> that JobSeeker households are faring poorly with high rates of poverty but less well documented that other working age households are also suffering from high financial stress.</p>
<p>We have used as a measure of severe stress answers to questions in the
Bureau of Statistics household expenditure surveys in 1998, 2003, 2009 and 2015 about seeking assistance from charities, going without meals, and the ability to pay bills.</p>
<p>For households headed by wage earners and for age pensioners, financial stress remains low. </p>
<p>For households headed by recipients of non-age pensions such as disability, carers’ and single parent payments, and for households headed by Australians on unemployment and related benefits, the proportion in stress has been climbing.</p>
<hr>
<p><strong>Severe financial stress by source of income</strong> </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=220&fit=crop&dpr=1 600w, https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=220&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=220&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=277&fit=crop&dpr=1 754w, https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=277&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/395664/original/file-20210419-17-af1wzo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=277&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://csrm.cass.anu.edu.au/research/publications/financial-stress-and-social-security-settings-australia">ANU Centre for Social Research and Methods</a></span>
</figcaption>
</figure>
<hr>
<p>Around 37% — more than one in three — households headed by Australians on allowances were in severe financial stress in 2015, up from one in four in 1998.</p>
<p>Twenty eight per cent of households headed by working-age pensioners were severely financially stressed, up from 19%.</p>
<p>The difference between a working-age pension and an allowance is that pensions are usually paid to people who aren’t expected to return to work for some time.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/there-are-lots-of-poverty-lines-and-jobseeker-isnt-above-any-of-them-158068">There are lots of poverty lines, and JobSeeker isn't above any of them</a>
</strong>
</em>
</p>
<hr>
<p>Allowances such as JobSeeker (previously Newstart) and Youth Allowance are usually paid to people who are expected to return to work, and are typically lower.</p>
<p>The reason households headed by both working-age pensioners and recipients of allowances are falling behind are complex. </p>
<p>Those on allowances struggle with incomes that climb only <a href="https://theconversation.com/top-economists-want-jobseeker-boosted-100-per-week-tied-to-wages-150364">in line with the consumer price index</a> and so until <a href="https://theconversation.com/the-50-boost-to-jobseeker-will-take-australias-payment-from-the-lowest-in-the-oecd-to-the-second-lowest-after-greece-155739">recently</a> have not increased in real terms for more than 25 years. </p>
<h2>Income matters, and the type of family</h2>
<p>Working-age pensioners have suffered from higher housing costs, limited liquid assets and tighter eligibility requirements which has meant those who have received working age pensions have been worse off.</p>
<p>Among households headed by age pensioners and wage earners, the incidence of financial stress was much lower, at 4% and 3%.</p>
<hr>
<p><strong>Severe financial stress by family type</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=202&fit=crop&dpr=1 600w, https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=202&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=202&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=254&fit=crop&dpr=1 754w, https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=254&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/395671/original/file-20210419-15-1lb3ucm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=254&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://csrm.cass.anu.edu.au/research/publications/financial-stress-and-social-security-settings-australia">ANU Centre for Social Research and Methods</a></span>
</figcaption>
</figure>
<hr>
<p>Twenty three per cent of households headed by single parents were in severe stress, compared to 3% of households headed by partnered parents.</p>
<p>Financial stress was at its most acute in households with children aged under five.</p>
<p>A lower 9% of single person households and 3% of couple-only households were in severe financial stress.</p>
<h2>Renters better off, but still badly off</h2>
<p>Renter households are much more likely to be in financial stress than homeowner households, but the proportion in severe stress has fallen from 15% to 12%</p>
<hr>
<p><strong>Severe financial stress by housing tenure</strong> </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=232&fit=crop&dpr=1 600w, https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=232&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=232&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=292&fit=crop&dpr=1 754w, https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=292&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/395675/original/file-20210419-17-1vwwxjz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=292&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://csrm.cass.anu.edu.au/research/publications/financial-stress-and-social-security-settings-australia">ANU Centre for Social Research and Methods</a></span>
</figcaption>
</figure>
<hr>
<p>Beyond these broad observations, we find considerable unexplained variation in financial stress. That might be because some households are better at managing money than others and some are more risk averse.</p>
<p>When we run our findings through our <a href="https://theconversation.com/cut-the-pension-boost-newstart-what-our-algorithm-says-is-the-best-way-to-get-value-for-our-welfare-dollars-108417">model</a> of the social security and tax system we find that while small increases in working-age payments would decrease the severity of financial stress, they wouldn’t do much to reduce the incidence of it.</p>
<p>A big increase in the overall social security budget would do a lot. </p>
<p>An increase of 10% could allow JobSeeker to increase from the current $620 per fortnight to $996 and disability support payments to increase from $953 per fortnight to $1060 and other working-age pensions to increase by similar amounts. Other payments would remain unchanged.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/as-one-gets-out-another-gets-in-thousands-of-students-are-hot-bedding-156589">As one gets out, another gets in: thousands of students are 'hot-bedding'</a>
</strong>
</em>
</p>
<hr>
<p>Our modelling shows that while increases to other payments could also lower severe financial stress, money spent on them would have less effect. </p>
<p>The scenario of a 10% increase in the social security budget that we put forward would cut the rate of severe financial stress among JobSeeker households by 16%.</p>
<p>The high rates of financial stress among households supported by working age payments is largely a policy choice. Extra money wouldn’t solve all of their problems but a decent safety net would go a long way.</p><img src="https://counter.theconversation.com/content/159218/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The ANU Centre for Social Research and Methods conducted research into financial stress for Social Ventures Australia and the Brotherhood of St Laurence.</span></em></p>The most stressed are Australians on JobSeeker and single parents.Ben Phillips, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1577672021-03-28T19:07:39Z2021-03-28T19:07:39ZAlready badly off, single parents went dramatically backwards during COVID. They are raising our future adults<figure><img src="https://images.theconversation.com/files/391861/original/file-20210325-15-k70gzn.jpg?ixlib=rb-1.1.0&rect=1229%2C133%2C2072%2C1378&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">LightField Studios/Shutterstock</span></span></figcaption></figure><p>Single parents with dependent children — eight out of ten of them women — were far more likely than others to lose work at the height of the pandemic and are far more likely to still be out of work now.</p>
<p>Even before COVID, many were in financial distress.</p>
<p>Single parents’ paid hours fell more than 30% in the depths of the crisis in April.</p>
<p>By December, even though there were no significant restrictions in place anywhere in Australia, paid hours for single parents remained 10% lower than they had been a year earlier. </p>
<p>This was at a time when the hours worked by couple parents had recovered quickly, and was higher than a year earlier.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/391848/original/file-20210325-21-1l450uy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<hr>
<p>Employment for single parents fell more than 10% between December 2019 and September 2020, and is still 5% lower than in December 2019.</p>
<p>About 50,000 single parents dropped out of the workforce altogether during the first lockdown – 11% of all single parents.</p>
<p>Why was the COVID recession so bad for single parents?</p>
<h2>Many single parents had no choice but to stop working</h2>
<p>One reason would be that the loss of formal and informal childcare and the need to manage remote learning meant many single parents had little choice but to stop working.</p>
<p>Also, single parents would be over-represented in the job-loss figures because they are over-represented in insecure work. </p>
<p>In August 2019, a quarter of single parents held casual jobs without paid leave. These jobs – many of them in COVID-vulnerable sectors such as retail and hospitality – were among the first to be lost during the lockdowns.</p>
<h2>Many more were in casual jobs, ineligible for JobKeeper</h2>
<p>Importantly, more than half of single parents in casual jobs had been in those particular jobs for less than a year, meaning the rules made them <a href="https://cdn.theconversation.com/static_files/files/1526/Fact_sheet-JobKeeper_Payment_0.pdf?1616711263">ineligible</a> for JobKeeper support. </p>
<p>In a survey by the Melbourne Institute, only <a href="https://melbourneinstitute.unimelb.edu.au/publications/research-insights/search/result?paper=3554918">13%</a> of single mothers reported that they were receiving JobKeeper in late 2020, compared to 18% of mothers in couples and 33% of fathers in couples.</p>
<p>The outsized impact of the COVID recession on single parents is even more of a concern when we consider that they were among the most disadvantaged Australians before COVID.</p>
<h2>Many had already been stripped of payments</h2>
<p>In 2018, a third of single-parent families were living in poverty (compared to less than 10% of couples with dependent children). One fifth of single parents reported that they regularly <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0009/3537441/HILDA-Statistical-report-2020.pdf">skipped buying</a> essential items.</p>
<p>And incomes for single parents were falling even before the crisis: between 2016 and 2018, when the national median annual income increased from $48,360 to $49,805, the median for single parents fell from $38,000 to $34,000.</p>
<p>Decisions by successive governments have contributed to this outcome.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-bad-bits-of-parentsnext-just-came-back-133079">The bad bits of ParentsNext just came back</a>
</strong>
</em>
</p>
<hr>
<p>From 2006, the Howard government’s <a href="http://povertyandinequality.acoss.org.au/causes-and-solutions/">Welfare to Work program</a> pushed new single parents claiming income support onto the Newstart unemployment benefit – $87 per week less than the Single Parenting Payment – if their youngest was eight or older. </p>
<p>The decision pushed about 20,000 single parents on to a lower payment.</p>
<p>In 2013, the <a href="http://povertyandinequality.acoss.org.au/causes-and-solutions/">Gillard government</a> pushed another 80,000 single parents onto Newstart by extending the policy to single parents who had been claiming parenting payments before 2006, almost doubling the proportion of single parents in poverty, lifting it to 59%.</p>
<h2>After Welfare to Work came ParentsNext</h2>
<p>Then in 2016, the Turnbull government launched <a href="https://theconversation.com/after-robodebt-its-time-to-address-parentsnext-133222">ParentsNext</a>, with the stated intention of helping single parents with children as young as six months to return to work. </p>
<p>It included so-called <a href="https://www.abc.net.au/news/2019-02-01/centrelink-payment-parentsnext-under-fire/10763732">participation plans</a>, under which parents could be stripped of payments unless they performed mandated activities – for example, taking their child to swimming lessons. </p>
<p>A Senate inquiry recommended it “<a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/ParentsNext/Report">not continue in its current form</a>”. Instead the 2020 budget set aside <a href="https://www.dese.gov.au/about-us/corporate-reporting/budget/budget-2020-21">$24.7 million</a> to “streamline the successful ParentsNext program”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/covid-19-is-a-disaster-for-mothers-employment-and-no-working-from-home-is-not-the-solution-142650">COVID-19 is a disaster for mothers' employment. And no, working from home is not the solution</a>
</strong>
</em>
</p>
<hr>
<p>The COVID crisis and a series of government decisions before that are condemning hundreds of thousands of Australian children to growing up in poverty, and exacerbates <a href="https://about.unimelb.edu.au/newsroom/news/2020/october/children-who-experience-poverty-more-than-three-times-more-likely-to-be-poor-as-adults">intergenerational disadvantage</a>.</p>
<p>Here are three things governments could do to make a difference:</p>
<ul>
<li><p><a href="https://grattan.edu.au/report/recovery-book/">Significantly</a> increase in the permanent rate of JobSeeker. This would make a huge difference for unemployed single parents with children aged eight or older who thanks to earlier government decisions have to rely on JobSeeker while they make the transition to work. The Federal Government plans to increase the permanent rate of JobSeeker by $25 a week. </p></li>
<li><p>Make <a href="https://grattan.edu.au/report/womens-work/">childcare</a> cheaper. This would help single parents get back into paid work sooner and expand opportunities for early education for their children. Cost is the major barrier for families wanting childcare. The Grattan Institute has identified a <a href="https://grattan.edu.au/report/cheaper-childcare/">series of options</a> to improve affordability.</p></li>
<li><p>Classify single parents in the workforce as “essential workers” for the purposes of any future lockdowns. This would mean their children could continue going to school and childcare.</p></li>
</ul>
<p>These changes would help single parents raising the adults of the future, who are at risk of slipping further behind.</p><img src="https://counter.theconversation.com/content/157767/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.</span></em></p><p class="fine-print"><em><span>Danielle Wood and Esther Suckling do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Other parents have got back the hours they lost. Not single parents. Many were forced to leave jobs to care for children.Tom Crowley, Associate, Grattan InstituteDanielle Wood, Chief executive officer, Grattan InstituteEsther Suckling, Intern, Grattan Institute, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1575062021-03-24T22:44:36Z2021-03-24T22:44:36ZWhat happens when you free unemployed Australians from ‘mutual obligations’ and boost their benefits? We just found out<figure><img src="https://images.theconversation.com/files/391338/original/file-20210324-17-f3sjoo.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C2703%2C1407&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">ldutko/Shutterstock</span></span></figcaption></figure><p>During COVID-19 the government ran what turned out to be a giant real-world experiment into what happens when you boost someone’s unemployment benefits and free them of the “mutual obligation” to apply for jobs. </p>
<p>On April 27 2020 the government as good as doubled the $565.70 per fortnight JobSeeker payment, lifting it by <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">$550</a> per fortnight for what turned out to be six months. In September the boost dropped to <a href="https://theconversation.com/unemployment-support-will-be-slashed-by-300-this-week-this-wont-help-people-find-work-146289">$250</a> per fortnight, and in December to <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">$150</a> per fortnight. </p>
<p>Next Thursday the boost vanishes, although the base rate of JobSeeker will climb by a less-than substantial <a href="https://theconversation.com/50-a-fortnight-rise-in-jobseeker-comes-with-tougher-job-search-requirements-155858">$50</a> a fortnight, leaving recipients $100 a fortnight worse off than they have been, $500 per fortnight worse off than back when JobSeeker doubled and back well below the <a href="https://theconversation.com/at-least-2-6-million-people-face-poverty-when-covid-payments-end-and-rental-stress-soars-157244">poverty line</a>.</p>
<p>From Thursday April 1 they will also be subject to much more demanding work tests, having to show they have applied for a minimum of <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/what-your-commitments-are">15 jobs a month</a>, climbing to 20 jobs a month from July 1.</p>
<p>On <a href="https://www.pm.gov.au/media/morrison-government-commits-record-9b-social-security-safety-net">top of that</a> the government has announced </p>
<ul>
<li><p>a return to compulsory face-to-face meetings with Jobactive providers</p></li>
<li><p>work-for-the-dole after six months of unemployment</p></li>
<li><p>a dob-in line for employers to report jobseekers who seem not to be genuine</p></li>
<li><p>increased auditing of job applications to ensure they are legitimate</p></li>
</ul>
<p>They are the sort of “mutual obligations” that were scrapped while JobSeeker was doubled. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-has-a-long-history-of-coercing-people-into-work-there-are-better-options-than-dobbing-in-156296">Australia has a long history of coercing people into work. There are better options than 'dobbing in'</a>
</strong>
</em>
</p>
<hr>
<p>Yet the government’s natural experiment where they doubled benefits and freed recipients of “mutual obligations” provides us with an opportunity to examine how a more generous approach affected recipients and whether, as the government says, a tougher approach is needed in order to <a href="https://www.news.com.au/finance/work/scott-morrison-says-aussies-refusing-to-work-due-to-higher-dole-payments/news-story/f72d57e48d29ae3e238c99b829409c7c">compel people to work</a>.</p>
<p>During last year’s more generous approach, we conducted an <a href="https://www.cfecfw.asn.au/wp-content/uploads/2021/03/Social-security-and-time-use-during-COVID-19-Report-Treating-Families-Fairly-2021.pdf">online survey</a> of JobSeeker recipients and found that (contrary to what appears to be the government’s expectation), it was helping get people into work.</p>
<p>Freed of “mutual obligations”, many were able to devote time to reengaging with the workforce.</p>
<p>As one respondent said, </p>
<blockquote>
<p>I was able to focus on getting myself back into the workforce. Yes, mutual obligation activities PREVENT people from being able to start a new business or re-enter the workforce as an employee</p>
</blockquote>
<p>And the extra income freed recipients to do things that would advance their employment prospects; either through study, through properly looking for work, or buying the tools needed to get work.</p>
<p>One said </p>
<blockquote>
<p>I could buy things that helped me with employment — equipment for online work, a bicycle for travel, a proper phone"</p>
</blockquote>
<p>An Australia Institute <a href="https://australiainstitute.org.au/wp-content/uploads/2021/02/P1035-Unemployment-payments-and-work-incentives-WEB.pdf">review</a> of unemployment payments and work incentives in 33 OECD countries found something similar — that higher payments correlate to lower unemployment.</p>
<p>Another respondent said the suspended mutual obligation requirements made it easier to care for an elderly parent during pandemic and their recovery from major surgery.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/2-6-million-face-poverty-when-covid-payments-end-rental-stress-soars-157244">2.6 million face poverty when COVID payments end, rental stress soars</a>
</strong>
</em>
</p>
<hr>
<p>Another said she had been able to focus on her health needs and her children.</p>
<p>People on social security are often accused of being dependent on welfare, but it’s often the economy and society that are dependent on their unpaid labour. </p>
<p>Yet (except for during the worst of the pandemic) these people have been denied a safety net that ensures their survival.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/391332/original/file-20210324-13-1yv9ddm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Fewer obligations meant parents were better able to care for children.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>The inadequacy of payments goes to a major and enduring flaw in the Australian social security system — its inability to recognise all of the productive activities people undertake, including <a href="https://www.canberratimes.com.au/story/6836986/not-enough-work-there-is-plenty-we-just-need-to-pay-for-it/">unpaid care </a> largely undertaken by women.</p>
<p>The decisions the government took during 2020 made a major difference to the lives of people outside the formal workforce. </p>
<p>They enabled them to turn their attention away from day-to-day survival towards envisioning and realising a more financially and emotionally sustainable future for themselves and their dependants.</p>
<p>The flow-on benefits, to all of us, ought to be substantial.</p>
<p>The government ought to be very interested. </p>
<p>If it was, it would examine the findings further, but they don’t seem to be on its radar.</p><img src="https://counter.theconversation.com/content/157506/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elise Klein has received funding from the British Academy, is a current board member of the Institute of Postcolonial Studies and is a member of BIEN.
Kelly Bowey, Senior Policy and Research Officer at the Centre for Excellence in Child and Family Welfare, assisted with the preparation of this piece.</span></em></p><p class="fine-print"><em><span>Kay Cook and Susan Maury do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>An online survey suggests they found it easier to live, easier to care for their families, and easier to prepare for the world of paid work.Elise Klein, Senior Lecturer, Australian National UniversityKay Cook, Senior Lecturer, Justice and Legal Studies Department, Swinburne University of TechnologySusan Maury, PhD candidate in Psychology, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1557392021-02-23T22:24:34Z2021-02-23T22:24:34ZThe $50 boost to JobSeeker will take Australia’s payment from the lowest in the OECD to the second-lowest after Greece<figure><img src="https://images.theconversation.com/files/385762/original/file-20210223-16-17ah1gs.jpg?ixlib=rb-1.1.0&rect=1092%2C272%2C1802%2C959&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">HARRYZH/Shutterstock</span></span></figcaption></figure><p>Fifty dollars sounds like a lot. But the increase in the JobSeeker unemployment benefit announced by Prime Minister Morrison on Tuesday is $50 <a href="https://www.pm.gov.au/media/morrison-government-commits-record-9b-social-security-safety-net">per fortnight</a>, which is just <a href="https://www.pm.gov.au/media/morrison-government-commits-record-9b-social-security-safety-net">$25</a> per week. It will replace the temporary Coronavirus Supplement of <a href="https://treasury.gov.au/sites/default/files/2020-11/Fact_sheet-Income_Support_for_Individuals.pdf">$75</a> per week, which is itself well down on the <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">$275</a> per week it began at in March last year.</p>
<p>It’s hard to see the increase as anything other than a cut, especially when coupled with another change which will allow recipients to earn other income of only <a href="https://www.pm.gov.au/media/morrison-government-commits-record-9b-social-security-safety-net">$75</a> per week before JobSeeker gets cut. That’s down from the present <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-much-you-can-get/income-and-assets-tests/income-test">$150</a> per week.</p>
<p>As the prime minister said, it’s better than it would have been if things returned to the level we had before special coronavirus provisions. At that time, recipients could earn only <a href="https://www.servicesaustralia.gov.au/individuals/subjects/payments-and-services-during-coronavirus-covid-19/if-you-get-income-from-jobkeeper-payment/jobkeeper-payment-changes-impact-jobseeker-payment">$53</a> per week before having their payment reduced.</p>
<p>But it’s not particularly generous. The Age and Sydney Morning Herald are quoting senior government sources as saying the $50 per fortnight increase in the rate was the <a href="https://www.smh.com.au/politics/federal/take-it-or-leave-it-government-won-t-budge-on-jobseeker-s-25-a-week-rise-20210223-p5752a.html">lowest figure</a> the party believed would be palatable to the public.</p>
<p>Morrison justified the increase of <a href="https://www.pm.gov.au/media/press-conference-australian-parliament-house-act-230221">$50 per fortnight</a> - rather than $150 (which would have kept what’s left of the coronavirus boost in place) or $100 or any other figure - by saying it will bring the payment to</p>
<blockquote>
<p>41.2% of the national minimum wage, which puts us back in the realm of where we had been previously</p>
</blockquote>
<p>Taking account of taxes paid and superannuation received by minimum wage workers gives a slightly higher replacement rate of 42.3%. That takes it back to roughly where it was at the end of the Howard government in 2007.</p>
<p>However, there’s no readily apparent reason why that should be a benchmark. </p>
<p>During the life of the Howard government the level of the single payment fell from around 50% of the minimum wage to 42%, meaning what’s proposed will return it to its lowest point relative to other benefits under Howard.</p>
<hr>
<p><strong>JobSeeker and age pension as a proportion of the minimum wage 1990-2021</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/385854/original/file-20210223-22-c5br3g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Notes: Rates for single adult shown relative to net income when receiving a full-time minimum wage (deducting tax and Medicare levy, and adding employer superannuation contribution). Any casual loading not included. Rates shown at first of each month. Any rent assistance not included. Poverty line is half of median equivalised household income for non self-employed workers. Rates include coronavirus supplement and energy supplement, future rates are estimates.</span>
</figcaption>
</figure>
<hr>
<p>Morrison also said the increase was the largest permanent increase in the unemployment benefit since 1986. It’s an increase of 9.7%. </p>
<p>During the Hawke and Keating administrations, the payment increased 23% in real terms. During the Whitlam administration it increased 50%. This means that while what’s offered is substantial by the standards of recent decades, it’s less so in the longer run.</p>
<h2>But what about the supplements?</h2>
<p>Morrison also argued in his press conference JobSeeker is more adequate than the base rate would suggest because </p>
<blockquote>
<p>on top of that, if they’re receiving Commonwealth Rent Assistance, that payment would increase to $760.40; and on top of that, the average value of stand-alone supplements, the energy supplement and so on, is an additional $13.03. So the suggestion that anyone who was on JobSeeker is simply on that payment alone and there aren’t additional supports that are provided is not correct. </p>
</blockquote>
<p>It’s true all people on income support receive the energy supplement (included in the figure above). But for a single person on JobSeeker, the supplement is only $8.80 per fortnight or less than 65 cents a day.</p>
<p>Many people do indeed get rent assistance, but after paying rent they become worse off rather than better off. </p>
<p>That’s because to get the maximum rate of rent assistance for a single person of <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/rent-assistance/how-much-you-can-get">$140</a> per fortnight (9% of the minimum wage), that person has to be paying around $310 per fortnight in rent. If that person is paying more, they get no extra help. The maximum is also lower for people in shared accommodation.</p>
<p>Private sector renters are amongst the <a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">worst off</a> recipients of income support. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-want-jobseeker-boosted-100-per-week-tied-to-wages-150364">Top economists want JobSeeker boosted $100+ per week, tied to wages</a>
</strong>
</em>
</p>
<hr>
<p>Other supplements such as the remote area allowance are indeed available, but are of no help to people who do not live in remote areas and may be inadequate to cover the higher costs involved. Supplements for help with language and literacy are only paid to people in special educational programmes. </p>
<p>Producing an average that includes supplementary payments most people don’t receive is inherently misleading.</p>
<h2>How Australia compares</h2>
<p>Net replacement rates measure the proportion of previous in-work income that is maintained after several months of unemployment. They are the benchmark used by the the prime minister to compare benefits to the minimum wage.</p>
<p>Using two months in unemployment as the measuring point (and using the most recently published 2019 rankings) before the pandemic, Australia’s replacement rate was the <a href="https://stats.oecd.org/Index.aspx?DataSetCode=NRR">lowest</a> in the OECD — even after rental assistance was added in.</p>
<hr>
<p><strong>Unemployment benefit, share of previous income after two months</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=378&fit=crop&dpr=1 600w, https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=378&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=378&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=475&fit=crop&dpr=1 754w, https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=475&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/385976/original/file-20210223-18-1etyxwu.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=475&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Net replacement rates in unemployment including rent assistance, 2019 or latest available data.</span>
<span class="attribution"><a class="source" href="https://stats.oecd.org/Index.aspx?DataSetCode=NRR">OECD.Stat</a></span>
</figcaption>
</figure>
<hr>
<p>When the maximum rate of Coronavirus Supplement was briefly in force in 2020, Australia moved to around the OECD average. </p>
<p>The new rate from April 2021 will move Australia from the lowest to the second lowest, ahead of Greece only.</p>
<hr>
<p><strong>Unemployment benefit, share of previous income, after Australian increase</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=378&fit=crop&dpr=1 600w, https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=378&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=378&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=475&fit=crop&dpr=1 754w, https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=475&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/385983/original/file-20210223-14-1jvrwe8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=475&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Net replacement rates in unemployment including rent assistance after two months, 2019 or latest available data.</span>
<span class="attribution"><a class="source" href="https://stats.oecd.org/Index.aspx?DataSetCode=NRR">OECD.Stat</a></span>
</figcaption>
</figure>
<hr>
<p>It should be acknowledged Australia’s system is based on different principles to many other OECD countries in which workers and their employers make contributions to and withdrawals from unemployment insurance. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/50-rise-in-jobseeker-comes-with-tougher-job-search-requirements-155858">$50 rise in JobSeeker comes with tougher job search requirements</a>
</strong>
</em>
</p>
<hr>
<p>But the difference in philosophy does not change the brutal reality that when Australian workers lose their job, their incomes fall more than in almost any other high income country.</p>
<p>Even after what the government has trumpeted as a historic increase, there will be few developed countries where people will be as worse off after losing work. Any permanent increase is welcome, but there is a long way to go.</p><img src="https://counter.theconversation.com/content/155739/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford has received funding from the Australian Research Council and the Department of Social Services. He is a Policy Advisor to the Australian Council of Social Service and a Fellow of the Centre for Policy Development.</span></em></p><p class="fine-print"><em><span>Bruce Bradbury has received funding from the Australian Research Council as well as from a number of government bodies and non-profit research foundations. He is currently participating in the Poverty and Inequality research partnership between UNSW and the Australian Council of Social Service.</span></em></p>Any permanent increase is welcome, but there’s a long way to go.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityBruce Bradbury, Associate Professor, Social Policy Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1553832021-02-17T19:12:05Z2021-02-17T19:12:05ZFirst lift JobSeeker, then add on fully funded unemployment insurance<figure><img src="https://images.theconversation.com/files/384689/original/file-20210217-17-1d67l56.jpg?ixlib=rb-1.1.0&rect=441%2C101%2C3024%2C1449&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">zairiazmal/Shutterstock</span></span></figcaption></figure><p>A <a href="https://theconversation.com/top-economists-want-jobseeker-boosted-by-100-per-week-and-tied-to-wages-150364">chorus of voices</a> is calling for the government to “raise the rate” of the JobSeeker unemployment benefit, among them the Reserve Bank Governor <a href="https://theconversation.com/reserve-bank-governor-not-for-turning-no-rate-hike-until-unemployment-near-4-5-154560">Philip Lowe</a>. And they’re right.</p>
<p>Once about as much as the age pension (and until recently called <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/newstart-allowance">Newstart</a>), JobSeeker is now less than two-thirds of it.</p>
<p>When the temporary <a href="https://treasury.gov.au/sites/default/files/2020-11/Fact_sheet-Income_Support_for_Individuals.pdf">coronavirus supplement</a> ends on April 1, JobSeeker’s inability to provide a decent standard of living while unemployed will become mercilessly apparent.</p>
<hr>
<p><strong>JobSeeker versus the age pension</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384660/original/file-20210217-18-1j4w77n.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Dollars per fortnight, base rate, single.</span>
<span class="attribution"><span class="source">Source: Ben Phillips ANU, DSS</span></span>
</figcaption>
</figure>
<hr>
<p>After JobSeeker is boosted, something the government <a href="https://www.theguardian.com/australia-news/2021/feb/11/scott-morrison-still-considering-changes-to-jobseeker-when-covid-supplement-ends">is considering</a>, there’s something else we should fix.</p>
<p>Right now JobSeeker is being asked to simultaneously serve two very different groups: those transitioning out of and back into work for a brief period (say, less than a year) and those in longer-term unemployment.</p>
<p>On this, Australia is an outlier. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=378&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=378&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=378&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=475&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=475&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384683/original/file-20210217-21-16fbcqk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=475&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Every member of the Organisation for Economic Co-operation and Development other than Britain, Ireland, and New Zealand offers a high, fairly generous, and time-limited initial payment (usually a portion of the former wage) that steps down at a later date. </p>
<p>In Canada the initial payment is 62% of average wages, falling to 23% after nine months. In the United States it is 40%, falling back to very little after six months.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384686/original/file-20210217-19-1094445.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>The high initial rate helps people weather the temporary income shock of unemployment, and provides breathing space to search for a job that’s right.</p>
<p>Because our system doesn’t distinguish between the short- and long-term unemployed, Australians experiencing short-term unemployment receive the <a href="https://stats.oecd.org/Index.aspx?DataSetCode=NRR">least-generous</a> payment in the developed world.</p>
<p>Our rate of long-term support is actually middle of the road by OECD standards, despite being well below the poverty line. </p>
<h2>Proper insurance</h2>
<p>In a policy proposal released this week by the Blueprint Institute, we suggest something better, an unemployment insurance system I have called <a href="https://www.blueprintinstitute.org.au/jobmatcher_real_unemployment_insurance">JobMatcher</a>.</p>
<p>JobMatcher would pay newly unemployed people 70% of their previous wage for six months, providing what US researchers believe is enough time to find <a href="https://www.nber.org/system/files/working_papers/w27574/w27574.pdf">the right job</a>.</p>
<p>After six months, they would be supported by the JobSeeker payment. </p>
<p>JobMatcher would have a number of economic benefits:</p>
<ul>
<li><p><strong>Getting people off the dole faster</strong>. Frontloading benefits has been found to <a href="http://ftp.iza.org/dp10044.pdf">speed up</a> reemployment by providing a hard deadline after which support will be reduced. </p></li>
<li><p><strong>Getting workers back into better jobs</strong>. Step-down systems of unemployment insurance provide more generous support workers at the start of unemployment, enabling them to find jobs better suited to their skills. These jobs are <a href="http://ftp.iza.org/dp10044.pdf">more likely</a> to be full-time, last longer, and pay <a href="https://www.sciencedirect.com/science/article/pii/S109420251500071X">higher wages</a>. </p></li>
<li><p><strong>Smoothing the temporary income shock of losing work</strong>. JobMatcher would cushion the initial income shock of short-term unemployment far better than JobSeeker is likely to, providing recipients with time and space to adjust their <a href="https://www.nber.org/system/files/working_papers/w12467/w12467.pdf">adjust their lifestyle and debt obligations</a>. </p></li>
<li><p><strong>Serving as an automatic stabiliser</strong>. Unemployment insurance <a href="https://izajolp.springeropen.com/track/pdf/10.1186/2193-9004-1-4.pdf">stabilises consumer spending</a> by smoothing fluctuations in disposable incomes. </p></li>
</ul>
<p>Other evidence suggests that a step-down scheme such as JobMatcher would boost <a href="https://reader.elsevier.com/reader/sd/pii/S109420251500071X?token=D84369C351F0D640779D327B8E6F739C38A17BE84B7B0B4365DF1F6C134921D8F6AFD12B4ADE4ED02C9A0A23FBB4CEDB">wages</a>, <a href="https://www.jstor.org/stable/pdf/3598795.pdf?refreqid=excelsior%3Affd35bd3a789eac011d1046c675fc796">productivity</a>, <a href="https://www.oecd-ilibrary.org/sites/9789264281394-5-en/index.html?itemId=/content/component/9789264281394-5-en">innovation</a>, and <a href="http://ftp.iza.org/dp1163.pdf">worker retention</a>. </p>
<h2>First things first</h2>
<p>First, JobSeeker needs to be increased. A reasonable boost would be $150 per fortnight, to replace the coronavirus supplement which is about to end. </p>
<p>And it should be indexed to <a href="https://theconversation.com/top-economists-want-jobseeker-boosted-by-100-per-week-and-tied-to-wages-150364">wages rather than prices</a> to keep pace with living standards. </p>
<p>With JobMatcher, payments to the unemployed would look like this:</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=346&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=346&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=346&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=435&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=435&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384688/original/file-20210217-21-fbtxc7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=435&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<h2>Proper premiums</h2>
<p>JobMatcher would be paid for with proper insurance premiums. </p>
<p>The government would charge most workers an annual JobMatcher premium equal to 1% of income, along the lines of the 2% Medicare levy.</p>
<p>Paying in to the system would do more than merely fund it. It would engender in people who have lost their jobs the belief that they had the right to use it. </p>
<p>And it would engender broader public support for the high payments involved.</p><img src="https://counter.theconversation.com/content/155383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Hamilton is Chief Economist at Blueprint Institute. The proposal was coauthored with Tom Barrett, Emma Beal, Josh Steinert, and Aurora Hawcroft. </span></em></p><p class="fine-print"><em><span>Daniel D'Hotman is the Director of Research & Operations at Blueprint Institute.</span></em></p>Paying out 70% of salary for six months would line us up with much of the rest of the developed world.Steven Hamilton, Visiting Fellow, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityDaniel D'Hotman, DPhil Candidate, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1545602021-02-03T06:41:20Z2021-02-03T06:41:20ZReserve Bank not for turning. No rate hike until unemployment near 4.5%<p>Reserve Bank governor Philip Lowe’s message to the nation today through the National Press Club is that he means it.</p>
<p>He isn’t intending to push up interest rates – he most probably isn’t intending to even think about pushing up interest rates – until 2024, at the earliest. </p>
<p>That’s a full three years from now, at a time when, maybe, inflation will be strong enough to be “<a href="https://www.rba.gov.au/speeches/2021/sp-gov-2021-02-03.html">sustainably within</a>” the Reserve Bank’s target band. </p>
<p>That’s the new benchmark, adopted by the bank <a href="https://theconversation.com/5-ways-the-reserve-bank-is-going-to-bat-for-australia-like-never-before-149311">in November</a>.</p>
<p>It replaced an earlier loophole-ridden benchmark of “progress towards” an inflation rate of 2% to 3%, something that could have meant almost anything.</p>
<p>The bank will now need to see actual, sustainable, inflation of 2% to 3%, something those of us wanting some inflation haven’t seen for a decade.</p>
<h2>Ultra-low rates til unemployment hits 4.5%</h2>
<p>After the press club event I asked him what sort of unemployment rate we would need to see for that to happen. Was it still the <a href="https://www.rba.gov.au/speeches/2019/sp-ag-2019-06-12-2.html">4.5%</a> the bank has nominated in the past, or had COVID pushed it up? Might less ambitious progress on unemployment do the trick? </p>
<p>He told he thought not. While it is impossible to be sure, something seemed to have changed around the world over the past ten years meaning it has become much harder to create inflation. He doubted whether an unemployment rate above 4.5% could do the trick.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-reserve-bank-might-yet-go-negative-149267">The Reserve Bank might yet go negative</a>
</strong>
</em>
</p>
<hr>
<p>Lowe told the press club that while unemployment had come down far more quickly than the bank expected when it produced its previous set of forecasts in November, its new forecasts had unemployment slipping only from 6.6% to 6% over the course of this year, and then taking another 18 months to reach 5.25%</p>
<p>An unemployment rate below 5% is beyond the bank’s forecasting horizon.</p>
<p>That’s why it has undertaken to buy as many government bonds as are needed to keep the three-year bond rate at the bank’s current <a href="https://theconversation.com/the-reserve-bank-might-yet-go-negative-149267">cash rate</a> target of 0.10%, to make it clear that the cash rate will “<a href="http://www.tveeder.com/561/byrange?&from=1612315800&to=1612319850">be where it is for the next three years</a>”.</p>
<h2>‘Creating money electronically’</h2>
<p>And there’s another reason for buying government bonds – to restrain the Australian dollar. On Tuesday Lowe announced plans to use a separate program to buy an <a href="https://www.rba.gov.au/media-releases/2021/mr-21-01.html">additional A$100 billion</a> of bonds between April and September. </p>
<p>Combined, the two bond-buying programs will depress Australian long-term interest rates and make foreigners less likely to buy Australian dollars to take advantage of higher rates here than overseas.</p>
<p>Asked directly whether the bank was printing money in order to buy government bonds, Lowe said it was, with the caveat that the modern way of doing things means the bank “<a href="http://www.tveeder.com/561/byrange?&from=1612315800&to=1612319850">creates the money electronically</a>”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-little-ray-of-sunshine-as-2021-economic-survey-points-to-brighter-times-ahead-154157">A little ray of sunshine as 2021 economic survey points to brighter times ahead</a>
</strong>
</em>
</p>
<hr>
<p>While Lowe accepts that the JobKeeper wage subsidy will end at the end of March (“the government made it clear this was a temporary program”) he is extremely keen for governments at all levels to keep spending on infrastructure, saying if weren’t for public projects, non-mining investment would be bad indeed.</p>
<p>While the economy is recovering, and the bank is forecasting slightly stronger economic growth than <a href="https://theconversation.com/a-little-ray-of-sunshine-as-2021-economic-survey-points-to-brighter-times-ahead-154157">The Conversation forecasting panel</a> of 3.5% this year and the next, the economy is unlikely to return to the trajectory it was on before the crisis, perhaps ever.</p>
<hr>
<p><strong>Reserve Bank GDP forecasts, February 2021 and February 2020</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=299&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=299&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=299&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=376&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=376&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382167/original/file-20210203-15-w016s3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=376&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Index numbers, December 2019 = 100.</span>
<span class="attribution"><a class="source" href="https://www.rba.gov.au/speeches/2021/sp-gov-2021-02-03.html">RBA, ABS</a></span>
</figcaption>
</figure>
<hr>
<p>The bank is envisaging an economy 4% smaller than it would have been. As Lowe put it: “it’s a big number, there’s a big gap there”.</p>
<p>The governor isn’t worried by a likely “blip” in unemployment when JobKeeper comes off in March, but he is worried about what will happen to employment beyond that. The unemployment rate is “higher today than it has been for almost two decades and many people can’t get the hours of work they want”.</p>
<p>Even when the unemployment rate was low (in NSW it got “as it was in 1973” before the crisis) wage growth was weak.</p>
<h2>JobSeeker a ‘fairness issue’</h2>
<p>It would help to permanently lift the rate of the JobSeeker unemployment benefit on which a million Australians rely and which is due to return to the below <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0011/3526877/Poverty-Lines-Australia-June-2020.pdf">poverty-line</a> level of $40 per day in April, although Lowe sees that not so much as an economic question but as a “fairness issue”.</p>
<p>“Different people legitimately have different views on the level of support stopping - my own view is that some increase is justifiable,” he told the press.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/vital-signs-any-talk-about-raising-interest-rates-is-a-huge-mistake-154073">Vital Signs: Any talk about raising interest rates is a huge mistake</a>
</strong>
</em>
</p>
<hr>
<p>The levers he can control, interest rates, will say low for as long as is necessary.</p>
<p>He isn’t “guaranteeing” to keep them low until 2024 or beyond, but he is guaranteeing to keep them low until inflation is sustainably near 3%, something he doesn’t think will happen until unemployment touches 4.5%, something he thinks is most unlikely to happen before 2024.</p>
<p>“I’m not pledging”, he told the national press, “but I am giving you my best guess”.</p><img src="https://counter.theconversation.com/content/154560/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Governor Lowe believes the unemployment rate will need to fall well below 5% before inflation climbs to the point where he needs to jack up rates.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1534442021-01-18T19:03:08Z2021-01-18T19:03:08ZThe economy can’t guarantee a job. It can guarantee a liveable income for other work<p>When the coronavirus pandemic hit Australia in March 2020, the Morrison government took bold and imaginative action. </p>
<p>The most notable examples were its income support programs – JobKeeper, paying a A$750 weekly subsidy to employers to keep workers on the payroll, and JobSeeker, which doubled unemployment benefits relative to the Newstart allowance, frozen in real terms for nearly 30 years. </p>
<p>These measures were announced as temporary. The government has already begun winding them back as the economy recovers from the worst impacts of the pandemic. On January 1 the JobSeeker supplement (being paid to about 1.3 million Australians) was cut from A$250 to A$150 a fortnight. It will cease in March.</p>
<h2>JobKeeper should end</h2>
<p>There are good reasons to phase out JobKeeper. It was designed specifically to assist businesses forced to scale back their activities due to COVID-19 and the restrictions introduced to control it. Eligibility is, therefore, tied to the impact of the lockdowns that took place nationally in the first half of 2020, and again in Victoria from August to October. </p>
<p>With those emergency times behind us, many businesses have returned to something like business as usual, while some have closed for good. Others have been brave enough to start new businesses. JobKeeper isn’t relevant to any of these. </p>
<p>It has been partially replaced by JobMaker, a wage subsidy for employers intended to encourage the employment of younger workers, which is scheduled to be wound back in March and completely phased out by October.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/in-defence-of-jobmaker-not-perfect-but-much-to-like-147898">In defence of JobMaker: not perfect, but much to like</a>
</strong>
</em>
</p>
<hr>
<p>The success of JobKeeper might lead to more consideration to temporary wage subsidies in response to future economic crises, perhaps along the lines of Germany’s <a href="https://www.imf.org/en/News/Articles/2020/06/11/na061120-kurzarbeit-germanys-short-time-work-benefit">Kurzarbeit scheme</a>, which will run at least to the end of the year. But designing such a scheme would take a lot of time. Winding down JobKeeper in the meantime makes sense.</p>
<h2>JobSeeker is another matter</h2>
<p>The situation is very different with JobSeeker. </p>
<p>The inadequacy of the Newstart payment was widely recognised long before the pandemic. Organisations as disparate as the Australian Council of Social Service, the Business Council of Australia and the OECD have <a href="https://probonoaustralia.com.au/news/2019/11/a-sad-and-sorry-history-of-newstart/">endorsed an increase</a>. Reserve Bank governor Philip Lowe has said raising Newstart said would <a href="https://www.sbs.com.au/news/rba-boss-says-raising-newstart-more-effective-than-tax-cuts-for-the-wealthy">do more for the economy</a> than cutting taxes for high income earners.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=410&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=410&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=410&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=515&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=515&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379180/original/file-20210118-17-1v2aqqw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=515&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Wages and allowance expressed in real terms, expressed in 2018 dollars.</span>
<span class="attribution"><a class="source" href="https://www.fwc.gov.au/documents/wage-reviews/2018-19/submissions/acoss-sub-awr1819.pdf">Australian Council of Social Service</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<hr>
<p>The system of unemployment benefits in place before JobSeeker worked on the assumption there were jobs aplenty for anyone willing and able. Unemployment was seen as reflecting personal defects or, more charitably, a lack of particular skills needed for “job readiness”. </p>
<p>This assumption was clearly untrue even before the pandemic. As the long history of booms, busts and economic crises have shown us, all workers are vulnerable (some more than others) to losing their job through no fault of their own. The pandemic has reinforced that lesson.</p>
<p>The failure of Australia’s labour market to provide full employment is evident from high and increasing levels of underemployment, particularly among young people. Even before the the pandemic an unacceptably high proportion of workers struggled with stringing together part-time “gigs”. </p>
<h2>Newstart is not enough</h2>
<p>Returning to the poverty levels of the former Newstart allowance as Jobkeeper winds down is a terrible option. We should restore parity between unemployment benefits and other social security benefits such as the age pension. </p>
<p>Until the 1990s these benefits were roughly equal in value. Since then the age pension and similar benefits have been increased in line with average earnings. Unemployment benefits, however, have been frozen in real terms since 1994.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing Newstart against poverty lines." src="https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=382&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=382&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=382&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=480&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=480&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379186/original/file-20210118-19-1wqmtly.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=480&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Grattan Institute</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<hr>
<p>Compounding the increasing financial hardship, life for the unemployed has been made harder by the steady intensification of compliance and reporting requirements. </p>
<p>While the controversial “robodebt” scheme – in which many welfare recipients were hounded to <a href="https://theconversation.com/government-makes-changes-to-error-prone-robo-debt-collection-127324">repay money they did not owe</a> – has been abandoned, more fundamental change is needed.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/robodebt-was-a-fiasco-with-a-cost-we-have-yet-to-fully-appreciate-150169">Robodebt was a fiasco with a cost we have yet to fully appreciate</a>
</strong>
</em>
</p>
<hr>
<h2>A liveable income guarantee</h2>
<p>In an economy that cannot provide full-time work for everyone who wants it, we need to take a broader view of the way people can contribute. </p>
<p>To respond to the post-pandemic era, we should adopt the concept of a Liveable Income Guarantee (LIG). </p>
<p>The LIG is closely linked to the “participation income” proposed by <a href="https://wiki.p2pfoundation.net/Participation_Income">British economist Anthony Atkinson</a>. It starts from the principle that everyone has a right to a liveable income and the opportunity to contribute to society. It’s similar to a universal basic income but requires recipients to participate in socially useful activities.</p>
<p>The narrow measure of “formal employment” largely obscures the fact that many people without paid work productively contribute to society in other ways.</p>
<p>Unpaid work of parents, carers and volunteers has been estimated as equal to <a href="https://www.abs.gov.au/websitedbs/censushome.nsf/4a256353001af3ed4b2562bb00121564/fcac2b648f550b74ca257a75002adec9!OpenDocument">almost half of Australia’s GDP</a>.</p>
<p>While the contributions of carers has been partly recognised through the Carer’s Payment, other forms of unpaid work have not.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/meet-the-liveable-income-guarantee-a-budget-ready-proposal-that-would-prevent-unemployment-benefits-falling-off-a-cliff-146990">Meet the Liveable Income Guarantee: a budget-ready proposal that would prevent unemployment benefits falling off a cliff</a>
</strong>
</em>
</p>
<hr>
<p>What other contributions might be acknowledged under the LIG? There are many possibilities, most of which have some precedent but have not been considered as part of a comprehensive program of social participation, including volunteering, ecological care projects and artistic and creative activity.</p>
<p>As the year of JobSeeker and JobKeeper draws to a close, it’s time for the Morrison government to show some of the same boldness and imagination it had a year ago.</p><img src="https://counter.theconversation.com/content/153444/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The inadequacy of the Newstart payment was recognised long before the pandemic. We shouldn’t go back to it.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1512892020-12-14T19:06:43Z2020-12-14T19:06:43ZOur research shows more Australians receive unemployment payments than you think<figure><img src="https://images.theconversation.com/files/374143/original/file-20201210-24-x7dx38.jpg?ixlib=rb-1.1.0&rect=24%2C73%2C5095%2C3555&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Kelly Barnes/AAP</span></span></figcaption></figure><p>Australians receiving unemployment payments are often <a href="https://insidestory.org.au/them-and-us-the-enduring-power-of-welfare-myths/">negatively portrayed</a> as a relatively small group of people with personal or behavioural problems that stop them from getting a job. </p>
<p>The unparalleled growth in unemployment during COVID-19 has opened up significant space to challenge long-held perceptions of “them and us” when it comes to welfare. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/whos-really-behaving-badly-confronting-australias-cashless-welfare-card-151847">Who's really behaving badly? Confronting Australia’s cashless welfare card</a>
</strong>
</em>
</p>
<hr>
<p>Nevertheless, extra support to Australia’s unemployed has already been <a href="https://theconversation.com/unemployment-support-will-be-slashed-by-300-this-week-this-wont-help-people-find-work-146289">substantially wound back</a> — with plans to <a href="https://www.sbs.com.au/news/some-330-000-more-australians-will-fall-into-poverty-when-coronavirus-supplement-is-cut-modelling-warns">do so again</a> by the end of the year. </p>
<p>Our <a href="http://library.bsl.org.au/jspui/bitstream/1/12353/1/Bowman_et_al_Everyone_counts_Newstart_Allowance_Dec2020.pdf">new study</a>, by a team at the Brotherhood of St Laurence, RMIT University and the Australian National University, highlights significant misunderstandings about the scale and scope of Australians who received Newstart — the unemployment payment <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1920/Quick_Guides/JobSeekerPayment">replaced by JobsSeeker Payment</a> earlier this year.</p>
<p>Bottom line? It’s much more common to get the payment than you think. </p>
<h2>‘Everyone counts’: our research</h2>
<p>This <a href="https://www.bsl.org.au/research/publications/everyone-counts/">study</a> makes use of <a href="https://www.aihw.gov.au/about-our-data/our-data-collections/department-of-social-services-data-over-multiple-i">a Department of Social Services
database</a> that records every interaction with Centrelink. This is the first time results from this database have been published by independent researchers.</p>
<p>It has given us an important opportunity to track how people have used unemployment payments — specifically Newstart Allowance — from 2001 to 2016 (the years available for study). </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-jobseeker-in-our-post-covid-economy-australia-needs-a-liveable-income-guarantee-instead-141535">Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead</a>
</strong>
</em>
</p>
<hr>
<p>We took a simple but new approach: to count every individual who ever received Newstart between those years.</p>
<p>Most statistics on the number of people receiving payments are reported as the “stock”, which is the number of recipients on a specific date in that year. With these new data, we are able to measure the “flow”, which is the number of people who ever received a payment during the course of each year, as well as over the whole period since 2001.</p>
<p>Our analysis is part of broader research that aims to gain a clearer understanding of the dimensions of “income volatility” (sudden changes in income) in Australia.</p>
<h2>How many people receive payments?</h2>
<p>We found receiving unemployment payments was much more common than previously thought during the study period.</p>
<p>For example, between 2013 and 2016, the number of people receiving Newstart at the end of the financial year ranged between 660,000 and 750,000. But over the course of each of those years, well over 1.1 million separate individuals received an unemployment payment. </p>
<p>This suggests approximately one in 11 people (9%) in the labour
force received Newstart in any of these years.</p>
<p>Overall, when we look at the “flow” figures, more than 4.4 million people received Newstart between 2001 and 2016 (nearly 2.5 million men and 2 million women). This is nearly one quarter of the qualified working-age population over this period. </p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>We also found the proportion of women receiving Newstart
increased from 30% in 2001 to 46% in 2016. In part this reflects <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Publications/Research_reports/JobSeeker_Payment">policy changes</a> that predominantly affected women, such as
restricting access to parenting payments and the increase in the Age Pension age for women.</p>
<h2>Time spent on welfare varies</h2>
<p>There is a widely-held view that many unemployed people rely on the payment for a <a href="https://www.acoss.org.au/wp-content/uploads/2019/11/SurvivingNotLiving.pdf">long time</a>. But our analysis provides a mixed picture on this point.</p>
<p>Nearly half of the Newstart population of 4.4 million (47%) received the payment for less than a year. Over two-thirds (68%) received it for less than two years. </p>
<p>So this would appear to contradict the idea most people rely on it long-term. However, it remains important to recognise that a significant minority still do.</p>
<p>At the other extreme, around 15% were on the payment for a total of five or more years. About 3.6% had been on it for ten or more years.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=871&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=871&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=871&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1095&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1095&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1095&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Between the two extremes — people who had only one short period on Newstart and people who spent most of these years on it — there are a multitude of differing patterns. This reflects both the ups and downs of the Australian labour market and the volatile circumstances experienced by many working-age Australians.</p>
<h2>Dramatic rise in payment suspensions</h2>
<p>Fluctuating income is a <a href="https://journals.sagepub.com/doi/full/10.1177/0003122418823184">key cause</a> of household financial and emotional stress. It can affect well-being as much as (if not more than) low wages.</p>
<p>For people receiving an income support payment,
the disruption caused by uncertain income is even worse — even a day’s delay in payment can have major consequences when it comes to paying bills or rent. </p>
<p>People on Newstart (now JobSeeker) can have their payments suspended either for not <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-report-and-manage-your-payment">reporting their income</a> correctly or not meeting <a href="https://www.servicesaustralia.gov.au/individuals/topics/mutual-obligation-requirements/29751">job-seeking requirements</a>. Successive governments have increasingly sought to <a href="https://journals.sagepub.com/doi/10.1177/0095399719839362">enforce</a> this — which has led to more uncertainty around the payment.</p>
<p>Our study found rates of suspension increased dramatically over the study period, from 2% in 2001 to 11% to 2016. Of those who were suspended, the likelihood of experiencing multiple suspensions increased from 2.3% to 14%. </p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=445&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=445&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=445&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Women were more likely to have been suspended on multiple
occasions than men. In 2016, 12.7% of the 556,000 women who received Newstart were suspended, compared to 9.8% of the 653,000 men.</p>
<h2>Social security is not a ‘marginal’ issue</h2>
<p>The biggest lesson of our study is that the idea social security payments are confined to a group of unfortunate individuals and families living at the margins of society is incorrect. </p>
<p>Our findings show how short-term reliance on unemployment benefits is relatively common. Social security, like healthcare and education, should be viewed as a core part of mainstream Australian life. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-the-coronavirus-supplement-stops-jobseeker-needs-to-increase-by-185-a-week-138417">When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week</a>
</strong>
</em>
</p>
<hr>
<p>Our insights also demonstrate that while longer-term reliance on Newstart is an important policy issue, short-term reliance is underestimated. They also shed new light on the increasing share of recipients — especially women — who are facing irregular payments due to suspensions.</p>
<p>Along with ongoing concerns about the <a href="https://theconversation.com/when-the-coronavirus-supplement-stops-jobseeker-needs-to-increase-by-185-a-week-138417">adequacy</a> of income support payments - highlighted once again by a recent <a href="https://apo.org.au/sites/default/files/resource-files/2020-04/apo-nid303530.pdf">Senate inquiry</a>, as well as by business groups like the <a href="https://www.smh.com.au/politics/federal/retail-groups-warn-cutting-back-jobseeker-could-hit-employment-20200810-p55ka5.html">Australian Retailers Association</a> — this raises questions about the extent to which the Australian social security system is effectively fulfilling its <a href="https://www.data.gov.au/organisations/org-dga-f7696dc3-e407-4c5f-bfaa-1f6d9ef37f17">stated mission</a>, </p>
<blockquote>
<p>to improve the lifetime well-being of individuals and families.</p>
</blockquote><img src="https://counter.theconversation.com/content/151289/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford has received funding from the Australian Research Council and the Department of Social Services. He is a Policy Advisor to the Australian Council of Social Service and a Fellow of the Centre for Policy Development.</span></em></p><p class="fine-print"><em><span>Ashton de Silva has in recent times received funding from the Australian Housing Urban Research Institute (related to a different project). Further, he has received grants from several firms in the private sector albeit unrelated to this particular project as well as organisations such as the CPA and Regional Australia Institute. In addition, he has been engaged by government bodies including the Australian Tax Office and the Australian Securities Investment Commission.</span></em></p><p class="fine-print"><em><span>Dina Bowman is a Principal Research Fellow in the Brotherhood of St Laurence's Research and Policy Centre. Her current research is supported by philanthropic funding to the Brotherhood of St Laurence - including donations from ANZ.</span></em></p><p class="fine-print"><em><span>Marcus Banks is a casual researcher at RMIT University in the School of Economics, Finance and Marketing. He is an active NTEU Delegate and supports campaigns by the Australian Unemployed Workers Union. He has received funding from the Australian Housing and Urban Research Institute and the Australian Securities Investment Commission.</span></em></p><p class="fine-print"><em><span>Zsuzsanna Csereklyei has in the past received funding from the Australian Housing Urban Research Institute, and the Australian Government, Department of Foreign Affairs and Trade (related to different projects). </span></em></p>A new study highlights significant misunderstandings about the scale and scope of Australians who receive unemployment payments.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityAshton De Silva, Associate Professor of Economics, RMIT UniversityDina Bowman, Principal Research Fellow, Research & Policy Centre, Brotherhood of St Laurence, and Honorary Principal Fellow, The University of MelbourneMarcus Banks, Social policy and consumer finance researcher, School of Economics, Finance and Marketing, RMIT UniversityZsuzsanna Csereklyei, Lecturer in Economics, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1518472020-12-10T09:00:04Z2020-12-10T09:00:04ZWho’s really behaving badly? Confronting Australia’s cashless welfare card<p>The government’s Cashless Debit Card almost fell apart on Wednesday night. </p>
<p>Senator Rex Patrick’s refusal to support the government’s plans to make the scheme permanent gave some hope that this expensive, ideological and cruel policy would end. </p>
<p>Yet in the final Senate vote, it was revealed that Centre Alliance had reached an understanding with the government. </p>
<p>The trail at four sites outside the Northern Territory would be extended by another two years and people in the Territory would be given the option of moving from the green <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/basicscard">BasicsCard</a> to the silver <a href="https://www.dss.gov.au/families-and-children/programmes-services/welfare-conditionality/cashless-debit-card-overview">Cashless Debit Card</a> (known searingly in East Kimberley as the “white” card). </p>
<p>Centre Alliance’s Stirling Griff <a href="https://thenewdaily.com.au/news/2020/12/11/cashless-card-sterling-griff/">abstained from voting</a> in order to give the government the numbers. </p>
<p>On one hand, the government failed to make the cashless debit card permanent.</p>
<p>On the other, the government can continue to subject people to the card and use the Northern Territory as cover to continue to spend public money setting up the infrastructure needed to roll it out nationally. </p>
<p>Only <a href="https://www.theguardian.com/australia-news/2020/nov/03/cashless-welfare-card-fewer-than-10-of-senate-inquiry-submissions-back-bill">10 per cent</a> of the 132 submissions to the latest <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/CashlessWelfareContinua">Senate inquiry</a> backed the extension.</p>
<h2>Two more years of income quarantining</h2>
<p>People opposing the Cashless Debit Card have peer-reviewed research on their side finding that by limiting access to cash and restricting what people can use money for, compulsory income management can cause problems from <a href="https://openresearch-repository.anu.edu.au/handle/1885/147866">hardship</a>, <a href="https://theconversation.com/i-dont-want-anybody-to-see-me-using-it-cashless-welfare-cards-do-more-harm-than-good-132341">stigma</a> to the reduction of <a href="https://www.lifecoursecentre.org.au/research/journal-articles/working-paper-series/do-welfare-restrictions-improve-child-health-estimating-the-causal-impact-of-income-management-in-the-northern-territory/">birth weight in babies</a>.</p>
<p>The trials underway in the East Kimberley and Goldfields regions of Western Australia, the Ceduna region of South Australia and the Bundaberg and Hervey Bay region in Queensland direct 80% of each welfare payment to a card for use on essentials such as food and clothes, leaving only 20% which can be accessed as cash. </p>
<p>The green Territory BasicsCard was introduced in 2007 as part of the Howard government’s 2007 Northern Territory <a href="https://www.monash.edu/__data/assets/pdf_file/0003/2106156/NT-Intervention-Evaluation-Report-2020.pdf">Emergency Response</a>, made possible by the temporary suspension of the <a href="https://www.theguardian.com/australia-news/2017/sep/02/northern-territory-intervention-violates-international-law-gillian-triggs-says">Racial Discrimination Act</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=384&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=384&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=384&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=483&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=483&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374317/original/file-20201210-18-1ox837t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=483&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">The silver cashless debit card</span></span>
</figcaption>
</figure>
<p>The silver cashless debit card came about as a key recommendation in mining billionaire Andrew Forrest’s 2014 <a href="https://www.niaa.gov.au/resource-centre/indigenous-affairs/forrest-review">National Indigenous Jobs and Training Review</a>.</p>
<p>Both compulsory income management programs <a href="https://www.theguardian.com/australia-news/2017/sep/02/northern-territory-intervention-violates-international-law-gillian-triggs-says">disproportionately target First Nations people</a>. </p>
<p>The government avoids acknowledging this by saying they are targeting places rather than people, but that doesn’t change the fact that in the East Kimberley for example, 82% of the people in trial are First Nations people.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/i-dont-want-anybody-to-see-me-using-it-cashless-welfare-cards-do-more-harm-than-good-132341">'I don't want anybody to see me using it': cashless welfare cards do more harm than good</a>
</strong>
</em>
</p>
<hr>
<h2>Real community support?</h2>
<p>Throughout the debate in the Senate, politicians campaigning for the card referred to “community support”. Senators said that the “community was consulted” and that the “community had asked for the card”.</p>
<p>The truth is that rather than being a local initiative, both cards were developed by and lobbied for by Australia’s political and business elite. </p>
<p>The Northern Territory Emergency Response was heavy handed and involved the use of the <a href="https://theconversation.com/ten-years-on-its-time-we-learned-the-lessons-from-the-failed-northern-territory-intervention-79198">military</a>. </p>
<p>The Cashless Debit Card involved power of another sort, using sweeteners of much needed funding for starved services. One community was told it might <a href="https://caepr.cass.anu.edu.au/sites/default/files/docs/Working_Paper_121_2017.pdf">miss out on funds</a> if it didn’t support the card.</p>
<h2>Decisions, then consultation</h2>
<p>The limited consultation that followed has been more like select information sessions aimed at selling the card, flying in the face of what ought to be an indigenous right to <a href="https://www.theguardian.com/commentisfree/2017/sep/22/indigenous-communities-need-to-be-part-of-the-solution-top-down-measures-dont-work">free, prior and informed consent</a>. </p>
<p>Real community participation, let alone self-determination, might have led to the experiment being aborted.</p>
<p>The government picked people to speak on behalf of the communities affected and claimed their views were representative. The views of people who opposed the card or had been forced to endure it were given less prominence.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-is-the-government-trying-to-make-the-cashless-debit-card-permanent-research-shows-it-does-not-work-149444">Why is the government trying to make the cashless debit card permanent? Research shows it does not work</a>
</strong>
</em>
</p>
<hr>
<p>It seemed disturbingly out of the settler colonial playbook – divide and conquer.</p>
<p>More than A$1 billion has been spent on compulsory income management to date without credible evidence that it works. </p>
<p>And yet the government is persisting. </p>
<p>This rubbishing of the public policy process needs to stop and the political and business elite need to get out of the way to allow genuine self-determined community development to flourish.</p><img src="https://counter.theconversation.com/content/151847/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elise Klein has received funding from the British Academy and is a board member of the Institute of Postcolonial Studies.</span></em></p>Senators have granted a two-year extension to a program for which there is little supporting evidence.Elise Klein, Senior Lecturer, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1504542020-11-29T19:06:10Z2020-11-29T19:06:10ZNew finding: boosting JobSeeker wouldn’t keep Australians away from paid work<figure><img src="https://images.theconversation.com/files/371693/original/file-20201127-17-52xsjo.jpg?ixlib=rb-1.1.0&rect=260%2C347%2C2304%2C1067&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">fizkes/Shutterstock</span></span></figcaption></figure><p>Incentives, the Freakonomics author Steven Levitt once quipped, are the “<a href="https://www.encyclopedia.com/arts/educational-magazines/freakonomics-rogue-economist-explores-hidden-side-everything">cornerstone of modern life</a>”. To this I would add: only if the incentive is big enough.</p>
<p>In Australia at present there is considerable support for increasing the JobSeeker unemployment payment by a <a href="https://theconversation.com/top-economists-want-jobseeker-boosted-by-100-per-week-and-tied-to-wages-150364">significant amount</a> to make up for decades in which it has fallen relative to wages and other payments.</p>
<p>Opponents say an increase might <a href="https://www.theguardian.com/australia-news/2020/jun/29/federal-government-believes-jobseeker-rate-could-be-putting-people-off-work">adversely affect incentives</a> to search for and take up paid work.</p>
<p>I have reviewed this claim in <a href="https://cdn.theconversation.com/static_files/files/1343/Borland_Labour_market_snapshot__71.pdf?1606359052">recent research</a> and find even a substantial increase in JobSeeker wouldn’t be big enough to make a difference. </p>
<p>If JobSeeker was to climb A$125 per week from $282.85 to $407.85, it would still be only a little more than half the national minimum wage.</p>
<p>The increase would leave JobSeeker recipients at the very bottom of the distribution of earnings of full-time adult workers – the bottom percentile. This means 99 out of every 100 full-time jobs would pay more.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-want-jobseeker-boosted-100-per-week-tied-to-wages-150364">Top economists want JobSeeker boosted $100+ per week, tied to wages</a>
</strong>
</em>
</p>
<hr>
<p>A higher JobSeeker payment of $125 per week could also preserve a significant financial incentive for recipients to take on extra days of paid work. </p>
<p>Under the current income test, the marginal gain from working an extra day at the minimum wage would range from $93 (for the first day) to $34 (third day).</p>
<p>Under a better income test the gain could be <a href="https://theconversation.com/blink-and-youll-miss-it-what-the-budget-did-for-working-mums-148264">smoothed</a> across the week.</p>
<h2>The real-life experiment</h2>
<p>We have just had a real-life experiment that has told us what happens to incentives to shift into paid work when JobSeeker is nearly doubled.</p>
<p>The payment was almost doubled between March and September 2020, being boosted by a coronavirus supplement of $275 per week.</p>
<hr>
<p><strong>JobSeeker vs age pension</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=249&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=249&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=249&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=313&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=313&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371885/original/file-20201130-20-1r2oe31.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=313&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-much-you-can-get">Source: Ben Phillips ANU, Services Australia</a></span>
</figcaption>
</figure>
<hr>
<p>If getting the doubled payment meaningfully reduced incentives to take up paid work, JobSeeker recipients would be less likely to move from unemployment into employment than before, and job vacancies would take longer to fill. </p>
<p>Neither happened while JobSeeker was doubled.</p>
<p>Compared to the previous years of 2017, 2018 and 2019 the flow from unemployment into employment collapsed in April when the onset of COVID-19 cost 607,000 people their jobs.</p>
<p>But in the following months, <em>while JobSeeker remained doubled</em>, the proportion of unemployed people who transitioned into employment returned to previous monthly benchmarks.</p>
<hr>
<p><strong>Flows from unemployment to employment</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=260&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=260&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=260&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=326&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=326&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371795/original/file-20201128-21-nspxoa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=326&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1343/Borland_Labour_market_snapshot__71.pdf?1606359052">ABS Labour Force, Borland</a></span>
</figcaption>
</figure>
<hr>
<p>Second, there is no evidence of a rise in the vacancy rate, as would be expected if the increased JobSeeker payment was having a major impact on incentives to work. </p>
<p>The vacancy rate fell between February and April as would be expected, and then regained some losses, but at no point climbed higher than before the collapse, even with higher JobSeeker payments.</p>
<h2>More JobSeeker might help</h2>
<p>Searching for jobs takes time and costs money. More income from JobSeeker means less financial stress and more “bandwidth” to commit to job search, and more resources such as the ability to pay for transport to and clothing for interviews.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-jobseeker-was-cut-the-unemployed-would-be-picking-fruit-why-thats-not-true-145951">'If JobSeeker was cut, the unemployed would be picking fruit'? Why that's not true</a>
</strong>
</em>
</p>
<hr>
<p>The Organisation for Economic Co-operation and Development made this point a decade ago in its <a href="https://cdn.theconversation.com/static_files/files/1345/Extract_from_OECD_2010_Survey_of_Australia.pdf?1606449879">review of Australia</a>.</p>
<p>It said Newstart (the old name for JobSeeker) had fallen to the point where questions could be asked about its “effectiveness in providing sufficient support for those experiencing a job loss, or enabling someone to look for a suitable job.”</p><img src="https://counter.theconversation.com/content/150454/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Borland receives funding from the Australian Research Council.</span></em></p>Australia has just run a real-life experiment.Jeff Borland, Professor of Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1503642020-11-29T00:39:55Z2020-11-29T00:39:55ZTop economists want JobSeeker boosted $100+ per week, tied to wages<figure><img src="https://images.theconversation.com/files/371797/original/file-20201128-14-80upwc.png?ixlib=rb-1.1.0&rect=371%2C5%2C3502%2C1988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Wes Mountain/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Once about as high as the pension, the JobSeeker (Newstart) unemployment payment has fallen shockingly low compared to living standards.</p>
<p>It’s now only two thirds of the pension, just 40% of the full-time minimum wage and <a href="https://www.tai.org.au/sites/default/files/P997%20Poverty%20and%20a%20reduced%20coronavirus%20supplement%20%5BWEB%5D.docx.pdf">half way below</a> the poverty line.</p>
<p>JobSeeker has fallen relative to other payments because while the pension and wages have climbed faster than prices, JobSeeker (previously called Newstart) has increased <a href="https://theconversation.com/its-newstart-pay-rise-day-youre-in-line-for-24-cents-which-is-peanuts-123856">only in line with prices</a> since 1991.</p>
<p>In an apparent acknowledgement that JobSeeker had fallen too low, the government roughly doubled it during the coronavirus crisis, introducing a supplement to enable people to “<a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/interview-karl-stefanovic-and-allison-langdon-today-5">meet the costs of their groceries and other bills</a>”.</p>
<p>But that supplement is being wound down, from <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353">A$225</a> per week to <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/jobkeeper-payment-and-income-support-extended">$125</a> on September 25, and again to <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">$75</a> on January 1, before expiring on March 31.</p>
<p>After March, the single rate of JobSeeker (including the $4.40 per week energy allowance) will drop back to about <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-much-you-can-get">$287.25 per week</a>.</p>
<hr>
<p><strong>JobSeeker vs age pension</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=240&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=240&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=240&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=301&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=301&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371424/original/file-20201126-25-1hrhd0f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=301&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get">Source: Ben Phillips ANU, Services Australia</a></span>
</figcaption>
</figure>
<hr>
<p>Ahead of a decision about any permanent increase expected early next year, The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle.</p>
<p>Only four think it should revert to $287.25 per week. </p>
<p>All but eight want a substantial increase. More than half (24 out of 45) want an increase of at least $100 per week.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=514&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=514&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=514&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=645&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=645&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371647/original/file-20201127-23-1d5smrw.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=645&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Economic Society of Australia/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>The results suggest the economists would be dissatisfied with a decision to merely increase JobSeeker by $75 per week in line with the supplement that is due to expire at the end of March. </p>
<p>The 45 members of the society’s 57-member panel who responded include Australia’s preeminent experts in the fields of microeconomics, macroeconomics economic modelling, labour markets and public policy.</p>
<p>Among them are former and current government advisers, a former member of the Reserve Bank board and a former member of the Fair Work Commission’s minimum wage panel.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-back-boosts-to-jobseeker-and-social-housing-over-tax-cuts-146914">Top economists back boosts to JobSeeker and social housing over tax cuts</a>
</strong>
</em>
</p>
<hr>
<p>Many want an increase of about $150 a week to bring JobSeeker close to the age pension and 50% of median income.</p>
<p>Curtin University’s Harry Bloch asked (rhetorically) whether unemployed people had “lower needs than those on the aged pension”.</p>
<p>Labour market specialist Sue Richardson said keeping payments so low that people lost dignity and hope and suffered material deprivation hurt not only the people who were unemployed, but also the thousands of children who grew up in their households.</p>
<h2>A scant incentive to shirk</h2>
<p>She knew of no evidence that suggested a low rate of JobSeeker increased the likelihood of an unemployed person getting a job.</p>
<p>Jeff Borland said even if JobSeeker was increased by $125 per week, those on it would still earn less than all but 1% of full-time adult workers and would face plenty of remaining financial incentives to get paid work. </p>
<p>In research to be published in The Conversation on Monday he examines a real-life experiment: the temporary near-doubling on JobSeeker between March and September, and finds it played <a href="https://theconversation.com/new-finding-boosting-jobseeker-wouldnt-keep-australians-away-from-paid-work-150454">no role in creating unfilled vacancies</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/new-finding-boosting-jobseeker-wouldnt-keep-australians-away-from-paid-work-150454">New finding: boosting JobSeeker wouldn't keep Australians away from paid work</a>
</strong>
</em>
</p>
<hr>
<p>Emeritus Professor Margaret Nowak said JobSeeker had been driven to the point where it denied unemployed Australians the shelter, food and transport they needed to find work.</p>
<p>Former Liberal party leader John Hewson described the failure to adjust JobSeeker for three decades as “immoral”, and a national disgrace driven by “little more than prejudice”.</p>
<p>Going forward, there was overwhelming agreement among those surveyed that once JobSeeker was restored to an acceptable level, it should be linked to wages (in line with the pension) rather than increase with prices as before.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=525&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=525&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=525&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=660&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=660&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371656/original/file-20201127-21-zazdc3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=660&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Economic Society of Australia/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Two thirds of those surveyed want JobSeeker increase in line with wages, and of those who do not, several want the pension to increase more slowly in order to ensure the two move in sync.</p>
<p>Gigi Foster and Geoffrey Kingston propose a half-way house – increases in both the pension and JobSeeker halfway between increases in the consumer price index and wages.</p>
<h2>Wages determine living standards</h2>
<p>Others suggest practical measures to make JobSeeker better at getting Australians into jobs. Beth Webster suggests reducing the rate at which JobSeeker cuts out with hours worked to encourage part-time workers to take on more hours. </p>
<p>Tony Makin suggests a relocation allowance to help people take on jobs distant from their current place of residence. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-jobseeker-was-cut-the-unemployed-would-be-picking-fruit-why-thats-not-true-145951">'If JobSeeker was cut, the unemployed would be picking fruit'? Why that's not true</a>
</strong>
</em>
</p>
<hr>
<p>None of the economists surveyed expressed concern about the budgetary cost of restoring the relative position of JobSeeker, estimated by the Parliamentary Budget Office to be <a href="https://www.aph.gov.au/-/media/05_About_Parliament/54_Parliamentary_Depts/548_Parliamentary_Budget_Office/Costings/Publicly_released_costings/Increase_JobSeeker_Payment_-_PDF.pdf?la=en&hash=59041CBFEEC774088C1A01C00E49D639A79D9E2A">$4.8 billion</a> per year for an increase of $95 per week.</p>
<p>Several expressed a desire to put the issue behind them, increasing JobSeeker to a reasonable proportion of the pension or median wage and leaving it there so that, in the words of Saul Eslake, “this issue never arises again”.</p>
<hr>
<p><em>Individual responses</em></p>
<p><iframe id="tc-infographic-549" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/549/06d5035bc9e0e4f1a7b7d0a0a56d9d8442f23fcd/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/150364/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two-thirds of those surveyed want it linked to wages.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1505292020-11-20T06:30:57Z2020-11-20T06:30:57ZRetirement incomes review finds problems more super won’t solve<figure><img src="https://images.theconversation.com/files/370504/original/file-20201120-17-3ehf2x.jpg?ixlib=rb-1.1.0&rect=107%2C425%2C3239%2C1832&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Robyn Mackenzie/Shutterstock</span></span></figcaption></figure><p>It would be a waste if the Friday’s mammoth <a href="https://treasury.gov.au/publication/p2020-100554">Retirement Incomes Review</a> was remembered only for its finding that increases in employers compulsory superannuation contributions come at the expense of wages.</p>
<p>That has <a href="https://theconversation.com/workers-bear-71-to-100-of-the-cost-of-increases-in-compulsory-super-150461">long been assumed</a>, and is what was <a href="https://treasury.gov.au/sites/default/files/2019-10/afts_retirement_incomes_consultation_paper.pdf">intended</a> when compulsory super was set up.</p>
<p>Compulsory super contributions are set to increase in five annual steps of<a href="https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage"> 0.5% of salary between 2021 and 2025</a>. </p>
<p>These are much bigger increases than the earlier two of 0.25% in 2012 and 2013.</p>
<p>And the wage rises they will be taken from will be much lower. The latest figures released on Wednesday point to shockingly low annual wage growth of <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/sep-2020">1.4%</a>. </p>
<p>Should each of the scheduled increases in employers compulsory super knock 0.4 points off wage growth (which is what the review expects) annual wage growth would sink from 1.4% to 1%. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/workers-bear-71-to-100-of-the-cost-of-increases-in-compulsory-super-150461">Workers bear 71% to 100% of the cost of increases in compulsory super</a>
</strong>
</em>
</p>
<hr>
<p>Private sector wage would sink from 1.2% to 0.8%, in the absence of something to push it back up.</p>
<p>Because inflation will almost certainly be higher than 1%, it means the buying power of wages would go backwards, all for the sake of a better life in retirement.</p>
<p>The review presents the finding starkly. Lifting compulsory super contributions from 9.5% of salary to 12% will cut working-life incomes by about 2%.</p>
<p>And for what? It’s a question the review spends a lot of time examining.</p>
<h2>Most retirees have enough</h2>
<p>The review dispenses with the argument that the goal of a retirement income system should be “<a href="https://treasury.gov.au/sites/default/files/2020-11/p2020-100554-00bkey-observations_0.pdf">aspirational</a>”, or to provide people with higher income in retirement than they had in their working lives. </p>
<p>It finds that for retirees presently aged 65-74 the replacement rates for middle to higher income earners are generally adequate. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=962&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=962&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=962&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1210&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1210&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265468/original/file-20190324-36267-olwp2z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1210&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage">Source: Australian Tax Office</a></span>
</figcaption>
</figure>
<p>Many lower-income earners get more per year in retirement than they got while working.</p>
<p>If the increases in compulsory super proceed as planned, this will extend to the bottom 60% of the income distribution. </p>
<p>They’ll enjoy a higher standard of living in retirement than while working (and will enjoy a lower standard of living while working than they would have). </p>
<p>Most retirees die with most of what they had when they retired, leaving it as a bequest. They are reluctant to “eat into” their super and other savings because of concerns about possible future health and aged care costs, and concerns about outliving savings.</p>
<p>The review quite reasonably sees this as a <a href="https://treasury.gov.au/sites/default/files/2020-11/p2020-100554-00bkey-observations_0.pdf">betrayal</a> of the purpose of government-supported super, saying</p>
<blockquote>
<p>superannuation savings are supported by tax concessions for the purpose of retirement income and not purely for wealth accumulation</p>
</blockquote>
<h2>It’s the pension that matters</h2>
<p>The pension does what super cannot. It provides a buffer for retirees whose income and savings fall due to market volatility, and for those who outlive their savings. 71% of people of age pension age get it or a similar payment. More than 60% of them get the full pension. </p>
<p>If there’s one key message of the review, it is this: it is the pension rather than super that matters for maintaining living standards in retirement, which is what the review was asked to consider.</p>
<p>It is also cost-effective compared to the growing budgetary cost of the super tax concessions.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-we-should-worry-less-about-retirement-and-leave-super-at-9-5-106237">Why we should worry less about retirement - and leave super at 9.5%</a>
</strong>
</em>
</p>
<hr>
<p>The age pension costs 2.5% of GDP and is set to fall to 2.3% of GDP over the next 40 years as the super system matures and tighter means tests bite.</p>
<p>Treasury modelling prepared for the review shows that if more money is directed into super and away from wages as scheduled, the annual budgetary cost of the super tax concessions will exceed the cost of the pension by 2050.</p>
<h2>There’s a real retirement income problem</h2>
<p>A substantial proportion of Australians, about 30%, are financially worse off in retirement than while working, and they are people neither super nor the pension can help.</p>
<p>Mostly they are older Australians who have lost their jobs and cannot get new ones before they before eligible for the age pension or become old enough to get access to their super. Often they’ve left the workforce due to ill health or to care for others and are forced to rely on JobSeeker, which is well below the poverty line.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-more-compulsory-super-here-are-5-ways-to-actually-boost-retirement-incomes-132655">Forget more compulsory super: here are 5 ways to actually boost retirement incomes</a>
</strong>
</em>
</p>
<hr>
<p>It’s much worse if they rent privately. About one quarter of retirees who rent privately are in financial stress, so much so that the review finds even a 40%
increase in the maximum Commonwealth Rent Assistance payment wouldn’t be enough to get them a decent standard of living in retirement.</p>
<h2>No recommendations, but findings aplenty</h2>
<p>The review was not asked to produce recommendations. Instead, while noting that much of the system works well, it has pointed to things that need urgent attention. </p>
<p>It finds that pouring a greater proportion of each pay packet into the hands of super funds is not the sort of attention needed, and in the present unusual circumstances could <a href="https://treasury.gov.au/sites/default/files/2020-11/p2020-100554-complete-report.pdf">cost jobs</a> as employers who can’t take the extra cost out of wages take it out of headcount.</p>
<p>The government will make a decision about whether to proceed with the legislated increase in compulsory super in its May budget, just before the first of the five increases due in July.</p><img src="https://counter.theconversation.com/content/150529/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Most Australians get enough to live on in retirement. Some get more they get while working, but 30% get less, and boosting super won’t help them.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1489802020-11-09T19:05:54Z2020-11-09T19:05:54ZJobMaker is nowhere near bold enough. Here are four ways to expand it<figure><img src="https://images.theconversation.com/files/368076/original/file-20201107-19-1ya5fvk.jpg?ixlib=rb-1.1.0&rect=1046%2C260%2C2613%2C1706&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AlessandroBiascioli/Shutterstock</span></span></figcaption></figure><p>The government has targeted its <a href="https://budget.gov.au/2020-21/content/factsheets/download/jobmaker_hiring_credit_factsheet.pdf">JobMaker Hiring Credit</a> too narrowly.</p>
<p>The scheme to go before the Senate this week will give employers who take on someone aged 16 to 29 years who has been on JobSeeker or a related benefit a bonus of A$200 per week, and a bonus of $100 per week if the person is aged 30 to 35 years.</p>
<p>New hires older than 35 won’t attract a bonus, and nor will new hires who have been out of work but not on JobSeeker.</p>
<p>The bonus will last for up to a year.</p>
<p>There are reasons to focus on young people. Youth unemployment is 14.5%, almost double the economy-wide average, and young people have lost more working hours than older people.</p>
<p>Also, young people will arguably be scarred for longer by the experience of unemployment (although many older people will be scarred for just as long or longer, never returning to work).</p>
<p>But Australians aged 35 and younger make up less than half of those on JobSeeker.</p>
<p>Most – about 800,000 of the 1.5 million – are older than 35.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/368169/original/file-20201109-19-1h602b1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://grattan.edu.au/wp-content/uploads/2020/10/Submission-JobMaker-26-October-2020.pdf">Grattan Institute, DSS</a></span>
</figcaption>
</figure>
<hr>
<p>With Victoria reopening, summer coming and the treasurer talking confidently about “fighting back”, it is easy to forget how serious our unemployment problem is.</p>
<p>Unemployment is at 6.9%, the highest it’s been this century. If the thousands working zero hours on JobKeeper were included, it would be higher still. Even without including those people, treasury the unemployment rate to reach <a href="https://budget.gov.au/2020-21/content/bp1/download/bp1_bs2.pdf">8%</a> by Christmas. </p>
<p>Official forecasts say unemployment won’t fall to 5.5% for three-and-a-half years, until mid 2024, an extraordinarily <a href="https://grattan.edu.au/news/no-snapback-australia-is-heading-for-an-unreasonably-slow-recovery/">slow recovery</a> by the standard of previous downturns.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/in-defence-of-jobmaker-not-perfect-but-much-to-like-147898">In defence of JobMaker: not perfect, but much to like</a>
</strong>
</em>
</p>
<hr>
<p>JobMaker as presently configured won’t do enough to speed it up. </p>
<p>The budget speech said the hiring credit would support around <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/budget-speech-2020-21">450,000</a> jobs , but treasury has since told a Senate hearing that only about 10% of those jobs will be jobs that wouldn’t have been created anyway – <a href="https://www.theguardian.com/australia-news/2020/oct/26/jobmaker-will-create-just-10-genuinely-additional-jobs-of-coalitions-total-pledge-treasury-says">about 45,000</a>.</p>
<p>In our <a href="https://grattan.edu.au/submissions/jobmaker-needs-to-be-more-ambitious/">submission</a> to the Senate inquiry into JobMaker we recommended four fundamental changes.</p>
<h2>1. Open it to all ages</h2>
<p>Opening the scheme to new employees of all ages, not just those age 35 or younger, could more than double the reach of the scheme. </p>
<p>It would also roughly double its cost, from $4 billion to roughly $8 billion, but that cost would remain <a href="https://theconversation.com/now-well-need-100-120-billion-why-the-budget-has-to-spend-big-to-avoid-scarring-145489">modest</a> in the context of the government’s stimulus spending to date.</p>
<p>Targeting younger workers would make sense if expenditure needed to be highly constrained, but with a need for more government spending rather than less there is no point in making the subsidy available to only some of the people who could benefit from it.</p>
<h2>2. Extend it beyond the unemployed</h2>
<p>Limiting the credit to jobs filled by new hires who have been on JobSeeker or a related payment is unnecessarily constraining. </p>
<p>If the most suitable candidate for a role is already employed, hiring that person provides an opportunity for someone else to fill their old position. If it is a new job, it is likely to ultimately put an unemployed person into work. </p>
<p>The goal ought to be to strengthen overall labour demand, not to encourage only the subset of job creation where the new job happens to be a good match for someone presently unemployed.</p>
<h2>3. Allow more employers to use it</h2>
<p>The scheme requires employers to demonstrate that new hires have boosted payroll beyond where it was in the three months to September 30 2020.</p>
<p>But the payroll baseline is defined as including jobs supported by <a href="https://theconversation.com/the-key-to-the-success-of-the-130-billion-wage-subsidy-is-retrospective-paid-work-135042">JobKeeper</a>. </p>
<p>As firms become ineligible for JobKeeper, and the payment rate is reduced <a href="https://treasury.gov.au/coronavirus/jobkeeper/extension">in January and again in March</a>, many businesses that relied on the payment will have to lay off staff. As a result, they will have an actual payroll bill well below where it was in the three months to September 30 2020.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/budget-2020-promising-tax-breaks-but-relying-on-hope-147012">Budget 2020: promising tax breaks, but relying on hope</a>
</strong>
</em>
</p>
<hr>
<p>This will effectively <a href="https://grattan.edu.au/wp-content/uploads/2020/10/Submission-JobMaker-26-October-2020.pdf">exclude them from the scheme</a>, giving them no extra incentive to retain staff as they come off JobKeeper, or to increase working hours or hire more staff as conditions improve.</p>
<p>The government should ease the criteria to require employers to only demonstrate that they have boosted payroll <em>net</em> of JobKeeper receipts.</p>
<h2>4. Ban ‘harvesting’</h2>
<p>The test should be more demanding. As designed, employers can claim back up to 100 per cent of an increase in their payroll, which creates incentives for employers to “harvest” credits by converting full-time jobs to part-time.</p>
<p>As an example, an employer who reduces the hours of an existing employee from 40 per week to 20, while hiring two new employees at 20 hours each would be able to claim the hiring credit twice – despite total hours worked and wages paid increasing by only one 20 hour job. </p>
<p>This could be fixed by requiring each new hire to boost payroll by a multiple of credit paid.</p>
<h2>A better, simpler model</h2>
<p>A better model would be to simply pay employers a proportion of their payroll growth, as proposed by economist <a href="https://www.afr.com/policy/economy/how-jobstacker-could-replace-jobkeeper-in-the-budget-20200904-p55slx">Peter Downes</a>.</p>
<p>Our calculations suggest that as presently designed JobMaker will skew employment towards lower-wage, part-time jobs. </p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=378&fit=crop&dpr=1 600w, https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=378&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=378&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=475&fit=crop&dpr=1 754w, https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=475&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/368238/original/file-20201109-13-jb7o61.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=475&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://grattan.edu.au/wp-content/uploads/2020/10/Submission-JobMaker-26-October-2020.pdf">Sources: Fair Work Commission, ABS and Grattan Institute calculations</a></span>
</figcaption>
</figure>
<hr>
<p>A rebate on additional payroll would instead encourage employment growth of all types – full-time as well as part-time, and extra hours worked by existing staff. </p>
<p>But even such a better-designed credit won’t help much if there’s weak demand for workers. To get it, we will need more stimulus, more government spending.</p>
<h2>Either way, we’re going to have to boost the economy</h2>
<p>Our estimate is that an extra <a href="https://theconversation.com/no-snapback-the-budget-sets-us-up-for-an-unreasonably-slow-recovery-heres-how-148098">$50 billion</a> would drive unemployment down to 5% and kickstart wage growth nearly two years ahead of the government’s schedule. </p>
<p>There are plenty of <a href="https://grattan.edu.au/news/budget-2020-unfinished-business-in-a-business-friendly-blueprint/">good options</a> for doing it, and a more ambitious JobMaker is one of them.</p><img src="https://counter.theconversation.com/content/148980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.</span></em></p><p class="fine-print"><em><span>Matthew Cowgill and Tim Helm do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It isn’t available to the bulk of the unemployed, it isn’t available to people who’ve been on JobKeeper rather than JobSeeker, and employers can overclaim.Brendan Coates, Program Director, Household Finances, Grattan InstituteMatthew Cowgill, Senior Associate, Grattan InstituteTim Helm, Senior Associate, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1470992020-10-01T20:03:55Z2020-10-01T20:03:55ZThe 5-prong plan for a budget that will set us up for the future<p>For three decades, Australia’s economic story has been marked by abundance and wealth. Much of it has flowed from minerals, and a good deal more from earlier economic reforms.</p>
<p>COVID-19 has exposed how unprepared we are for a new uncertain reality. </p>
<p>Next week’s budget most certainly does have to address the recession we are in. But it also has to get us in shape for what’s ahead.</p>
<p>Property and resources booms have masked structural weaknesses.</p>
<p>Even before this crisis, our productivity growth had begun to lag other nations – and this was in the midst of a widespread productivity slowdown among advanced nations, dubbed “<a href="https://theconversation.com/vital-signs-if-we-fall-into-a-recession-and-we-might-well-have-ourselves-to-blame-118387">secular stagnation</a>” by former US Treasury Secretary Larry Summers.</p>
<p>Australia is ranked 22nd by Cornell University’s <a href="https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf">Global Innovation Index</a>, 16th in competitiveness by the <a href="https://www.weforum.org/reports/the-global-competitveness-report-2018">World Economic Forum</a>, and outside the top 20 on multiple indicators of <a href="https://www.industry.gov.au/data-and-publications/australian-innovation-system-report/australian-innovation-system-report-2017">industry and business collaboration</a>.</p>
<p>Performing better won’t happen by itself.</p>
<p>The <a href="https://bit.ly/349MOj1">Budget Blueprint</a> we released this week suggests a five-prong plan.</p>
<h2>1. Continued financial support</h2>
<p>We need to set aside any usual concerns about public debt for the good of the nation. Providing too little support or withdrawing it too quickly would threaten our fledgling recovery. But we should prioritise support that has the best bang for buck, avoids perverse incentives, and adapts to changing circumstances.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361028/original/file-20201001-17-11rhr5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>We are suggesting</p>
<ul>
<li><p>Bringing forward planned personal tax cuts</p></li>
<li><p>Revenue-contingent loans for small and medium businesses.</p></li>
<li><p>Immediate capital expensing and hiring incentives for small and medium businesses</p></li>
<li><p>Investment in projects high on Infrastructure Australia’s priority list</p></li>
<li><p>Household cash stimulus payments of A$1,000 per adult earning less than $100,000 plus $500 for each dependent, and a further $750 for government payment recipients</p></li>
</ul>
<p>(The stimulus payments would hardly be a first. The Rudd government handed out two cash payments during the global financial crisis. The Morrison government handed $750 to pensioners, Newstart recipients, family tax beneficiaries, and other social security recipients early in the coronavirus crisis.)</p>
<h2>2. Medium-term fiscal discipline</h2>
<p>A ratcheting up of government debt over time poses big risks. Our existing fiscal and tax settings are ill-equipped to repay a net debt approaching A$1 trillion.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361035/original/file-20201001-16-d28sja.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>We suggest</p>
<ul>
<li><p>Accounting separately in the budget papers for the cyclical and structural deficits</p></li>
<li><p>Credibly committing to drawing down net debt faster than through bracket creep alone</p></li>
<li><p>Increasing the cap on tax receipts from its current level of 23.9% of GDP</p></li>
<li><p>Committing to overhauling our tax and transfer system</p></li>
</ul>
<h2>3. Compassionate social initiatives</h2>
<p>During the crisis we have taken welcome steps to protect vulnerable Australians, but we need to do more. Societies are judged by how they treat their most vulnerable.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361033/original/file-20201001-22-wn1eft.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>We suggest</p>
<ul>
<li><p>Targeted interventions and retraining to address the pandemic’s disproportionate impact on women and young people in the workforce</p></li>
<li><p>Additional funding for support services and strengthen legal protections to combat domestic violence</p></li>
<li><p>Permanent Medicare funding for bulk-billed telehealth services (psychologists, psychiatrists, and GPs) for those at risk of mental illness and suicide</p></li>
<li><p>Boosting funding for social housing to reduce the impact of homelessness and housing insecurity while supporting economic activity</p></li>
</ul>
<h2>4. Clean, cheap and reliable energy</h2>
<p>Many governments have leveraged COVID-19 stimulus to invest in clean energy. With excellent renewable resources and a strong clean-technology sector, Australia can play a key role in accelerating the transition to a low-carbon world.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361039/original/file-20201001-21-kbx4zb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>We suggest</p>
<ul>
<li><p>Increasing funding to the Clean Energy Financing Corporation’s Innovation Fund and decrease its required rate of return</p></li>
<li><p>Creating a “Grid Expansion Fund” to publicly finance critical electricity transmission projects</p></li>
<li><p>Recasting the regulatory investment test for transmission infrastructure to include carbon emissions</p></li>
<li><p>Conducting rigorous cost-benefit analyses of investment options in the technologies other nations are investing in during the crisis such as green hydrogen and steel</p></li>
</ul>
<h2>5. Setting things up for the next boom</h2>
<p>The record-high debt incurred in World War II was followed by rapid growth that helped us pay it down. Getting us on a similar path today will require an industry policy that supports dynamism.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361044/original/file-20201001-13-1m70all.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>We suggest</p>
<ul>
<li><p>Redesigning JobSeeker, offering more generous support in a smarter way to encourage better matches of workers to firms discourage over-reliance on welfare</p></li>
<li><p>Reforming and better funding the higher-education sector to promote competition and better prepare workers for the jobs of the future</p></li>
<li><p>Committing to supporting research, development, and deployment in science, technology, engineering, and related fields to drive innovation and productivity</p></li>
<li><p>Improving access to capital for young and fast-growing firms, learning from successful international efforts such as the Israel Innovation Fund</p></li>
</ul>
<p>Nothing focuses the mind like a crisis.</p>
<p>We think that with the right policy settings it is possible to get out of the slump we are in while creating the conditions that will ignite the next boom.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-back-boosts-to-jobseeker-and-social-housing-over-tax-cuts-146914">Top economists back boosts to JobSeeker and social housing over tax cuts</a>
</strong>
</em>
</p>
<hr>
<p>Even better, we think it can be done while assisting the vulnerable and refashioning our energy system.</p>
<p>It’s a tall but important order. We are hoping for some first steps in the first pandemic budget on Tuesday night.</p><img src="https://counter.theconversation.com/content/147099/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Hamilton is chief economist at the Blueprint Institute.</span></em></p><p class="fine-print"><em><span>Daniel D'Hotman is a senior researcher at the Blueprint Institute.</span></em></p><p class="fine-print"><em><span>Josh Steinert is a researcher at the Blueprint Institute. </span></em></p>The budget needs to spend big, but it shouldn’t stop there.Steven Hamilton, Visiting Fellow, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityDaniel D'Hotman, DPhil Candidate, University of OxfordJosh Steinert, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1469902020-09-30T20:03:34Z2020-09-30T20:03:34ZMeet the Liveable Income Guarantee: a budget-ready proposal that would prevent unemployment benefits falling off a cliff<figure><img src="https://images.theconversation.com/files/360725/original/file-20200930-24-z395fs.jpg?ixlib=rb-1.1.0&rect=32%2C297%2C2970%2C1666&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Ben Jeayes/Shutterstock</span></span></figcaption></figure><p>The economic crises that have punctuated the 21st century, most notably the global financial crisis and the COVID-19 crisis, have led to a growing realisation that alternatives to our present system are <a href="https://theconversation.com/whatever-it-takes-should-now-include-a-universal-basic-income-134405">possible and perhaps inevitable</a>. </p>
<p>In particular, there has been an erosion of the belief that the economy is able to provide a decent income to everyone who wants to work.</p>
<p>A number of proposals have been put forward in the wake of this realisation, among them</p>
<ul>
<li><p><a href="https://griffithlawjournal.org/index.php/gjlhd/article/view/1056">universal basic income</a>, which would unconditionally provide every resident (children and adults) with a regular subsistence wage</p></li>
<li><p>a <a href="https://www.theaustralian.com.au/commentary/the-case-for-a-government-jobs-guarantee/news-story/dee6e9545cd5af967c853e2f0481b02d">job guarantee</a> in which the government would provide real jobs, at the minimum wage, to all unemployed Australians</p></li>
</ul>
<p>Many seem utopian, which isn’t necessarily a bad thing – it’s good to look beyond the day-to-day to consider how things could be done differently. </p>
<p>In a new Australian National University Policy Brief we propose something practical, which we are calling a <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/uploads/taxstudies_crawford_anu_edu_au/2020-09/complete_liveable_income_sep_2020_0.pdf">Liveable Income Guarantee</a> (LIG).</p>
<h2>Take the age pension..</h2>
<p>It starts with one of the most successful institutions we’ve got: the age pension.</p>
<p>Before the age pension was introduced in 1908, retired Australians were highly likely to be poor. But now, on some measures, retired Australians are less likely to be in poverty than Australians of less than pension age.</p>
<p>Our proposal is to replicate this success for the entire population.</p>
<p>We are proposing a payment equal to the pension, and subject to the same asset and income tests, that would be provided to everyone who is willing to make a contribution to society consistent with their ability to do so.</p>
<h2>…extend it to others</h2>
<p>“Contribution” would be defined broadly to maximise contributions. Examples would include full-time study, volunteering, caring for children, ecological care, and starting a small business.</p>
<p>The biggest shift relates to the treatment of unemployed workers and single parents. </p>
<p>JobSeeker is set to return to the <a href="https://www.theguardian.com/australia-news/2019/may/15/living-on-newstart-i-dont-eat-every-day-that-saves-some-money-i-guess">unliveable</a> rates of the former Newstart after <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/jobkeeper-payment-and-income-support-extended">the end of December</a>.</p>
<p>We are suggesting that instead it be lifted to the rate of the age pension, which is about where it used to be before unemployment benefits were frozen in real terms in the 1990s.</p>
<hr>
<p><strong>Newstart versus the age pension</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/360709/original/file-20200930-20-1qsaae6.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Dollars per fortnight, single.</span>
<span class="attribution"><span class="source">Source: Ben Phillips ANU, DSS</span></span>
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</figure>
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<p>Parenting Payments have also been notoriously low, especially for single parents, whose support has been cut consecutively by five prime ministers from <a href="https://theconversation.com/its-not-just-newstart-single-parents-are-271-per-fortnight-worse-off-labor-needs-an-overarching-welfare-review-107521">Howard to Turnbull</a>.</p>
<p>Unlike some proposals for a universal payment to all citizens, the increased expenditure required for the liveable income guarantee would be relatively modest, as little as A$20 billion a year. </p>
<h2>Do it for the price of tax cuts…</h2>
<p>This is roughly comparable to the budget cost of the income tax cuts, primarily directed to high earners, legislated to take effect in <a href="https://www.news.com.au/finance/economy/australian-economy/the-rich-to-get-huge-tax-cuts-under-scott-morrisons-plan/news-story/bedfdb64550ccd7e50a21c1baaf394be">2022 and 2024</a>.</p>
<p>The real barriers to the adoption of the proposal are ideological. The central assumption underlying economic policy in Australia has been that in a market economy everyone who wants a decent job is capable getting one. </p>
<p>It has followed that the unemployed are seen as either unwilling to work or suffering from particular deficits that need to be remedied by training and job readiness programs <a href="https://theconversation.com/australia-has-been-stigmatising-unemployed-people-for-almost-100-years-covid-19-is-our-big-chance-to-change-this-143349">case by case</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-jobseeker-was-cut-the-unemployed-would-be-picking-fruit-why-thats-not-true-145951">'If JobSeeker was cut, the unemployed would be picking fruit'? Why that's not true</a>
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<p>Over the first two decades of this century, it has become evident this assumption is incorrect. The global financial crisis and the subsequent swing to austerity produced sustained high unemployment in much of the developed world.</p>
<p>While Australia avoided the worst consequences thanks to well-timed stimulus (here and in China) the unemployment rate has failed to fall below 5% as underemployment has climbed for more than a decade. </p>
<p>Any prospect of a rapid return to full employment have been dashed by the pandemic. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-jobs-market-is-nowhere-near-as-good-as-youve-heard-and-its-changing-us-132249">The jobs market is nowhere near as good as you've heard, and it's changing us</a>
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<p>Longer term it is clear that many existing jobs will disappear as a result of technological change, and it isn’t clear that our current institutions will be able to manage the process. </p>
<p>While governments should commit to a return to full employment, they are unlikely to be completely successful. </p>
<h2>Ready us for the future</h2>
<p>The implementation of a liveable income guarantee would allow us to be better prepared in case they are not and to be better prepared for future disruptions, be they pandemics or anything else.</p>
<p>On the brighter side, technological progress has increased our productive capacity to the point where we can afford to support a much wider range of non-market contributions to a market economy. The crisis has shown us how important <a href="https://theconversation.com/each-budget-used-to-have-a-gender-impact-statement-we-need-it-back-especially-now-144849">many of those contributions are</a>.</p>
<p>Looking beyond the crisis, it is possible (relatively simple) to create a society in which everyone has a decent standard of living, and no one is excluded. </p>
<p>Providing dignity to everyone who makes a contribution would benefit us all.</p><img src="https://counter.theconversation.com/content/146990/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elise Klein is a board member of the Institute of Postcolonial Studies and a member of the Basic Income Earth Network.</span></em></p><p class="fine-print"><em><span>Troy Henderson is a member of the Basic Income Earth Network. </span></em></p><p class="fine-print"><em><span>John Quiggin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We could do it for the price of tax cuts.John Quiggin, Professor, School of Economics, The University of QueenslandElise Klein, Senior Lecturer, Australian National UniversityTroy Henderson, Lecturer in Political Economy, University of Sydney, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1469142020-09-26T22:58:53Z2020-09-26T22:58:53ZTop economists back boosts to JobSeeker and social housing over tax cuts<figure><img src="https://images.theconversation.com/files/360106/original/file-20200926-16-1l5r11n.png?ixlib=rb-1.1.0&rect=0%2C0%2C3473%2C1994&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Wes Mountain/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Overwhelmingly, Australia’s leading economists want the budget to boost social housing and the JobSeeker unemployment benefit rather than bring forward personal income tax cuts.</p>
<p>The 49 eminent economists who responded to Conversation-Economic Society of Australia pre-budget survey were asked to rate 13 options in terms of “bang for the buck” – effectiveness in boosting the economy over the next two years.</p>
<p>Among the options offered were boosting JobSeeker (previously called Newstart), wage subsidies beyond the expiry of JobKeeper, one-off cash payments to households, big infrastructure spending, bringing forward the personal income tax cuts, and company tax cuts.</p>
<p>The options were selected by a committee of the central council of the Economics Society and were presented to each surveyed economist in a random (shuffled) order.</p>
<p>The economists surveyed are Australia’s leaders in the fields of microeconomics, macroeconomics, economic modelling and public policy. Among them are former and current government advisers, former heads of statutory authorities, and a former member of the Reserve Bank board.</p>
<p>Each was asked to nominate the four most effective options for boosting the economy.</p>
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<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=786&fit=crop&dpr=1 600w, https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=786&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=786&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=988&fit=crop&dpr=1 754w, https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=988&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/360139/original/file-20200927-16-9ch9p1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=988&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption"></span>
<span class="attribution"><span class="source">Economic Society of Australia/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>The most popular option, endorsed by 55% of those surveyed, was boosting spending on social housing.</p>
<p>University of Melbourne econometrician Lisa Cameron said the budget provided an unusual opportunity to fix things for the long term while boosting the economy. </p>
<p>Social housing would leave us with something worthwhile (as did the school hall building program during the global financial crisis) in addition to providing work for the building industry. Alleviating homelessness would be a lasting benefit.</p>
<h2>If it goes to the unemployed, it will be spent</h2>
<p>The second most popular option, endorsed by 51%, was permanently boosting JobSeeker, previously known Newstart. The temporary boost in the A$282.85 per week payment was wound back last week and will end in December.</p>
<p>Melbourne University economist John Freebairn pointed out that with no real increase in Newstart since 1993 and many on it in demonstrable poverty, every extra cent spent on it will be spent rather than saved. </p>
<p>Supported by fewer than half of those surveyed, but third most popular at 45%, was more funding for education and training.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/should-the-government-keep-running-up-debt-to-get-us-out-of-the-crisis-overwhelmingly-economists-say-yes-143089">Should the government keep running up debt to get us out of the crisis? Overwhelmingly, economists say yes</a>
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<p>Flinders University labour market specialist Sue Richardson said education was
labour-intensive, which would help with employment, and would assist young people severely hit by the pandemic to get the skills they would need to get jobs rather than stay unemployed.</p>
<p>Matthew Butlin, who heads the South Australian Productivity Commission, said the decimation of income from student fees means universities will have less money to subsidise research. There was a case for more direct funding of university research in the form of competitive grants for projects with practical applications.</p>
<p>The fourth most popular option was infrastructure spending, supported by 41%.</p>
<h2>Why not a Hoover Dam, a new Opera House?</h2>
<p>Many made the point that the projects chosen would have to be worthwhile in their own right, and feared this might not be the case. Others looked to big “nation building” projects along the lines of the Hoover Dam in the United States which was built during the Great Depression and employed 21,000 people.</p>
<p>“Why not building a massive dam in Australia? Why not building a new Sydney Symphony Orchestra building like the Berlin Philharmonie? Why not expand the National Parks? Why not building green libraries all over Australia?,” asked Sydney University’s Stefanie Schurer. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/homelessness-and-overcrowding-expose-us-all-to-coronavirus-heres-what-we-can-do-to-stop-the-spread-134378">Homelessness and overcrowding expose us all to coronavirus. Here's what we can do to stop the spread</a>
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<p>Done right, like the Sydney Harbour Bridge which was completed during the Great Depression, big imaginative projects could leave us with something valuable. </p>
<p>There was less enthusiasm for continued wage subsidies (35%) and an expanded investment allowance (29%) with University of NSW economist Gigi Foster saying investment allowances could be replaced with income-contingent loans along the lines of the Higher Education Contributions Scheme. </p>
<p>That way businesses could borrow to invest, with an obligation to repay if the investment paid off.</p>
<h2>If it goes on tax cuts, it might not be spent</h2>
<p>The same approach was taken by some to funding higher quality aged care (supported by 31%) and increasing subsidies for child care (29%).</p>
<p>Economic modeller Warwick McKibbin suggested funding child care through income-contingent loans (repayable on the basis of income) rather than subsidies. </p>
<p>Bringing forward the leglislated personal income tax cuts <a href="https://www.news.com.au/finance/economy/australian-economy/josh-frydenberg-reveals-20-billion-tax-cuts-will-be-fasttracked-amid-pandemic/news-story/8a20fe8f5b75a3ec6dbfe97eff367808">as proposed by the government</a> and cash payments to households were relatively unpopular, supported by 20% and 16%.</p>
<p>Saul Eslake said that while he agreed with the treasurer that early tax cuts would “put money in people’s pockets”, there was no guarantee the high earners “into whose pockets most of that money would be put”, would take it out and spend it in sufficient quantity.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/frydenberg-is-setting-his-budget-ambition-dangerously-low-146855">Frydenberg is setting his budget ambition dangerously low</a>
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<p>Eslake suggested that rather than supporting households with <a href="https://finance.nine.com.au/personal-finance/900-cash-bonus-who-gets-it/facdc354-9a48-4e9e-850c-2bb8705dbe29">cheques</a> as happened during the financial crisis, households could be handed time-limited tradeable vouchers that could be spent in areas hurt by restrictions, such tourism and the arts, or used for other worthwhile purposes such as childcare or reskilling.</p>
<p>Among those who did support bringing forward the tax cuts was John Freebairn, who said that although presented as cuts, what was proposed would do little more than restore what had been lost to bracket creep, keeping income tax steady.</p>
<h2>Company tax cuts an also-ran</h2>
<p>Company tax cuts, once touted by former prime minister Malcolm Turnbull as the key to <a href="https://www.smh.com.au/politics/federal/turnbull-government-s-company-tax-cuts-defeated-in-the-senate-20180821-p4zyrl.html">jobs and qrowth</a> garnered minimal support, being backed by just six of the 49 economists surveyed.</p>
<p>The least popular option, backed by only two economists surveyed, was government support for cleaner fossil fuels such as natural gas, as the <a href="https://theconversation.com/morrison-government-threatens-to-use-snowy-hydro-to-build-gas-generator-as-it-outlines-gas-fired-recovery-plan-146154">prime minister is promising</a>. In contrast 13 (26%) backed support for renewable energy.</p>
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<p><em>Individual responses</em></p>
<p><iframe id="tc-infographic-526" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/526/a74918a356bcbd21567286435b9d476fdeedcb62/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/146914/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>More than half back a permanent boost to JobSeeker. Only one in five want to bring forward tax cuts.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.