tag:theconversation.com,2011:/us/topics/jobseeker-payment-84449/articlesJobSeeker Payment – The Conversation2023-08-01T02:46:21Ztag:theconversation.com,2011:article/2106992023-08-01T02:46:21Z2023-08-01T02:46:21ZDutton’s JobSeeker plans would at first leave 640,000 worse off and 168,000 better off<figure><img src="https://images.theconversation.com/files/540337/original/file-20230801-57254-85o5vl.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6709%2C3561&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>If this year’s budget measures are passed by parliament in the current sitting, the government has indicated that the single rate of JobSeeker payment will increase by around <a href="https://www.theguardian.com/australia-news/2023/jul/30/jobseeker-to-rise-by-56-a-fortnight-but-albanese-government-unlikely-to-offer-further-boost">$56 per fortnight</a> in September. </p>
<p>This will be the result of the $40 per fortnight increase in basic payment promised in the budget, plus the usual half-yearly indexation increase on the new amount, which this time will be 2.2% - for a total increase of nearly $41.</p>
<p>However, the Opposition has indicated it will <a href="https://www.abc.net.au/news/2023-07-31/coalition-opposes-jobseeker-lift-moves-to-amend/102667552">oppose</a> the increase and seek to increase the “free area” recipients can earn before losing some JobSeeker benefits, from $150 to $300 per fortnight.</p>
<p>This would cut the increase due in September to the 2.2% from indexation, which would make it about $15 per fortnight. </p>
<p>Late on Monday, the Opposition made clear that if its amendment fails it <a href="https://www.aap.com.au/news/liberals-wont-stand-in-the-way-of-welfare-rise-dutton/">wouldn’t stand in the way</a> of the government’s plan, but it’s still worth asking which arrangement would benefit whom, and which would be more effective at getting job-seekers into work.</p>
<h2>More incentive to work?</h2>
<p>Currently, a single person receiving the JobSeeker payment can earn $150 per fortnight before their payment starts to be reduced by 50 cents for each dollar of earnings. Once their earnings exceed $256 per fortnight, the payment is reduced by <a href="https://www.servicesaustralia.gov.au/income-test-for-jobseeker-payment">60 cents</a> in the dollar. </p>
<p>Once they start to pay income tax, the combination of the reduction in benefits and the increase in tax produces a very high <a href="https://taxpolicy.crawford.anu.edu.au/publication/12578/effective-marginal-tax-rates">effective marginal tax</a> rate of 67.6%, meaning they lose 67.6% of the extra dollars they earn – much more than the highest-earning worker loses.</p>
<p>Opposition social services spokesman Michael Sukkar said increasing the income test free area before the benefits are reduced would make putting in more hours <a href="https://www.michaelsukkar.com.au/ministerial-media-releases/transcript-doorstop-mural-hall-parliament-house-act/">more rewarding</a>:</p>
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<p>There are 808,000 JobSeeker recipients across the nation of which more than 75% have zero reported earnings, with no part-time work. Increasing the income-free area before benefits are reduced incentivises those on working age payments to take up employment opportunities. </p>
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<img alt="alt text here" src="https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540339/original/file-20230801-234597-46v9tb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&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">The Opposition wants to increase the income test free area so job seekers can earn more before their benefit is reduced.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Winners vs losers</h2>
<p>Given the Opposition says its proposal would cost <a href="https://www.michaelsukkar.com.au/ministerial-media-releases/incentivising-jobseekers-to-enter-the-workforce/">$2.9 billion</a> less over four years than the government’s, there would obviously be losers compared with the government’s measure.</p>
<p>Those currently without earnings and those already earning up to $150 per fortnight would not immediately benefit – and instead of their payment going up by $56 per fortnight it would increase by about $15 in September, leaving them $41 per fortnight worse off.</p>
<p>People would start to benefit once they earned $150 per fortnight; they would break even when they earned around $200 per fortnight; and they would benefit the most from the Opposition’s proposal when they earned $300 per fortnight or more, keeping $55.60 per fortnight more than at present.</p>
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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>My calculations suggest this means that, at first, the Opposition’s plan would leave about 640,000 JobSeeker recipients worse off, and 168,000 better off.</p>
<p>But if the change in the income test encouraged more people into part-time work, more would benefit – although this would require people without earnings or earning little to find part-time jobs that pay at least $200 per fortnight.</p>
<p>It is hard to see how this could happen for all of them. </p>
<p>Even if all the 430,000 Australian jobs currently vacant were filled by people on JobSeeker who would benefit from the change, more than 200,000 would miss out and be worse off.</p>
<h2>Would the change get more people into work?</h2>
<p>Implicit in the claim that what the Coalition is proposing would get more people on JobSeeker into work is the assumption that what’s keeping them out of work is insufficient rewards from part-time work. But this might not be the case.</p>
<p>The Bureau of Statistics is now funded to publish statistics on barriers and incentives to labour-force participation on an annual basis, with the most recent publication being for <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/barriers-and-incentives-labour-force-participation-australia/latest-release#key-statistics">2020-21</a>. </p>
<p>That survey found the most common reason women were unavailable to start a job or work more hours within four weeks was “caring for children”, while for men it was “long-term sickness or disability”.</p>
<p>Wanting to maintain their level of social security payments is also a reason given for being unavailable for work, but it ranked tenth out of 11 reasons for parents, and seventh out of eight for people with long-term health conditions.</p>
<h2>Many on JobSeeker can’t easily seek jobs</h2>
<p>As shown in the chart below, the increasing share of people on unemployment benefits for five years or more parallels the growth in the share of people with only a partial capacity to work. It is currently almost 44% of people on JobSeeker, compared with just under 19% in 2012. </p>
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<p><iframe id="kU7Gc" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/kU7Gc/7/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>People living with a psychological or psychiatric disability or a musculoskeletal or connective tissue condition account for almost <a href="https://www.westernsydney.edu.au/__data/assets/pdf_file/0008/1880360/Dead_Ends_-_How_our_social_security_system_is_failing_people_with_a_partial_capacity_to_work.pdf">80%</a> of those assessed as having a partial capacity to work.</p>
<p>More than 60% of this group are aged over 45. Most of them are on JobSeeker long-term: 82% have been on it for a year or more, and more than half for five years or more.</p>
<p>The shift of these people to JobSeeker is the result of decisions of successive governments to reduce access to payments including the disability support pension and parenting payment single. </p>
<p>The increase in the threshold age for the age pension has also had a role – forcing people to stay on “unemployment” payments longer before receiving the pension.</p>
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Read more:
<a href="https://theconversation.com/australias-retirement-age-just-became-67-so-why-are-the-french-so-upset-about-working-until-64-208648">Australia's 'retirement age' just became 67. So why are the French so upset about working until 64?</a>
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<p>The <a href="https://www.oecd-ilibrary.org/social-issues-migration-health/faces-of-joblessness-in-australia_c51b96ef-en">OECD</a> found in 2019 that the most common employment obstacles in Australia were “limited work experience, low skills and poor health”.</p>
<p>While providing good incentives to work is an important part of reducing long-term disadvantage, it isn’t the main part. </p>
<p>What the Coalition is proposing would provide some people more incentive, but it wouldn’t attack the most important barriers.</p>
<p>And it would make one worse.</p>
<p>The government’s <a href="https://www.dss.gov.au/groups-councils-and-committees-economic-inclusion-advisory-committee/interim-economic-inclusion-advisory-committee-2023-24-report">Interim Economic Inclusion Advisory Committee</a> (of which I was a member) reported this year that the low level of JobSeeker was itself a barrier to employment. </p>
<p>It’s one the Opposition’s proposal would do nothing to reduce.</p><img src="https://counter.theconversation.com/content/210699/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 (EIAC). The views expressed are his own, not those of the EIAC.</span></em></p>The JobSeeker payment is set to increase by an extra $40 a fortnight from September, but only if the budget measure gets through parliament.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2054312023-05-10T12:44:16Z2023-05-10T12:44:16ZThe day after the night before - Chalmers and Taylor on the budget<p>Will the budget make inflation worse? Are its boosts to welfare payments just the first step for the Labor government? Could the projected one-off surplus be followed by another one or more? What (if any) of the budget measures will the Coalition oppose? There’s quite a bit about this budget that, as the saying goes, “only time will tell”. </p>
<p>In this podcast, Treasurer Jim Chalmers defends his budget from those economists who claim it will be inflationary, and strongly rejects suggestions it doesn’t have much for middle income Australians struggling with rising mortgage payments. Chalmers also promises that, given the current tight labour market, a priority in coming months will be finding ways to help more of the long-term unemployed into jobs. </p>
<p>Shadow treasurer Angus Taylor lists some of the measures the opposition supports but will not commit on the changes to the Petroleum Resource Rent Tax, despite the sector’s benign attitude to the cautious revamp.</p>
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<p>E&OE TRANSCRIPT
PODCAST INTERVIEW
THE CONVERSATION
THURSDAY, 11 MAY 2023</p>
<p>SUBJECTS: May Budget, inflation, interest rates, cost of living, NDIS, Petroleum Resource Rent Tax, JobSeeker, welfare increases, stage three tax cuts, surplus, labour market.</p>
<p>MICHELLE GRATTAN, HOST: Jim Chalmers, the economic argument about this Budget has come down to whether it will or will not add to inflation. A number of economists say it will, but you strongly reject that. Can you just take us through briefly your argument about why those economists are wrong.</p>
<p>JIM CHALMERS, TREASURER: Well, first after all there’s a lot of economists who have my view, including the considered advice of the Treasury. And the reason for that is because what we’ve done is we’ve designed the cost-of-living package in particular, to be particularly cognisant of the inflationary pressures in the economy. It’s spread out over four years – not all of the money hits the economy at once. And if you think about the next year, which is the year that the Opposition is focused on, a big chunk of the money we’re spending next year is the funding for the programs which are obviously ongoing but weren’t funded in an ongoing way. There’s also the impact of the small business tax breaks and some other reasons. So, overall, our Budget is designed to take some of the edge off these cost-of-living pressures, not add to the inflationary pressures in the economy, and you can see that in the Treasury’s forecasts.</p>
<p>GRATTAN: So you’re confident that the Reserve Bank will think that you’ve helped it, not hindered it in its push to contain inflation?</p>
<p>CHALMERS: Well, I’m always careful, as you know, Michelle, I don’t want to put words in the Reserve Bank Governor’s mouth in particular, they take their decisions independently. But obviously I wouldn’t be handing down a Budget that made their job more difficult. And in the context of the energy plan, the energy relief payments and some of the other measures in the Budget, we’re going out of our way to make their job easier.</p>
<p>GRATTAN: Now, in the Budget you’ve increased JobSeeker and related payments by a small amount. Do you see this as a first step only in raising these payments? You know you’ll have more advocacy from your inclusion advisory group next year, because that’s an ongoing exercise?</p>
<p>CHALMERS: Two quick things about that, I mean, first of all, having just handed down a Budget with an increase to the base rate of JobSeeker and the associated payments - and I’m not flagging what we might do in 364 days’ time in the next Budget or whenever it is - but the second point I’d make is that as a Labor government – and the Prime Minister makes this point repeatedly – we’re always looking to do what we can to help people, but we do that within the constraints of a really responsible Government and a really responsible Budget. And I think the overwhelming story out of this Budget is the fact that we’ve been able to be responsible and compassionate at the same time.</p>
<p>GRATTAN: Now, of course, we always seem to return to the stage three tax cuts. We’ve had two Budgets now where there’s been pressure, to which the Government hasn’t responded, to refashion those tax cuts. I know you say you’ve got no plans to do this, but can we take this as a never-ever pledge – that they’re definitely here to stay?</p>
<p>CHALMERS: Well, the point that I would make about that, Michelle, is similar to the point I’ve made all the other times I’ve been asked, including at the National Press Club after the Budget – and that is, changing these tax cuts wasn’t even part of our deliberations in this Budget. And our position hasn’t changed. That’s why the Budget doesn’t reflect any change. And they come in in more than a year’s time, but it hasn’t been something that we’ve been contemplating. I get asked from time to time from both directions – people want me to either guarantee it or they want me to say that they we will abolish them. We haven’t changed our position despite all the pressure coming at us from both directions. We think it’s important that you return bracket creep, particularly for people on lower and middle incomes - I said that at the Press Club as well. And we need to remember that these tax cuts kick in 45 grand, and we’ve always supported tax relief for people on modest incomes.</p>
<p>GRATTAN: You’d always have the option of going to an election to promise to do something later, of course.</p>
<p>CHALMERS: I’m not speculating about that. We haven’t changed our position. We’ve got a Budget which has done as much as we can, frankly, for the most vulnerable people, the people on the lowest incomes, and I’m proud of that.</p>
<p>GRATTAN: You’ve been a bit sensitive today when people have pointed out that the Budget doesn’t have anything particularly special for middle-income, mortgage-stressed people. Why do you refute that proposition?</p>
<p>CHALMERS: I don’t feel like I’m especially sensitive about it, but I do think it’s complete and utter rubbish. And the reason I think that is because we’ve been really careful in prioritising the most vulnerable. We haven’t neglected middle Australia. For example, big changes to bulk billing, a centrepiece of the Budget. A lot of people with kids under 16 will benefit from that right up and down the income scale. Cheaper early childhood education. We’ve actually copped a lot of flak for being too kind to middle Australia in our early childhood policies. They kick in on the 1st of July. Energy efficiency measures, the training package, the home guarantee, there’s a whole bunch – there are a whole bunch of policies in the Budget for middle Australia. It’s just that the focus of a lot of the commentary has been what we’re doing for the most vulnerable people. That’s a good thing from my point of view, we are doing what we can there but that doesn’t mean we’re neglecting middle Australia.</p>
<p>GRATTAN: The Budget forecasts some $15 billion in savings from the National Disability Insurance Scheme. That’s a big amount of money. What will be involved, and do you think people on the scheme will be alarmed, because this is a particularly delicate area for obvious reasons?</p>
<p>CHALMERS: Look, it is. I acknowledge that. And that’s why both in the Budget speech and in the speech the following day I’ve gone out of my way to say that our objective here – our number one objective – is to make sure that people are getting the care that they need and deserve and that was intended when we designed the scheme in the first place. But we need to get a handle on some of these increasing costs in the system. And Bill Shorten has been doing a terrific job working with the NDIA and the sector and others, and Anthony Albanese with the state and territory leaders to try and moderate the growth in the program, not because we want to cut it for its own sake but because we want to make sure we’re getting value for money for people who need it and rely on it.</p>
<p>GRATTAN: But you’re pointing to these savings, and that inquiry into the scheme hasn’t even reported – won’t report for a few months yet.</p>
<p>CHALMERS: But, I mean, as you would appreciate from – you know, you would have seen some of these processes before, there’s often kind of iterations, there’s often engagement with the review panel as it continues its work. And what we saw – what we would have seen in the Budget is about a $17 billion increase in the cost of the NDIS. There’s about $15 billion of savings that were able to be found to moderate that growth.</p>
<p>GRATTAN: That’s pretty huge.</p>
<p>CHALMERS: Well, I think it shows –</p>
<p>GRATTAN: 15 out of 17.</p>
<p>CHALMERS: Well, I think it shows that if you put the effort into it, making sure that every dollar goes to the people who need it in the scheme, you can make the scheme more sustainable. You can put it on a more sustainable footing. That’s what I want to see, because I believe in the NDIS. I want it to be here to stay, and in order for it to be here to stay we’ve got to moderate some of these costs.</p>
<p>GRATTAN: As Treasurer you give the impression that you’ve been much influenced by working for a Treasurer. And as a staffer, of course, you went through the Labor Government’s trauma with its resources tax. In undertaking changes announced in this Budget to the Petroleum Resource Rent Tax, you treated the sector really very much with kid gloves. You’ve engaged with that industry. How much were you influenced by your own experience before?</p>
<p>CHALMERS: I think everybody is in one way or another. I like to think that I’ve got my eyes forward in the job that I want to do and not trying to –</p>
<p>GRATTAN: But you’ve got a few scars from the past.</p>
<p>CHALMERS: I think everyone does, from their own experiences. I don’t want to pretend that I haven’t learned a lot in that pretty remarkable apprenticeship that I was fortunate to have. I mean, nobody’s come to this job –</p>
<p>GRATTAN: Don’t mention tax inquiry.</p>
<p>CHALMERS: Well, nobody’s come to this job with the kind of apprenticeship that I had for it, and I’m grateful for that. And most days I reflect on something I’ve learned, as people would in all walks of life in their work. But I try and look forward. I want to make my time in this job really count, and one of the things that I’m pleased about in extracting $2.4 billion of extra tax sooner out of offshore LNG projects -yes I went about it in a consultative way, that’s the tone that Anthony Albanese sets for his Government. That’s his expectations of us. If you can get a good outcome from working with people rather than against them, then I would have thought the onus is on all of us in all of our portfolios to try.</p>
<p>GRATTAN: Now, you’re celebrating a surplus for this financial year, although there are a couple of months to go.</p>
<p>CHALMERS: You won’t be seeing any Back in Black mugs or anything from me, Michelle, or any self-congratulation. There’s good reasons to be cautious.</p>
<p>GRATTAN: Just fingers crossed. But the Budget then projects deficits in the later years. But I’m just wondering whether there might be, not a trick here, but some optimism that’s not reflected in those figures – in other words, is it not possible, certainly next financial year, that with the savings, with the stream of revenue that’s still to come you could, in fact, get a surplus next financial year?</p>
<p>CHALMERS: Well, I’m not prepared to pre-empt that, and I don’t want to get ahead of ourselves. And I think there are genuinely good reasons to be cautious and careful and conservative, including, the history of my immediate predecessor that I just joked about. There is no point over promising and under delivering here. I’d rather avoid that.</p>
<p>GRATTAN: But you might over-deliver after the under-promising?</p>
<p>CHALMERS: Well, it remains to be seen what happens with the labour market, what happens with commodity prices and a range of other influences on the Budget. But I think there’s a good reason to be cautious and conservative, and that’s what I’m being.</p>
<p>GRATTAN: Now, I just want to finish on the labour market, and something that I asked you earlier at the Press Club, because I think it’s important and something our listeners would be interested in. The Budget does not focus much attention, even with this tight labour market, on getting the long-term unemployed into jobs. What priority are you giving this? What more can you do about it? And what’s your thinking ahead?</p>
<p>CHALMERS: Yeah, very important priority; very, very high on our list. And one of the reasons I’m so proud of the place-based initiatives for communities where we’ve had entrenched disadvantage and intergenerational long-term unemployment is we need to think differently about the communities, frankly, like the one I grew up in and the one that I represent now.</p>
<p>GRATTAN: Just explain that place-based community program.</p>
<p>CHALMERS: So there are programs around Australia which find the communities with a lot of disadvantage and they try and apply a hyperlocal approach with great local leaders backed by the Commonwealth Government to try and break the cycle of intergenerational disadvantage. And it involves the philanthropic sector, it involves all of the community organisations, support from all three levels of government. And what I’ve seen in my own community, a program called Logan Together and a guy called Matthew Cox, who’s been central to all my thinking on this, is if we get a good model and we can apply it to other communities like Logan around Australia, we give ourselves a chance of breaking this cycle so that we have fewer long-term unemployed people. And so we intervene early in people’s lives and all of these sorts of things that are really important. So that’s part of the thinking. You’ve asked me before about employment services. That’s important too. Surely we can do better there. I mean, surely. And so we’ve got an Employment White Paper. My colleague Julian Hill and others are doing a heap of work at the committee level to see if we can do that better. Tony Burke is in charge of that as the Employment Minister, and so I’d happily work very closely with him to see if we can make improvements there. But I think the overall objective is really important. When we’ve got unemployment three and a half per cent, even if it gets to four and a half per cent on the Budget forecasts, we need to do a much better job of actually hooking people up with the opportunities of a growing job-creating economy. Employment services, the Employment White Paper, the place’s based programs, the participation agenda we have around early childhood education, all of these things are important. We’ve done a heap of work, but there will be more to do.</p>
<p>GRATTAN: Jim Chalmers, thanks very much for talking with us today.</p>
<p>CHALMERS: Thanks for the opportunity, Michelle.</p>
<p>ENDS</p>
<hr>
<p>TRANSCRIPT
INTERVIEW WITH MICHELLE GRATTAN,
THE CONVERSATION
Wednesday 10th May 2023
Topics: Budget 2023
E&OE </p>
<p>MICHELLE GRATTAN: Angus Taylor, you’ve condemned this as a high taxing, high spending Labor budget, to what degree and where should the taxing and spending have been lower?</p>
<p>ANGUS TAYLOR: Well, can we start with the facts because it’s very important to understand the baseline here. Labor’s added $185 billion of spending since they got into government and crucially, in the new initiatives they’re pursuing. There’s $2 of spending for every dollar of revenue. And so, at a time when we need a budget that’s responsible to take pressure off inflation, that’s not what’s needed. Now, there’s many areas where we’ve already outlined our view, that spending is not appropriate at the moment. $45 billion of spending we’ve opposed in the Parliament in recent months, about $18 billion of interest cost attached to that. We do think that adding over 10,000 new public servants at the moment is not the right answer, particularly at a time when we do need to put this downward pressure on inflation. Outside of national security and frontline services there’s real questions about whether that is needed. </p>
<p>MICHELLE GRATTON: Well, what about the welfare spending, though? You’re saying there should be less of that, those initiatives?</p>
<p>ANGUS TAYLOR: Well, we’ll work through all of these, and we have our own processes as you know.</p>
<p>MICHELLE GRATTON: Sure, but they’re pretty obvious. </p>
<p>ANGUS TAYLOR: Well, no, because you’ve got to go through your process and make decisions as a Shadow Cabinet and I always respect that process and we should, you know, that’s how these things work. What I would say in general, as a matter of principle right now is that what really is needed is dealing with inflation at the source, not dealing with it through the symptoms. There’s no point putting a band aid on a bullet wound, you’ve got to go to the source and a budget that puts downward pressure on inflation is good for all Australians. Everybody is better off including the most vulnerable, you don’t have to pick and choose. We all benefit from the prices of the goods and services we buy being lower than they otherwise would be. </p>
<p>MICHELLE GRATTAN: But even taking that point, nevertheless, we’re in a situation where the very vulnerable people on JobSeeker and so on are needing more money, needing more assistance. Are you saying that was inappropriate? </p>
<p>ANGUS TAYLOR: I’m saying that the risk with this strategy is that you give with one hand and take away more with the other and we are seeing, we’ve got stagnant real wages in this election cycle over three years. They’re not growing, and that’s in the Budget papers. It’s very clear.</p>
<p>MICHELLE GRATTAN: But they are starting to grow over this next year.</p>
<p>ANGUS TAYLOR: In this election cycle, under Labor’s government real wages are flat. Over the three years and you know, this is real pain that’s being felt. There’ll be people listening to this out there now who feel substantially worse off than they were a year ago. And the truth is, if you’re a family with a mortgage right now, a typical family will be $25,000 a year worse off than they were a year ago. That is that is what inflationary pressures and interest rate pressures do to people’s standard of living. And the key here is to go to the source with a budget that is good for all Australians. You don’t need to discriminate. Everyone is better off. If you can take pressure off inflation. That should have been the focus of this budget, and it wasn’t.</p>
<p>MICHELLE GRATTAN: Now let’s go to this question of inflation and dig down. Jim Chalmers claims that the budget won’t put pressure on inflation. The Opposition says it will. What is your evidence? What is your argument that it will be inflationary?</p>
<p>ANGUS TAYLOR: Well, a couple of things I’d say, first is you’ve got two independent economists saying it will be inflationary people like Chris Richardson and Stephen Hamilton, have all made this point. Chris Richardson was very strong last night straight out of the box, saying that this will be inflationary.</p>
<p>MICHELLE GRATTAN: He’s had a bit of a clip around the ear from the Prime Minister.</p>
<p>ANGUS TAYLOR: Well, I mean, you know that’s how Labor works. If someone says something that Labor doesn’t like, they clip people around the year. That’s unfortunate, but the truth is, he is speaking out because if you have $185 billion of new spending since, they got into government, $2 of spending initiatives versus every dollar of revenue initiative, that is expansionary. Now, right now, we don’t need that. I mean, we know historically, if you want to deal with inflation, you’ve got to see fiscal consolidation. We also know the best kind of fiscal consolidation is to make sure your economy grows faster than you spend. We confronted this in the past. If you don’t have that you end up where we ended up in the 70s and 80s where central banks have to do all the work and the pain is enormous, Michelle, we, many of us, certainly my age and older remember that only too well and that’s not where we want to be in the coming months and years.</p>
<p>MICHELLE GRATTAN: So, do you think that this budget will push up interest rates?</p>
<p>ANGUS TAYLOR: I’m not going to make a forecast on interest rates. I mean, the Treasurer loves to make forecasts. Lots of people have been trying to forecast inflation and interest rates and frankly, they’ve largely been wrong. We saw, even last week, the Reserve Bank raised interest rates, the pundits, the capital markets, they all had it wrong. Economists had it wrong. So, the truth of the matter is the inflationary pressures have been stronger than has been predicted, substantially stronger than has been predicted and that’s why now it’s incumbent on the Government to take that risk away, to take those pressures off every Australian. There was an opportunity here to unite Australians behind the one thing that is hurting all of us. There was an opportunity to do that. They’ve missed that opportunity and I think both in terms of what’s right for Australia and politically frankly, there’s been a real opportunity missed, and it’s incredibly disappointing.</p>
<p>MICHELLE GRATTAN: But when you say there was an opportunity, what positively should have been done?</p>
<p>ANGUS TAYLOR: Well, I’ve already said a number of things, but I’ll add to that. The first and most striking thing of all, when you read the Budget papers is one of the first things I look to. So, when you look at the fiscal strategy, there is no commitment to budget balance in this fiscal strategy. Now since the charter of budget honesty was put in place in the 1990’s under Peter Costello, there has always been a commitment to budget balance. It’s gone. And the reason is…</p>
<p>MICHELLE GRATTAN: Well, we’ve got it now though. </p>
<p>ANGUS TAYLOR: Well, hang on, for a year after an $80 billion windfall, when as I think I’ve said to you before, we had a budget coming out of the pandemic through to the May election that was already in balance, but from here on in the Treasury is taking it over a cliff, going out to an over $36 billion deficit. That’s not expansionary, that’s inflationary. If you take a budget that’s in balance, and then you turn it into a big deficit. It’s pretty it’s pretty straightforward. I don’t know how you can argue that that’s not expansionary.</p>
<p>MICHELLE GRATTAN: Isn’t it possible, though – and we’ve seen changes over forward estimates, incredibly, over recent years – isn’t it possible that the deficit that’s forecast could be reined in a lot with spending cuts, for example to the NDIS? </p>
<p>ANGUS TAYLOR: Look I don’t know. Look I read the budget and I assume that’s the Government’s plan. I don’t have any other plan to work on Michelle. So that is their plan. That’s what they put out. They just put out all the details and I think that’s what we’ve got to assume that their plan is right now. Now if they plan, more spending and more taxes, they should tell us.</p>
<p>MICHELLE GRATTAN: Now, I heard you say last night that the Opposition supported the energy price help and had done so all along. But in fact, you opposed the legislation that was part of that.</p>
<p>ANGUS TAYLOR: Oh, well, you know, Labor plays tricky games with these things. They put and they’re doing this time and time again. They put two pieces of legislation together. One they know we can’t support, and one they know we do support and they put us in those positions. We support that energy price relief. I’ll tell you why, Labor promised a $275 reduction in electricity bills. We now know from these Budget papers, that for a typical Australian family, there’s going to be a $500 energy price increase even after that relief. So, they’ve completely failed in their promise. Australians worked on the assumption that the promise was going to be kept. It hasn’t been kept. They deserve better than that. And that’s why unfortunately, and we do it with regret because it’s not this is not where we want it to be, but the truth of the matter is Australians deserved better than that, and Labor’s had to deal with it.</p>
<p>MICHELLE GRATTAN: Now you’ve seen the details of the changes to the petroleum resource rent tax. Are you going to support that?</p>
<p>ANGUS TAYLOR: We haven’t seen the details? That’s not right. We’ve seen a top line number and the thing about resource rent taxes, and we learnt this with the mining tax, is they are incredibly complex? </p>
<p>MICHELLE GRATTAN: Well, the industry supports them.</p>
<p>ANGUS TAYLOR: Well hang on. We are interested in what’s right for Australia and Australians. I hear a lot of commentators who wouldn’t normally say that the mining industry should be supported in whatever they say or the resources industry. We will make a judgement on this as we always do on what’s right for Australia. Again, I have to say if you want the price of something to go down, you don’t normally hit it with a tax. That being said, we will work through this carefully. I saw the mining resource rent tax way back in the in the last Labor government completely fail. Jim Chalmers was in Wayne Swans office at the time, it was a dog’s breakfast, a complete disaster. They are very complex taxes and are they going down? Is this going to be a bad tax? I don’t know. You’ve got to get into the detail. We’ll no doubt, we’ll get briefings on this over the coming weeks.</p>
<p>MICHELLE GRATTAN: Like you, I remember that big tax, and the big difference is that the mining industry opposed it very, very strongly. This time the industry is going along with it.</p>
<p>ANGUS TAYLOR: Well, a couple of things. Just because the mining industry supports something, doesn’t mean it’s right. And I think all people should understand that. We’re interested in what’s right for Australia and Australians and for energy prices for Australians in particular. So that’s got to be the test. As you know from that last mining tax, actually, the final version, the mining industry did support it, but it was a complete dog’s breakfast and we got rid of it because of that. It wasn’t helping. It was deterring investment, because it was sending the wrong signal to investors. So, it was a bad tax, and it was abolished as a result, but we’ll look at this one with all its complexity, and we’ll make a judgment about whether it’s good for Australia and Australians.</p>
<p>MICHELLE GRATTAN: Just finally, and I know you say you work through the whole budget but is there anything now that the Opposition will fight, will resist in Parliament?</p>
<p>ANGUS TAYLOR: Can I start by saying the things we’re going to support. There are some things in this budget we are going to support. So, we do support the instant asset write off, it’s only $20,000, but that’s important for small businesses. We do support the initiative on women’s safety. We think that’s really positive. The veteran’s payments, and the extension of the work bonus for pensioners. I think these are important initiatives. We proposed that sometime back, it’s not the full version of it, we’d prefer more, but it’s something for an extra six months and that will encourage pensioners into the workforce, and we like that. We’ll work our way through all the other initiatives. We have to say making government bigger in Canberra. It’s not necessarily the answer right now, particularly with these inflationary pressures at work, whether there’s any legislation on that probably not but there’s some initiatives around bigger government that we were concerned about, and we’ll work our way through that.</p>
<p>MICHELLE GRATTAN: Well talking about bigger government, just to finish off, what about the extra staff for politicians?</p>
<p>ANGUS TAYLOR: Well, it’s good question. So, the first thing I’ll say about it, is we’re pleased that there’s no budget for extra politicians in the budget. And whilst Albanese has been talking about more politicians, as you will remember a few weeks back he was saying maybe we need more politicians. We don’t agree with that. </p>
<p>MICHELLE GRATTAN: But what about the staff?</p>
<p>ANGUS TAYLOR: The staff issue, again we’ll work our way through that. It’s far more modest, I have to say, than more politicians…</p>
<p>MICHELLE GRATTAN: I’d be very surprised if you end up saying no.</p>
<p>ANGUS TAYLOR: Well, Michelle, I mean every penny has to be scrutinized right now because every penny risks raising inflation for Australians, and that’s why we’re taking a very principled approach to this. </p>
<p>MICHELLE GRATTAN: Angus Taylor, thank you very much for talking with us. </p>
<p>ANGUS TAYLOR: Thanks Michelle.</p>
<p>ENDS</p><img src="https://counter.theconversation.com/content/205431/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan 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>In this podcast, @michellegrattan canvasses the budget with Treasurer @JEChalmers, Shadow Treasurer @AngusTaylorMP and The Conversation's politics + society editor @amandadunn10Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2052052023-05-08T12:31:36Z2023-05-08T12:31:36ZNow it’s Labor promising the budget will be (briefly) back in black<p>Tuesday’s budget will forecast a surplus of about $4 billion for this financial year – the first Commonwealth budget surplus in a decade and a half.</p>
<p>The budget projects an improvement of more than $143 billion over four years to 2025-26 compared to the Coalition’s final budget, brought down in March last year by Josh Frydenberg. </p>
<p>The budget was last in surplus in Coalition Prime Minister John Howard’s final year – 2007-2008. After the global financial crisis threw it into deficit, in 2019 Frydenberg declared the budget “back in black”, but the COVID support measures meant the promised surplus was never achieved. </p>
<p>While the budget is forecast to be in deficit over the remaining years of the forward estimates, the deficits will be smaller in each year than previously forecast. </p>
<p>Revenue will be boosted by stronger than expected employment growth and record-high commodity prices, both of which are expected to ease off in future years.</p>
<p>The government will return to the bottom line 82% of revenue upgrades in this budget and 87% across its first two budgets. It says this compares to an average of about 40% under the former government and 30% under the Howard government. </p>
<p>Immediately after landing back in Australia after his trip to the coronation, Prime Minister Anthony Albanese confirmed the budget will widen access to the parenting payment (single) by raising the cut off point from when the parent’s youngest child is eight to the age of 14.</p>
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<p>At present these parents – overwhelmingly women, and often victims of domestic violence – have to move to the lower JobKeeper payment when their youngest turns eight. The change will mean eligible single parents now on JobSeeker will receive an increase of $176.90 a fortnight. </p>
<p>The issue has been personally important to Albanese, who was raised by a single mother on the disability pension. Albanese was opposed to the Gillard’s government’s decision to tighten eligibility, which followed an earlier decision to restrict parenting payments by the Howard government.</p>
<p>Albanese said the government’s action “will make a big and immediate difference for tens of thousands of mums, dads and children right around Australia”. </p>
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Read more:
<a href="https://theconversation.com/view-from-the-hill-budget-centrepiece-will-be-14-6-billion-cost-of-living-package-205192">View from The Hill: Budget 'centrepiece' will be $14.6 billion cost-of-living package</a>
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<p>The change, which requires legislation, is due to start from September 20. It will cost $1.9 billion through to 2026-27. Some 57,000 single principal carers will benefit, including 52,000 women. </p>
<p>The government last week announced it would scrap from next year the controversial ParentsNext program which imposed obligations for mothers with very young children. </p>
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Read more:
<a href="https://theconversation.com/controversial-parentsnext-program-to-be-scrapped-next-year-205037">Controversial ParentsNext program to be scrapped next year</a>
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<p>Among the budget’s welfare decisions, JobSeeker is expected to be raised by a modest amount. </p>
<p>The budget will contain $17.8 billion in savings and re-purposing. This will take total savings across Labor’s first two budgets to $40 billion. </p>
<p>The budget’s centrepiece is a package of measures designed to ease cost-of-living pressures, costing a $14.6 billion over four years, including assistance for more than 500,000 households with their energy bills. </p>
<p>In an upbeat address to an enthusiastic Labor caucus meeting Albanese said the budget would be “in the best tradition of the Australian Labor Party”. </p>
<p>It would deal with immediate challenges, “but always with the eye on the future, on the medium and long term, to make sure that we’re delivering, laying those foundations for a better future that we promised”.</p>
<p>He said as well as not leaving people behind, the budget would be about the “aspiration of people for a better life”. </p>
<p>The caucus welcomed the new member for Aston, Mary Doyle, who took the seat from the opposition at the April 1 byelection.</p>
<p>The government is focused on minimising the inflationary effect of budget measures, with Albanese telling caucus inflation was “a tax on the poor”. The opposition is preparing to make a central argument against the budget that it is inflationary. </p>
<p>Shadow finance minister Jane Hume said tackling inflation should be the number one priority. “If they really wanted to tackle the cost of living, they would tackle inflation first and foremost” by reining in spending. </p>
<p>Deputy Liberal leader Sussan Ley said any surplus the government delivered would be “because of the strong economic book that they inherited from us”.</p><img src="https://counter.theconversation.com/content/205205/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan 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 budget projects an improvement of more than $143 billion over four years, compared to the Coalition’s final budget, brought down in March last year by Josh FrydenbergMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2050152023-05-07T20:17:51Z2023-05-07T20:17:51ZThe case for boosting JobSeeker for all: younger people report greater financial hardship<figure><img src="https://images.theconversation.com/files/524557/original/file-20230505-27-um5ftm.jpg?ixlib=rb-1.1.0&rect=0%2C336%2C4982%2C2450&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>In response to calls to raise the JobSeeker payment, the Albanese government is <a href="https://theconversation.com/presented-with-a-jobseeker-finding-too-clear-to-ignore-he-changed-the-subject-how-jim-chalmers-is-shaping-the-budget-204754">expected</a> to announce an increase in Tuesday’s budget only be for recipients aged 55 and over.</p>
<p>Doing so will fuel the familiar generational debate about comparative levels of hardship experienced by older and younger Australians. </p>
<p>JobSeeker’s current single rate is $49.51 a day, about 65% of the age pension and 18.5% of average full-time earnings. Last month, the government’s own Economic Inclusion Advisory Committee recommended it be raised to 90% of the age pension. </p>
<p>This age targeting is reportedly justified on the basis that older recipients are more likely to be long-term unemployed, and majority female. </p>
<p>But are younger recipients less needy? Our research suggests their need may well be greater, reporting far higher levels of hardship than older Australians, even when depending on JobSeeker.</p>
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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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<h2>Measuring financial hardship</h2>
<p>Our results are drawn from the Household, Income and Labour Dynamics in Australia survey – better known as the <a href="https://melbourneinstitute.unimelb.edu.au/hilda">HILDA survey</a> – which each year since 2001 has polled a representative sample of about 18,000 Australians on many aspects of their lives.</p>
<p>Our first graph shows average financial hardship by age.</p>
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<p>We compiled this index from answers given by HILDA participants to seven indicators of their material hardship over the previous nine months. These were, due to a shortage of money: </p>
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<li>could not pay electricity gas or telephone bills on time</li>
<li>could not pay the mortgage or rent on time</li>
<li>pawned or sold something</li>
<li>went without meals</li>
<li>was unable to heat home</li>
<li>asked for financial help from friends or family</li>
<li>asked for help from welfare or community organisations.</li>
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<p>About 22% of those aged 20-80 reported at least one hardship, with the average hardship of those in their 20s being 2.9 times more than those aged 55 to 69.</p>
<p>The next graph shows the constituent elements of the composite measure.</p>
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<p>While the responses to “asking for help” – with young people presumably asking parents first – do seem to skew the results, five of the other six measures follow the same pattern. (The exception is “unable to heat home”, where there’s no significant age trend.)</p>
<p>One reason for this distinct pattern is <a href="https://doi.org/10.1111/j.1475-4991.2011.00470.x">home ownership and wealth accrual</a> over time. Young people are typically more financially stressed because they have had less time to accumulate liquid assets, such as cash and bank deposits. </p>
<p>It’s also possible that younger people are more likely to admit to hardship, though <a href="https://doi.org/10.1111/j.1475-4991.2011.00470.x">our research suggests</a> this is not a significant factor. </p>
<h2>What about JobSeeker recipients?</h2>
<p>The next graph shows financial stress among JobSeeker recipients by age before and during 2020. It also shows the effect of higher payments in 2020, when the federal government doubled the JobSeeker rate for six months (known as the Coronavirus Supplement).</p>
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<p>Thanks to those payments, financial stress among the young fell to its lowest level in at least two decades. But that still meant, on average, those younger than 55 were 2.5 times more likely to report being financially stressed than those 55 and older. </p>
<p>The Coronavirus Supplement experiment in 2020 taught us that a higher JobSeeker payment rate can make a meaningful difference to the financial wellbeing of all Australians, both young and old.</p>
<p>We will find out shortly what the federal government has learned from this policy lesson.</p>
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Read more:
<a href="https://theconversation.com/presented-with-a-jobseeker-finding-too-clear-to-ignore-he-changed-the-subject-how-jim-chalmers-is-shaping-the-budget-204754">Presented with a JobSeeker finding too clear to ignore, he changed the subject: how Jim Chalmers is shaping the budget</a>
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<img src="https://counter.theconversation.com/content/205015/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>Should people aged 55 and over get a targeted boost to their JobSeeker payments? Our research suggests the need among young Australians may well be greater.Peter Siminski, Professor of Economics, University of Technology SydneyGianni La Cava, Adjunct Fellow in Economics, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2048142023-05-02T07:29:49Z2023-05-02T07:29:49ZWord from The Hill: Another rate rise, higher tax on cigarettes, and likely JobSeeker boost for over-55s<p>As well as her interviews with politicians and experts, Politics with Michelle Grattan includes “Word from The Hill”, where she discusses the news with members of The Conversation’s politics team.</p>
<p>In this podcast Michelle and politics + society editor Amanda Dunn discuss the Reserve Bank’s Tuesday interest rate rise (this time 25 basis points), the 11th increase in a year. </p>
<p>They also canvass a likely boost to JobSeeker payments for people aged 55 and over in next week’s budget (a higher rate is already there for those 60-plus who have been out of work nine months). This will be part of the government’s promised cost-of-living relief package. The budget will deliver a hit to cigarette smokers, with a 5% rise in excise for each of three years, bringing in $3.3 billion in revenue for the government. Health Minister Mark Butler announced the increase in a Tuesday speech that also flagged a comprehensive push to crack down on the vaping scourge.</p><img src="https://counter.theconversation.com/content/204814/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan 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>In this podcast, @michellegrattan and @amandadunn10 discuss another interest rate rise form the RBA, Labor's war on vaping and an increase to the tobacco tax, and the likely boost to JobSeeker for people aged 55 and over.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2041932023-04-20T10:32:03Z2023-04-20T10:32:03ZGrattan on Friday: The government invited ambit claims for the budget and now it will be judged against them<p>Budgets are for stakeholders and interest groups like Christmas is for kids. They’re preceded by a multitude of letters to “Santa”, aka the treasurer, in the run-up. </p>
<p>For the May 9 budget, two key correspondents were appointed by the government itself. This week, the wish lists from the Economic Inclusion Advisory Committee and the Women’s Economic Equality Taskforce were released. </p>
<p>The inclusion committee, an ongoing body to review the adequacy of welfare support, was born out of a demand to Prime Minister Anthony Albanese from Senate crossbencher David Pocock last year, in exchange for his vote on the government’s industrial relations legislation. </p>
<p>It was always clear the committee would confront the government with more demands than could be met, and that would become a political challenge. </p>
<p>The taskforce, chaired by businesswoman and gender equity advocate Sam Mostyn, was set up to reflect the government’s desire to underline its policy tilt towards women. </p>
<p>Managing expectations before a budget is always tricky, and these committees are making this especially so for Treasurer Jim Chalmers ahead of his second budget. </p>
<p>The message from Chalmers is that funds are limited and the government can’t do all it might like to do (let alone all that others might want it to do). </p>
<p>Indeed, Chalmers is trying to find ways to constrain spending – to allow maximum room for budget repair – rather than expand it. </p>
<p>The Minister for the National Disability Insurance Scheme, Bill Shorten, this week outlined areas for reform of the NDIS to get it “back on track”. While Shorten stresses this is about improving outcomes, everyone in government knows the NDIS’s costs must be contained or the scheme will be totally unsustainable. </p>
<p>On Treasury figures, the inclusion report’s recommendations would cost more than $34 billion over the forward estimates.</p>
<p>The government has indicated it expects to adopt some of the proposals. But it has already shied away from the biggest one: a large increase in JobSeeker, which the report says should be taken to some 90% of the age pension (at a cost of $24 billion over the forward estimates). </p>
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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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<p>That would restore the relativity of the mid-1990s. At present, the rate for singles is about 65% of the age pension.</p>
<p>Among the things on the “urgent” list of the women’s taskforce are reinstatement of the parenting payment (single) for women with children aged over eight, abolition of the childcare subsidy activity test, and investment in “an interim pay rise for all early childhood educators”. </p>
<p>Despite the government ruling out the “large” increase in JobSeeker, it is still possible the budget could make some change to it, among other pickings from the inclusion report. </p>
<p>Similarly, the government could take up the reinstatement of the parenting payment (single), for which there is considerable pressure. </p>
<p>The inclusion committee is chaired by former Labor minister Jenny Macklin, who has an extensive background in welfare policy, and includes substantial expertise among its members. Its report contains a plethora of detail and it is closely argued. </p>
<p>The report’s lens is squarely focused on issues of adequacy and poverty. While it says its JobSeeker recommendation would not be a significant discouragement to seeking paid work (and the current low rate is a barrier to doing so), some believe the recommended big lift would indeed create a disincentive in our present full employment labour market. </p>
<p>Many people, especially in Labor’s base, will see this report as a benchmark for what a Labor government should do to promote fairness for those at the bottom and create a more equitable society. The same applies with the women’s taskforce measures.</p>
<p>In that sense, the budget must inevitably fall short of the tests these reports pose for it. </p>
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Read more:
<a href="https://theconversation.com/grattan-on-friday-chalmers-grapples-with-a-budget-where-economics-and-politics-pull-in-different-directions-203759">Grattan on Friday: Chalmers grapples with a budget where economics and politics pull in different directions</a>
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<p>Commentators have already suggested a parallel, of sorts, between the proposed Indigenous Voice to Parliament and the inclusion committee. The comparison is a very long stretch, but in each case, special access is involved but the government isn’t bound by recommendations. </p>
<p>What we are seeing with the inclusion committee (and indeed the women’s taskforce) is that the demands may shape the public conversation. The same would apply with the Voice. </p>
<p>How the government responds to the inclusion committee in particular could affect its future relations with the Senate crossbench. Pocock is already out in the media rejecting the government’s arguments that it is constrained by a lack of resources. What about those $250 billion stage 3 tax cuts? he asks. (The government has said they won’t be touched in this budget.) </p>
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<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-david-pocock-has-only-just-arrived-in-the-senate-and-now-hes-negotiating-with-the-pm-195295">Grattan on Friday: David Pocock has only just arrived in the Senate and now he's negotiating with the PM</a>
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<p>The way Pocock and other key crossbenchers react post-budget will depend on precisely what’s taken up. Pocock will be able to claim a victory if he can say his demand for the committee made a difference. </p>
<p>While the budget is a major juggling act for Chalmers, his reform of the Reserve Bank is shaping up, in political terms, as an easier task. </p>
<p>The changes in the report from the review panel, released on Thursday and accepted in principle by the government, are extensive. These include setting up an expert board that would decide monetary policy, which would be separate from the bank’s general board. The aim is to improve the decision-making of the bank, which has come under sharp criticism in the wake of its recent performance on interest rates. </p>
<p>Some of the changes will require legislation, for which Chalmers has been very anxious to get a bipartisan approach. He doesn’t want to have to haggle with the Senate crossbenchers, cutting deals and finding trade-offs, in this sensitive area. </p>
<p>So he has engaged the shadow treasurer, Angus Taylor, during the review process. Taylor has been briefed along the way and was given an advance copy of the report. </p>
<p>The strategy appears to have paid off. Taylor was positive about the review’s plan for a board of experts, and said: “It is the Coalition’s intention to continue to approach the implementation of this review with a spirit of bipartisanship.”</p>
<p>It’s a rare and welcome move away from the opposition’s usual hyper-negativity.</p><img src="https://counter.theconversation.com/content/204193/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan 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>Managing expectations before a budget is always tricky. Two committees are making this especially so for Treasurer Jim Chalmers ahead of his second budget.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2040452023-04-19T06:18:37Z2023-04-19T06:18:37ZBoosting JobSeeker is the most effective way to tackle poverty: what the treasurer’s committee told him<p>Federal Treasurer Jim Chalmers and Minister for Social Services Amanda Rishworth established an Economic Inclusion Advisory Committee <a href="https://theconversation.com/view-from-the-hill-welfare-recipients-are-potential-winners-from-pocock-twisting-albaneses-arm-195422">in December 2022</a> to advise the government on ways to lift economic inclusion and reduce disadvantage.</p>
<p>I am a member of that committee, which was tasked with reporting to the government at least two weeks prior to the federal budget in May – enough time to include a response to in the budget. </p>
<p>The committee delivered its report to the government in late February. The goverment made <a href="https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2023-04/eiac-report.pdf">it public yesterday</a>.</p>
<p>There are 37 recommendations – too many to discuss in detail here. The most pressing concern, and the most important for immediate policy action, is to substantially increase the JobSeeker payment for the unemployed. </p>
<p>Apart from a temporary boost during the COVID-19 pandemic, the payment (previously known as the NewStart Allowance) has declined relative to median incomes and other welfare payments for several decades.</p>
<hr>
<p><strong>JobSeeker Payment relative to Age Pension, 2000 to 2021</strong></p>
<figure class="align-center ">
<img alt="JobSeeker Payment relative to Age Pension, 2000 to 2021" src="https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=262&fit=crop&dpr=1 600w, https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=262&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=262&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=330&fit=crop&dpr=1 754w, https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=330&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/521808/original/file-20230419-26-e5y3ss.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=330&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">Interim Economic Inclusion Advisory Committee, 2023–24 Report to the Australian Government</span></span>
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<p>The committee has recommended restoring the relativities of the mid-1990s, when the unemployment benefit was about 90% of the age pension. This would require increasing the current rate for singles (now 65% of the age pension) from A$693 to $958 a fortnight – or from about $49.50 to about $68 a day. </p>
<h2>How we made our decision</h2>
<p>We compared the JobSeeker payment with a range of metrics such as the age pension, minimum wage, budget standards, average weekly earnings and various poverty lines such as the <a href="https://melbourneinstitute.unimelb.edu.au/publications/poverty-lines">Henderson Poverty Line</a> maintained by the University of Melbourne. </p>
<p>There is no right level for JobSeeker (or any other welfare payment) and there is no single methodology that provides all the answers.</p>
<p>But all the metrics tell the same story: JobSeeker has drifted behind all these benchmarks, largely due to being indexed to the Consumer Price Index rather than wages or incomes.</p>
<hr>
<p><strong>JobSeeker Payment relative to half median equivalised disposable
income, 2000 to 2021</strong></p>
<figure class="align-center ">
<img alt="JobSeeker Payment relative to half median equivalised disposable income, 2000 to 2021" src="https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=364&fit=crop&dpr=1 600w, https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=364&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=364&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=457&fit=crop&dpr=1 754w, https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=457&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/521809/original/file-20230419-20-5s2pdd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=457&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">Interim Economic Inclusion Advisory Committee, 2023–24 Report to the Australian Government</span></span>
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</figure>
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<p>Given the committee only had a couple of months to draft a report, it was not possible to review all aspects of the welfare system – such as the age pension, disability support payments and family payments – or the many other aspects that affect economic inclusion. </p>
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<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>
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<h2>The greatest, most urgent, need</h2>
<p>Nonetheless our judgement is the evidence shows the most urgent need of policy attention is the precarious financial situation for almost 1 million Australians that depend on JobSeeker and associated payments such as a Youth Allowance</p>
<p>The 4 million Australians receiving other payments (age pension, disability pension, veterans pension, parenting payments and carer payments) are more likely to be matching up to adequacy benchmarks. There was a substantial boost to most pension payments following the 2009 <a href="https://www.dss.gov.au/about-the-department/publications-articles/corporate-publications/budget-and-additional-estimates-statements/pension-review-report">Harmer Pension Review</a>.</p>
<p>The committee also found <a href="https://my.gov.au/en/services/work/experiencing-financial-hardship/rent-assistance">Rent Assistance</a> is inadequate and not keeping up with rental costs for most low-income households. It too requires an urgent and substantial increase. </p>
<p>But the highest priority is JobSeeker, as the most effective payment to lower financial stress and poverty. JobSeeker has a larger budget and is better targeted than Rent Assistance to those in most financial need.</p>
<h2>What will it cost?</h2>
<p>Increasing JobSeeker and associated working age payments would cost the federal budget about $5.7 billion in 2023, according to Australian National University’s <a href="https://csrm.cass.anu.edu.au/research/policymod">PolicyMod</a> model of Australia’s tax and transfer system. Over the four years of forward estimates (2023 to 2026), the cost would be about $24 billion. </p>
<p>The total cost of welfare payments in 2023-24 is expected to reach A$145 billion. So $5.7 billion, while a substantial additional expense, does only represent a 4% increase in the welfare cash payments, and less than 1% of the total federal budget.</p>
<p>The available evidence outlined in the report suggests the recommended increase would be unlikely to greatly impact participation, given the payment would still be substantially lower than the minimum wage. Indeed the committee’s judgement was that leaving it at the current rate may be a net negative for participation, with poverty being a barrier to employment.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-underclass-dont-like-work-our-research-shows-vulnerable-job-seekers-dont-get-the-help-they-need-169609">Australia's 'underclass' don't like work? Our research shows vulnerable job seekers don't get the help they need</a>
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<p>The welfare system in Australia is supposed to provide an adequate safety net but for nearly a million Australians the system is not achieving this vital goal. </p>
<p>The government has an opportunity in the next budget to right a significant wrong for a group of some of the most disadvantaged people in a mostly otherwise wealthy nation.</p><img src="https://counter.theconversation.com/content/204045/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Phillips is a member of the Interim Economic Inclusion Advisory Committee.</span></em></p>ANU economist Ben Phillips, a member of the Economic Inclusion Advisory Committee, explains why it regards increasing JobSeeker as the most pressing priority for the Albanese government.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/1857592022-06-30T06:21:54Z2022-06-30T06:21:54ZJobSeeker rule changes: what you must do under the new ‘points-based activation’ system<p>From Monday July 4 2022, Australian job seekers face a new social security system to police eligibility for support payments. </p>
<p>It replaces the “Jobactive” system that required the “mutual obligation” of applying for 20 jobs a month for payments to continue.</p>
<p>You must now instead earn 100 points a month through a variety of activities, including applying for jobs, attending courses and even working. </p>
<p>This “point-based activation system” was designed under the Morrison government, with <a href="https://www.sbs.com.au/news/article/existing-mutual-obligation-penalties-wiped-as-labor-unveils-changes-to-new-jobseeker-program/39s3aqr5g">some alterations made</a> by the Albanese government. It reflects recommendations made in 2019 by a Senate select committee inquiry that found the Jobactive program to be punitive and “<a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/JobActive2018/Report/section?id=committees%2freportsen%2f024217%2f27084">not fit for purpose</a>”.</p>
<p>The inquiry recommended a broader range of activities should count towards mutual obligation requirements, and that those activities better promote work readiness.</p>
<p>The new system – now called Workforce Australia – does this with a list of more than 30 tasks or activities. </p>
<h2>Making a job plan</h2>
<p>When you apply for income support, you will need to create a “job plan”, recording everything you must do to meet your mutual obligations requirements. </p>
<p>An assessment will be made of how well you can self-manage this job plan. You will be assigned to either an “online employment service” or to a service provider for personal assistance. </p>
<p>Providers have the power to customise plans by reducing the number of points a job seeker needs each month, or increasing the value of points for activities. </p>
<h2>How to get to 100 points</h2>
<p>A job application (or what the system calls a “job search”) earns five points. You are generally expected to do at least five job searches a month (with some exceptions, such as if you are attending an adult migrant English course). </p>
<p>The balance of the activities involve looking for work, training courses to improve skills, or activities that contribute to your employability. The following tables summarises these activities and their point values.</p>
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<p><iframe id="rGLPE" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/rGLPE/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>A full breakdown of the points system can be found <a href="https://jobsearch.gov.au/points-values-tasks-activities-pbas">here</a>.</p>
<h2>What if you don’t earn 100 points?</h2>
<p>If you fail to reach 100 points without a good reason, you will receive a demerit point – a formal warning. This will move you from the “green zone” to the “warning zone”. </p>
<p>Each demerit points expires after six months. </p>
<p>If you accrue three demerit points at any one time, you will be required to attend a “capabilities interview” – an “informal” interview with your service provider to review if your job plan is right for you. </p>
<p>If you accrue five demerit points, you must attend a “capabilities assessment” – a formal interview with Centrelink. This meeting will have direct implications on payments. For examples, if it is decided your job plan is not fit for purpose, you return to the green zone with a new plan. If not, you will be moved to the “penalty zone” – putting you at risk of losing payments. </p>
<p>If you fail to comply with any part of your job plan while in the “penalty zone”, you will be penalised one week’s payment. If it happens again, you will lose two week’s payment. If it happens a third time, your payments will be cancelled, and you will have to wait four weeks before you can reapply. </p>
<p>Essentially, three strikes in the penalty zone and you are out.</p>
<h2>What if you earn more than 100 points?</h2>
<p>A beneficial feature of the new system is the ability to bank excess points. So if you accrue more than 100 points in one month, you can use those extra points (up to a total of 50 points) the next month. </p>
<h2>Is this system better?</h2>
<p>Welfare advocates <a href="https://au.finance.yahoo.com/news/centrelink-job-seeker-will-change-next-month-heres-why-recipients-are-worried-015017339.html">are worried</a> the system could prove just as punitive as the the old system.</p>
<p>There are certainly anomalies, such as the differing time commitments per point values. The greater discretion given to employment service providers over job plans could also contribute to inequalities, particularly for those who cannot advocate for themselves.</p>
<p>But in most respects the points-based activation system is an improvement over what it replaces. It provides greater flexibility and emphasises activities that contribute to employability, not just activity involving applying for jobs.</p><img src="https://counter.theconversation.com/content/185759/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>Instead of applying for 20 jobs a month, from Monday July 4 Australians on JobSeeker payments will have to earn 100 points a month. So what will you actually need to do?Mona Nikidehaghani, Lecturer in Accounting, University of WollongongMichael Mehmet, Senior Lecturer in Marketing, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1835372022-06-15T20:02:52Z2022-06-15T20:02:52Z5 charts on Australian well-being, and the surprising effects of the pandemic<p>Since 2001 our research group has asked 2,000 Australians every year how they’re doing. Are they satisfied with their standard of living, their relationships, purpose in life, community connectedness, safety, health and future security? </p>
<p>We’ve asked them through good times and bad, through wars and global financial downturns, fires and floods. And now through years of pandemic – the worst economic crisis in a generation, and the worst health crisis in a century</p>
<p>Using an <a href="https://www.acqol.com.au/uploads/pwi-a/pwi-a-english.pdf">internationally regarded methodology</a>, we combine their subjective ratings across seven life areas into a single score out of 100. These results form the basis of the <a href="https://www.australianunity.com.au/about-us/wellbeing-index">Australian Unity Wellbeing Index</a>, a collaborative partnership between Deakin University and mutual company Australian Unity.</p>
<p><a href="https://www.acqol.com.au/uploads/surveys/survey-038-report.pdf">Our latest results</a> may surprise you. Over the pandemic Australians’ average subjective well-being has barely deviated from remarkably stable levels maintained over 20 years.</p>
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<p>That doesn’t make for an exciting graph. But it is significant. </p>
<p>It shows that while well-being is, on average, quite high, it won’t get any better by just continuing along the same path. </p>
<p>This is where our survey gets more interesting. Beneath the headline result is a more pronounced story – of notable differences in people’s subjective well-being based on their circumstances and life experience. </p>
<p>In these differences lie important lessons about the need to look beyond averages as a measure of a nation. </p>
<h2>Why is average well-being so stable?</h2>
<p>First, though, it’s worth understanding why the national average score is relatively high, and so stable. This pattern is consistent with life satisfaction scores <a href="https://www.oecd-ilibrary.org/sites/b48de22e-en/index.html?itemId=/content/component/b48de22e-en#section-d1e11835">across most OECD countries</a>.</p>
<p>It reflects both biological and situational factors. </p>
<p>At the biological level it is thought that humans have evolved to maintain a relatively optimistic and happy mood. This is controlled by <a href="https://link.springer.com/article/10.1007/s11205-017-1585-5">homeostatic mechanisms</a> like those that maintain an optimal body temperature. </p>
<p>But like body temperature, well-being can be undermined by situational factors. In particular, it declines without sufficient levels of <a href="https://journals.uvic.ca/index.php/ijcyfs/article/view/18638">three key resources</a>: enough money, connection with others, and a sense of purpose.</p>
<p>Because not everyone has equal access to these resources, inequities drive very different patterns of well-being in disadvantaged groups.</p>
<h2>Well-being by living arrangements</h2>
<p>Our second graph shows subjective well-being levels by living arrangements. These are perhaps our most predictable results. Those living alone, in share houses and single parents have the lowest scores overall. But there are also less intuitive results, with the well-being of those living alone and single parents increasing significantly in 2020.</p>
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<p>Perhaps because these groups are more likely to be socially isolated, the effects of lockdowns had less impact. But the more obvious reason is likely to do with income, as our next graphs show.</p>
<h2>Well-being by occupation</h2>
<p>Year in, year out, certain groups show lower levels of subjective well-being. Most evident are those who are unemployed. But in 2020 this group reported considerably better well-being – nine percentage points higher than 2019. </p>
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<p>There are three possible explanations. First, the composition of the unemployed cohort changed due to pandemic-related job losses. Second, the stigma of being unemployed was reduced. </p>
<p>The third reason, however, seems most obvious. In 2020 the JobSeeker payment was doubled from $550 to $1,100 a fortnight. For those struggling to even pay for necessities such as rent and food, this would have been a huge relief. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-economy-cant-guarantee-a-job-it-can-guarantee-a-liveable-income-for-other-work-153444">The economy can't guarantee a job. It can guarantee a liveable income for other work</a>
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<p>However, in 2021, the JobSeeker payment <a href="https://theconversation.com/there-are-lots-of-poverty-lines-and-jobseeker-isnt-above-any-of-them-158068">was cut back</a> to about $620 a fortnight. At the same time well-being for those who were unemployed fell. To a level lower than in 2019 in fact.</p>
<p>This is consistent with economic theory of loss aversion – that people feel losses more deeply than gains in income.</p>
<h2>Losing really hurts</h2>
<p>Our next graph demonstrates this loss-aversion effect. Those who lost income during the pandemic reported lower well-being than the national average. But those whose household income increased during the pandemic reported well-being levels identical to those whose income remained the same. </p>
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<h2>Marginal diminishing gains</h2>
<p>Our final graph shows well-being levels by income. The largest well-being increases were in the lowest-income households in 2020. Well-being for those on the highest incomes didn’t change. </p>
<iframe src="https://flo.uri.sh/visualisation/10197445/embed" title="Interactive or visual content" class="flourish-embed-iframe" frameborder="0" scrolling="no" style="width:100%;height:600px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/10197445/?utm_source=embed&utm_campaign=visualisation/10197445" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>Thus, governments allocating more money to people who already have their financial needs met is unlikely to improve subjective well-being. On the other hand, lifting people out of poverty is likely to make a big difference to their well-being. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/our-top-1-of-income-earners-is-an-increasingly-entrenched-elite-170445">Our top 1% of income earners is an increasingly entrenched elite</a>
</strong>
</em>
</p>
<hr>
<h2>The importance of measuring well-being</h2>
<p>These results show why it is important to look past headline figures, such as GDP or national averages, to judge whether policies and programs are actually contributing to well-being and societal progress. </p>
<p>This is why countries such as New Zealand, Scotland, Wales, Iceland and Finland are now incorporating <a href="https://weall.org/wego">well-being measures</a> into their budgets and policy frameworks. Like the OECD, these countries have recognised that improving the well-being of society, particularly of disadvantaged groups, is a <a href="https://www.oecd.org/wise/measuring-well-being-and-progress.htm?msclkid=9f369dfad02611ecb5224219fa9930a5">core marker of societal progress</a>. </p>
<p>We’d like to see Australia do the same.</p><img src="https://counter.theconversation.com/content/183537/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Lycett receives research funding from the NHMRC, government partners and industry partners Dyson and Australian Unity. She has previously worked on the Australian National Development Index. </span></em></p><p class="fine-print"><em><span>Craig Olsson is currently supported by funding from the NHMRC, ARC and industry partners Australian Unity and the Victorian Department of Education and Training.</span></em></p><p class="fine-print"><em><span>Delyse Hutchinson receives research funding from the NHMRC, ARC and other research council grants, in addition to industry partner Australian Unity.</span></em></p><p class="fine-print"><em><span>Matthew Fuller-Tyszkiewicz receives research funding from the NHMRC and ARC, in addition to industry partner Australian Unity.</span></em></p><p class="fine-print"><em><span><a href="mailto:robert.cummins@deakin.edu.au">robert.cummins@deakin.edu.au</a> has received research funding from Australian Unity and numerous other sources including research council grants. </span></em></p><p class="fine-print"><em><span>Sarah Khor was previously funded on a Research Training Stipend by the Australian Government.
She is a member of the Australian Psychological Society.</span></em></p><p class="fine-print"><em><span>Mallery Crowe and Tanja Capic 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>Australians’ average subjective well-being has barely deviated over the past few years. But there have been some remarkable changes among disadvantaged groups.Kate Lycett, NHMRC Early Career Fellow, Centre for Social and Early Emotional Development, Deakin UniversityCraig Olsson, NHMRC Principal Research Fellow; Director, Centre for Social and Early Emotional Development., Deakin UniversityDelyse Hutchinson, Clinical Psychologist and NHMRC Leadership Fellow, Centre for Social and Early Emotional Development, Deakin UniversityMallery Crowe, Partnership Project Coordinator, Centre for Social and Early Emotional Development, Deakin UniversityMatthew Fuller-Tyszkiewicz, Professor, Psychology, Deakin UniversityRobert Cummins, Professor emeritus, Deakin UniversitySarah Khor, Research Fellow and Psychologist, Deakin UniversityTanja Capic, PhD candidate, Psychology, Deakin 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>
<hr>
<p><iframe id="G3Ndx" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/G3Ndx/9/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></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>
<hr>
<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><iframe id="8qJcT" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/8qJcT/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></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>
<hr>
<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>
</strong>
</em>
</p>
<hr>
<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>
<hr>
<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>
</strong>
</em>
</p>
<hr>
<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>
<hr>
<p><iframe id="Dy8rc" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Dy8rc/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<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>
</strong>
</em>
</p>
<hr>
<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>
<hr>
<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>
</strong>
</em>
</p>
<hr>
<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/1795732022-03-21T03:18:35Z2022-03-21T03:18:35ZThe Greens’ liveable income guarantee is a serious idea the major parties won’t touch – yet<figure><img src="https://images.theconversation.com/files/453187/original/file-20220321-17-1i5mmmm.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5166%2C2630&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>The Australian Greens have lobbed a large rock into the placid pool of economic policy by announcing a proposal for a “<a href="https://www.aap.com.au/news/greens-unveil-89b-income-support-increase/">Liveable Income Guarantee</a>”. </p>
<p>The policy would increase all income support payments – for those looking for work, studying full-time or unable to work because of age, disability or caring responsibilities – to A$88 a day (about $32,000 a year) from July 2023. </p>
<p>This payment level is based on the poverty line calculated by the <a href="https://melbourneinstitute.unimelb.edu.au/research/labour/henderson-poverty-line">Melbourne Institute</a>. Increases to all payments would be indexed to changes to the poverty line. The policy would also scrap mutual obligation programs such as “work for the dole” and relax eligibility restrictions.</p>
<p>Currently welfare payments vary widely, with the age pension for a single person being about $70 a day, while JobSeeker is about $44 a day. </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>This is the first significant economic policy in the undeclared campaign for the next federal election campaign. Up to to this point it looked like there wouldn’t be much to talk about.</p>
<p>Apart from some sweeteners carefully targeted at marginal seats and voting blocs, and small-scale initiatives like Labor’s <a href="https://theconversation.com/labors-proposed-10-billion-social-housing-fund-isnt-big-as-it-seems-but-it-could-work-174406">social housing program</a>, the only significant new policy from either major party likely to follow the election is the “Stage 3” tax cuts legislated under the Turnbull government. </p>
<p>These cuts are supported by both the government and the opposition. Both major parties have also committed to “budget repair”, a euphemism for expenditure cuts, but are unlikely to provide any details until after the election.</p>
<h2>COVID-19 changed the landscape</h2>
<p>The Greens’ plan shares its name, and many of its design features, <a href="https://theconversation.com/forget-jobseeker-in-our-post-covid-economy-australia-needs-a-liveable-income-guarantee-instead-141535">with a proposal</a> put forward in July 2020 by Tim Dunlop, Elise Klein and myself. </p>
<p>We proposed this after the massive expansion of the JobSeeker program to deal with COVID-19 demonstrated Australia did have the resources to eliminate most sources of poverty when it was considered necessary to do so. We argued a liveable income guarantee would be an ideal way to make the achievements of JobSeeker permanent. </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>The Greens’ policy differs from our 2020 proposal in two main respects. </p>
<p>First, it is more generous, raising all benefits. The Parliamentary Budget Office has calculated this will cost about $43.7 billion in the first year, and $44.9 billion in the second.</p>
<p>On the other hand, we proposed expanding payment eligibility to people engaged in volunteering, community projects and artistic and creative activity. The Greens’ proposal maintains the existing set of benefit categories. </p>
<h2>How to pay for liveable welfare payments</h2>
<p>As debt and deficits have faded as a political point-scoring issue, the idea that all new spending programs need to be matched with other cuts or extra revenue has become less compelling. </p>
<p>But resources used for one public program can’t be used for other programs, or for private expenditure. So it’s important to ask what kinds of measures could offset the call on public resources proposed in the liveable income guarantee. </p>
<p>The option with the biggest impact would be to cancel or defer the Stage 3 tax cuts, which will cost an estimated $18-20 billion a year. That would offset nearly half the money spent on the liveable income guarantee. </p>
<p>The Greens have also pointed to tax measures they have previously proposed, including a billionaires tax and a corporate super-profits tax. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-to-camouflage-150-billion-in-spending-call-it-tax-expenditure-176236">How to camouflage $150 billion in spending: call it 'tax expenditure'</a>
</strong>
</em>
</p>
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<p>It has always hard to estimate how much revenue such measures would collect, given the capacity of wealthy individuals and corporations to rearrange tax affairs. </p>
<p>On the other hand, with improved global cooperation on tax, thanks mainly to initiatives from the OECD, there is more capacity to make billionaires and large corporations pay a fairer share of the costs of the society that supports them.</p>
<p>Another source of offsets could arise from what used to be called “<a href="https://theconversation.com/how-to-camouflage-150-billion-in-spending-call-it-tax-expenditure-176236">tax expenditures</a>” and are now referred to more obscurely as tax benchmark variations. These are tax concessions or exemptions applying to particular activities or classes of taxpayer.</p>
<p>These total about <a href="https://theconversation.com/how-to-camouflage-150-billion-in-spending-call-it-tax-expenditure-176236">$150 billion a year</a> according to the latest Treasury estimates. The biggest elements are concessions on capital gains tax and superannuation.</p>
<h2>A policy for serious debate</h2>
<p>The Greens proposal would greatly improve the position of millions of Australians on low incomes at the expense of reducing the disposable incomes and wealth of the well-off, with a particular impact on the very rich. </p>
<p>Barring a complete revolution in Australian politics, there’s no chance the next election will lead to such a result, or even a serious move in that direction. </p>
<p>It is a striking commentary that the Greens’ Liveable Income Guarantee will be rejected by a government led by Scott Morrison, a self-declared conservative, and also by Anthony Albanese, a leader from the Labor Party faction still sometimes called the “socialist left”.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/what-happens-when-you-free-unemployed-australians-from-mutual-obligations-and-boost-their-benefits-we-just-found-out-157506">What happens when you free unemployed Australians from 'mutual obligations' and boost their benefits? We just found out</a>
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<p>Based on current polls, the most that millions of Australians living in poverty can hope for is a Labor government in need of Green support raising benefits a little, and softening some of the most oppressive features of the current system.</p>
<p>But the point of an election is to debate and decide on the future direction of the country. By putting forward this bold initiative, the Greens are providing us the chance to have such a debate. </p>
<p>Other Greens proposals, like phasing out the use of coal, once seen as outside the realm of possibility, are now widely accepted. Similarly, the liveable income guarantee may make its way on to the policy agenda for the future.</p><img src="https://counter.theconversation.com/content/179573/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin has undertaken research on the design of a Liveable Income Guarantee, but has not received external funding for this work. He is not a member of any political party.</span></em></p>The plan to increase all income support payments to a minimum of $88 a day is the first major economic proposal of the federal election campaign.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1751462022-01-19T18:59:45Z2022-01-19T18:59:45ZGovernment slashes COVID payment when people need it most<p>With Australia’s official COVID-19 infection numbers topping <a href="https://www.nytimes.com/interactive/2021/world/australia-covid-cases.html">100,000 a day</a>,
the federal government has slashed its last remaining pandemic support payment. </p>
<p>The decision is ill-timed, irresponsible and heartless. It is stripping away support for those most affected by the pandemic at the time they need it most. It will place those in low paid and precarious work in further financial stress as they lose income to isolate when infected or in close contact with someone else with COVID-19. </p>
<p>The Pandemic Leave Disaster Payment was introduced in August 2020 in response to concerns casual workers and others without sick or pandemic leave entitlements could not take time off work when infected or in contact with someone with COVID-19.</p>
<p>The leave payment was initially available to those not qualifying for JobKeeper – or, after JobKeeper ended in March 2021, the “disaster payment” introduced in response to <a href="https://theconversation.com/support-package-for-sydney-better-and-more-fit-for-purpose-than-jobkeeper-164394">the Sydney lockdown</a> in July 2021. Since that payment ended the Pandemic Leave Disaster Payment is the only individual financial support the federal government provides.</p>
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<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>
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<p>Available to people who had contracted COVID, were a close contact or needed to care for someone who had COVID, until this week it paid A$750 a week for two weeks. You could claim the payment regardless of the number of hours of paid work you lost.</p>
<p>On January 18 the rules tightened – a move announced via a <a href="https://ministers.pmc.gov.au/mckenzie/2022/changes-pandemic-leave-disaster-payment">press release </a> on January 8 (a Saturday). </p>
<p>Now it only pays $750 if you lose 20 hours or more of paid work a week. If you lose 8-19 hours you get just $450 a week. If you lose less than eight hours you get nothing.</p>
<p>Getting the payment has also been made more difficult by imposing a 14-day time limit to apply, from the start of the isolation period. To qualify, you must show evidence of a positive PCR or rapid antigen test. Considering the difficulty of obtaining RATs, and delays in PCR test results <a href="https://www.smh.com.au/politics/victoria/test-samples-no-longer-suitable-after-seven-day-wait-20220108-p59ms1.html">of a week or more</a>, this is a unreasonable and unnecessary constraint. </p>
<h2>Flawed eligibility rules</h2>
<p>A major flaw in the eligibility rules for the leave payment it is not available to people receiving social security payments. This excludes all JobSeeker recipients, despite about <a href="https://data.gov.au/data/dataset/dss-payment-demographic-data/resource/80cc89a3-3208-4e0d-9745-598f7a882e28">one in four</a> being in some form of paid work – generally low-paid casual jobs. </p>
<p>The leave payment has been a vital part of the economic supports to help people stay safe and protect their loved ones and the community.</p>
<p>The peak body for the community services sector, the Australian Council of Social Service, has <a href="https://www.acoss.org.au/media-releases/?media_release=another-income-hit-for-casual-workers-massive-cut-to-pandemic-leave-disaster-payment">condemned this decision</a>. It says cutting the payment will leave people without enough to cover basic costs, let alone the extra costs of isolation such as delivery fees, rapid tests (if you can get them) and personal protective equipment.</p>
<h2>Worst time possible</h2>
<p>There could scarcely be a worse time to cut this payment, with Australia now in the worst stage of the pandemic.</p>
<p>Between August 5 2020 and July 8 2021 the Pandemic Leave Disaster Payment provided <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp2122/Quick_Guides/COVID-19DisasterPayments">almost 15,000 grants</a> to support those in need. During this period the peak COVID case rate was just over 500 day, in August 2020. Consider, therefore, the likely need now we’re at more than <a href="https://www.nytimes.com/interactive/2021/world/australia-covid-cases.html">100,000 a day</a>. </p>
<p>With no other form of federal income support available you may apply for an unemployment or sickness payment like JobSeeker. But Services Australia advises this will be paid about <a href="https://www.servicesaustralia.gov.au/when-youll-get-your-first-jobseeker-payment?context=51411">two weeks after</a> a claim is granted. That is of little help to cover rent while you’re isolating with COVID. JobSeeker is also a maximum of $315 a week – inadequate to cover basic costs. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/healthy-humans-drive-the-economy-were-now-witnessing-one-of-the-worst-public-policy-failures-in-australias-history-174606">Healthy humans drive the economy: we're now witnessing one of the worst public policy failures in Australia's history</a>
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<p>This cut will affect many of the same people <a href="https://www.dailytelegraph.com.au/news/national/pm-announces-national-day-of-thanks-for-pandemic-heroes/news-story/174c8ccb94814aaa554d79eea0193e4f">lauded as the heroes of pandemic</a> – essential workers employed casually in health and aged care, supermarkets, hospitality venues and warehouses. It will also hurt temporary visa holders, who are entitled to the leave payment and do not qualify for any other federal income support. </p>
<p>Last week <a href="https://www.acoss.org.au/media-releases/?media_release=community-sector-calls-for-collaboration-and-decisive-leadership-from-national-cabinet-to-deal-with-covid-debacle">ACOSS called for</a> the establishment of a civil society COVID Rapid Response Group to work alongside National Cabinet. We need the interests of people most at risk in the room at the highest levels when decisions like the future of the Pandemic Leave Disaster Payment are made.</p>
<p>Cutting this payment now is effectively telling low-paid workers at the worst stage of the pandemic in Australia that they’re on their own.</p><img src="https://counter.theconversation.com/content/175146/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cassandra Goldie is chief executive of the Australian Council of Social Service, which receives funding from governmental, philanthropic and member organisations.</span></em></p>With Australia now in the worst stage of the COVID-19 pandemic, there could hardly be a worse time for Australian government to cut and restrict its Pandemic Leave Disaster Payment.Cassandra Goldie, Adjunct Professor and UNSW Law Advisory Council Member, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1658132021-08-11T20:09:09Z2021-08-11T20:09:09ZAustralia was a model for protecting people from COVID-19 — and then we dumped half a million people back into poverty<figure><img src="https://images.theconversation.com/files/415610/original/file-20210811-13-14glvul.jpg?ixlib=rb-1.1.0&rect=1042%2C221%2C1954%2C1134&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>As the pandemic swept the globe in 2020, Australia stood out as a model for how to contain the virus and support its citizens. </p>
<p>A year later, Australia is struggling with vaccination and has abandoned the measures it put in place in 2020 to support the most vulnerable.</p>
<p>The <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/covid-19-disaster-support-payment-boosted">A$750 per week</a> COVID disaster payment to Australians in jobs is as big as the biggest of last year’s JobKeeper payments. It has been extended to the casual workers employed for less than a year and visa holders who missed out last time.</p>
<p>And it’s being delivered direct to the recipients rather than via employers, some of whom appeared to have <a href="https://www.abc.net.au/news/2021-03-22/how-jobkeeper-turned-into-profit-maker-ian-verrender/100020236">pocketed</a> the money last time. So far, so good.</p>
<p>For the newly unemployed and people on parenting payments there’s an extra $200 per week — but only if they’ve lost more than eight hours’ per week work.</p>
<p>What’s missing is last year’s effective doubling of JobSeeker and related benefits for people who were already out of work: the $550 per fortnight add-on that lifted the payment up towards the poverty line. </p>
<p>An estimated <a href="https://www.acoss.org.au/media-releases/?media_release=with-hundreds-of-thousands-on-44-a-day-in-lockdown-focus-must-be-on-support-not-debt-recovery-or-arbitrary-eligibility-criteria">540,000</a> of the 720,000 adults locked down on such payments don’t get the $200 per week because they didn’t have paid work ahead of the lockdown. </p>
<p>They are unable to find it during the lockdown and have to live on $44 a day — well below the <a href="https://theconversation.com/there-are-lots-of-poverty-lines-and-jobseeker-isnt-above-any-of-them-158068">poverty line</a>.</p>
<h2>The COVID supplement changed lives</h2>
<p>Last year the so-called <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">coronavirus supplement</a> made all the difference, allowing those families to buy essential items including food and medical care that were previously out of reach.</p>
<p>An <a href="https://www.cfecfw.asn.au/covid-19-social-security-measures-enabled-job-seeking-but-payment-cuts-inhibit-this-once-more-finds-survey/">online survey</a> conducted by Swinburne University and the Australian National University found the money was used for basic needs and strategic expenditures to “improve their household’s long-term financial security”.</p>
<p>The Australian National University found poverty rates dropped markedly for couples with children, and even more for <a href="https://csrm.cass.anu.edu.au/sites/default/files/docs/2020/8/Impact_of_Covid19_JobKeeper_and_Jobeeker_measures_on_Poverty_and_Financial_Stress_FINAL.pdf">single parent households</a>. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-happens-when-you-free-unemployed-australians-from-mutual-obligations-and-boost-their-benefits-we-just-found-out-157506">What happens when you free unemployed Australians from 'mutual obligations' and boost their benefits? We just found out</a>
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<p>Before COVID hit, the poverty rate in single parent households was 20.2%. In the absence of policy change and the advent of COVID-19 it would have climbed to 27.9%. The COVID stimulus payments cut it to just 7.6% in June.</p>
<p>A survey of single mothers found <a href="https://antipovertyweek.org.au/2020/09/parents-receiving-the-coronavirus-supplement-dreading-cuts-at-the-end-of-september/">88%</a> suffered less anxiety. More than two-thirds (69%) reported being healthier as a result of being able to buy enough and healthier food.</p>
<p>So valued was the $550 per fortnight it sparked a website, <a href="https://www.livingincomes.org.au/2020/08/13/550-reasons-to-smile/">550 Reasons to Smile</a>, showcasing stories of the changes it had wrought.</p>
<blockquote>
<p>An old gas heater died and thankfully to the $550 supplement I was able to go and purchase a new one straight away to keep my new baby and 2 other children warm at night (one has severe croup)</p>
<p>We could afford a new phone. We are both in our early 60s and our best skill was hiding our poverty after our small business, our life, went bankrupt. We would skip meals before the grandchildren would visit to afford those treats. </p>
</blockquote>
<p>When the $150 per fortnight that remained of the coronavirus supplement after it had been phased down ended on March 28 this year, it was replaced by a permanent increase in JobSeeker and similar benefits of only $50 per fortnight.</p>
<p>It plunged hundreds of thousands of children back into poverty. </p>
<h2>Toys and food matter to children</h2>
<p>Prior to COVID-19, I led a <a href="http://www.powertopersuade.org.au/blog/poverty-and-its-effects-on-school-aged-children-understanding-the-consequences-of-policy-choices/20/4/2021">research project</a> with children aged between seven and 12. Two-thirds lived in locations identified by standard indicators as disadvantaged.</p>
<p>We gave children the time to raise issues that mattered to them. There was discussion about favourite and longed-for toys, games, and devices; the most fun parks and playgrounds; and the ups and downs of friendships. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=968&fit=crop&dpr=1 600w, https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=968&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=968&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1217&fit=crop&dpr=1 754w, https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1217&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/415609/original/file-20210811-21-bzskwn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1217&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">Children go without things they need for school.</span>
<span class="attribution"><span class="source">Yuganov Konstantin/Shutterstock</span></span>
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<p>As the research unfolded and children felt more comfortable, they raised the challenges of not having enough money to meet the most basic needs. </p>
<p>Some had only one meal a day and not all were offered school breakfasts.</p>
<p>A nine-year-old boy described his neighbours as “good” and “always helpful”. He said they provided food when his family could not afford to buy it.</p>
<p>A common theme was the imperative to protect their parents by not asking for things they needed, including things for school.</p>
<p>This is the reality of poverty — a reality to which too many Australian children are currently being abandoned.</p><img src="https://counter.theconversation.com/content/165813/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sharon Bessell receives funding from the Australian Research Council, the Norwegian Research Council, and the Australian Government through the Department of Foreign Affairs and Trade.
This article was prepared with the assistance of Toni Wren.</span></em></p>An estimated 540,000 Australians didn’t have paid work ahead of lockdown, so missed out on COVID-19 support this year. They’ve been left to live on $44 a day — well below the poverty line.Sharon Bessell, Professor of Public Policy, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1643942021-07-13T10:30:38Z2021-07-13T10:30:38ZSupport package for Sydney better and more fit for purpose than JobKeeper<p>The economic support package announced by Prime Minister Scott Morrison and NSW Premier Gladys Berejiklian is exactly what is needed, and just in the nick of time.</p>
<p>In a number of ways, in fact, it is more fit for purpose than the JobKeeper and JobSeeker policies that played such a key role in shielding the nation from the worst economic impacts of the COVID-19 pandemic. </p>
<p>There is support for workers who lose their jobs or have their hours cut, and incentives for affected businesses to keep their workers on the payroll.</p>
<p>In the face of what looks set to be an extended lockdown for Sydney, significant support was clearly needed. The federal government has rightly resisted calls to reinstate the JobKeeper wage subsidy, and opted instead for a new, more flexible scheme better suited to the circumstances.</p>
<p>There are two key planks of support, working together. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/yes-lockdowns-are-costly-but-the-alternatives-are-worse-163572">Yes, lockdowns are costly. But the alternatives are worse</a>
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<h2>Payments to individuals</h2>
<p>The first is payments for individuals. For Melbourne’s lockdown in late May and early June the federal government provided up to A$500 a week to those losing more than 20 hours of work a week. It is boosting this to $600 a week. For those losing eight to 20 hours a week, the payment is increasing from $325 to $375. The liquid assets test that applied to the Victorian payments has been scrapped.</p>
<p>Critically, any worker who loses enough hours is eligible. That means the payment can help virtually all workers losing work due to the lockdown, at least to some degree, and gives businesses the flexibility to scale down by reducing hours while minimising the impact on workers. We can squabble about the generosity of the payment, but it is more than double the rate of JobSeeker.</p>
<p>Importantly, it means the cost of the lockdown is being shared by the federal and state governments, rather than just falling on businesses and workers. This provides confidence that lockdown decisions will be made entirely in accordance with the public health advice.</p>
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<h2>Payments to businesses</h2>
<p>The second plank is a partnership between the federal and state governments to revive the cash-flow boost instituted at the beginning of the pandemic, before the federal government introduced JobKeeper.</p>
<p>Only businesses with annual turnover between $75,000 and $50 million are eligible. For those suffering a 30% decline in annual turnover (compared to pre-pandemic times), the payment will cover 40% of their payroll costs up to a maximum of $10,000 a week. To qualify, however, they must not lay off any staff. </p>
<p>This emulates one of the best features of JobKeeper by maintaining the connection between employers and employees through the crisis to speed the recovery once restrictions lift.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-most-economists-continue-to-back-lockdowns-164239">Why most economists continue to back lockdowns</a>
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<h2>Improvements on JobKeeper</h2>
<p>In his press conference, the Prime Minister described the measures as targeted, timely, proportionate, scalable and able to be administered quickly and simply.</p>
<p>It’s hard to disagree.</p>
<p>One aspect that’s a big improvement over JobKeeper is that the turnover test is based on actual turnover, rather than projected turnover or trailing turnover, as with the earlier schemes. This should see the money better targeted to the businesses genuinely in need.</p>
<p>Another improvement is that it drops the cumbersome JobKeeper approach of paying employers a per-employee subsidy they were then expected to pass on to each worker at a fixed rate regardless of actual hours. This time businesses will get a payroll subsidy they can use however they see fit — so long as they don’t lay anyone off. </p>
<p>This should maximise flexibility, and minimise business failures and layoffs. And compliance should be straightforward to enforce via Business Activity Statements and Single Touch Payroll records.</p>
<h2>But it is all a bit reactive</h2>
<p>I do, however, see one negative.</p>
<p>Just as many ordinary Australians seem to have assumed and behaved as though the pandemic was behind us, so did the federal government in configuring its fiscal support measures earlier this year.</p>
<p>It was right to end the JobSeeker supplement and JobKeeper as the economy recovered. But it was wrong not to replace them with a suite of more flexible, contingent measures to be triggered in the event of future lockdowns. It should have foreseen the possibility of a future prolonged lockdown and been prepared for it, rather than be forced to play catch-up.</p>
<p>Following the announcement of these measures, the federal minister for government services, Linda Reynolds, said “our response will continue to evolve”. But what businesses and consumers have needed all along is certainty — to know that if things go pear-shaped there’s a plan and they will be looked after.</p>
<p>Without that certainty, consumers will hold back on spending and businesses will hold back on investment, putting a brake on the economic recovery. </p>
<p>Every Australian consumer, worker and business — in every Australian state and territory — needs to know today exactly how they’ll be supported should things get a lot worse or go on a lot longer than currently expected.</p><img src="https://counter.theconversation.com/content/164394/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Hamilton is Chief Economist at Blueprint Institute.</span></em></p>The business support package to save the NSW economy gets it right on most counts.Steven Hamilton, Visiting Fellow, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityLicensed 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>
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<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/1569452021-03-30T18:54:30Z2021-03-30T18:54:30ZHomeless numbers set to rise again, but inquiry can be a turning point if we get smarter about housing people<p>Australian parliaments produce many committee reports, but only occasionally does one deserve to be described as a “landmark report”. The Legal and Social Issues Committee report <a href="https://www.parliament.vic.gov.au/lsic-lc/article/4662">Inquiry into homelessness in Victoria</a>, released this month, may be just such a report that makes a difference, if its recommendations are followed. The report has advanced a bold reform agenda, proposing measures that would be the most significant response to <a href="https://www.ahuri.edu.au/research/ahuri-briefs/what-are-the-different-types-of-homelessness">homelessness</a> in Australian history.</p>
<p><a href="https://www.abc.net.au/news/2021-03-30/regional-homeless-fears-jobkeeper-and-jobseeker-supplement-ends/13279522">Homelessness is set to increase</a> following the <a href="https://www.rent.com.au/blog/eviction-moratorium">end of moratoriums</a> on evictions and rent increases in Victoria, New South Wales and Western Australia this month. <a href="https://www.ato.gov.au/general/jobkeeper-payment/">JobKeeper</a> payments and the <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">Coronavirus Supplement</a> to JobSeeker payments also ended this week. The combined effect will be to <a href="https://theconversation.com/at-least-2-6-million-people-face-poverty-when-covid-payments-end-and-rental-stress-soars-157244">increase housing stress</a> and thus the risk of people becoming homeless. </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>
<h2>Moving beyond crisis management</h2>
<p>More crisis accommodation is already needed in some places, as the report notes. But it cautions: “Such an investment in crisis accommodation is not intended to increase the emphasis on the provision of crisis accommodation in Victoria’s homelessness system.” </p>
<p>Instead, the inquiry has produced a strongly argued case for providing more affordable and social housing. Its report states:</p>
<blockquote>
<p><em>“The provision of affordable, stable, long-term housing is key to reducing the number of people at risk of, or experiencing, homelessness in Victoria.”</em></p>
</blockquote>
<p>To advance this agenda, a significant investment is now eminently possible. The Victorian government has announced a <a href="https://www.premier.vic.gov.au/victorias-big-housing-build">A$5 billion program</a> to build 9,300 new social housing dwellings over the next four years. Even with this 10% increase in dwellings at below-market rents, the report notes, Victoria will still be below the national average for social housing as a proportion of all housing. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/victorias-5-4bn-big-housing-build-it-is-big-but-the-social-housing-challenge-is-even-bigger-150161">Victoria's $5.4bn Big Housing Build: it is big, but the social housing challenge is even bigger</a>
</strong>
</em>
</p>
<hr>
<p>The committee did its work under the difficult conditions of the COVID-19 pandemic. Yet the inquiry received more than 450 formal submissions and held 18 in-person and online hearings in Melbourne and regional Victoria. The committee reminds us:</p>
<blockquote>
<p><em>“Homelessness is one of the most complex and distressing expressions of disadvantage and social exclusion in our society and requires immediate attention by government.”</em> </p>
</blockquote>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/i6RQSt0shp0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Victoria can solve the problem of homelessness, the parliamentary inquiry says in its recent report.</span></figcaption>
</figure>
<p>Media coverage of homelessness often focuses on stories about people sleeping rough. The default response is often to call for more crisis accommodation. </p>
<p>The inquiry found that “Victoria’s homelessness system is overwhelmed with those in need”. However, the report warns: “There is significant risk in treating immediate problems in isolation.”</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/states-housed-40-000-people-for-the-covid-emergency-now-rough-sleeper-numbers-are-back-on-the-up-154059">States housed 40,000 people for the COVID emergency. Now rough sleeper numbers are back on the up</a>
</strong>
</em>
</p>
<hr>
<h2>Putting the focus on early intervention and prevention</h2>
<p>The report’s focus on early interventions and preventing homelessness in the first place stands out as a notable contribution to public policy discussion about homelessness. It eschews conservative thinking about funding that simply builds on the status quo – i.e more crisis accommodation – on the grounds that “early intervention is crucial to ending homelessness”.</p>
<blockquote>
<p><em>“Early intervention involves the homelessness sector and other related sectors intervening as early as possible to prevent people becoming homeless. This is achieved through addressing risk factors which may cause a person to become homeless and to give a person the opportunity to build personal, social and economic resilience.”</em></p>
</blockquote>
<p>The two largest cohorts who become homeless are <a href="https://www.aihw.gov.au/reports/australias-welfare/homelessness-and-homelessness-services">families with children and young people</a> on their own. Families, mainly women with children, typically become homeless when <a href="https://www.ahuri.edu.au/housing/policy-analysis/housing-homelessness-and-domestic-and-family-violence">fleeing domestic and family violence</a>. Adolescents typically become homeless because of <a href="https://www.aihw.gov.au/reports/children-youth/australias-children/contents/housing/homelessness">intolerable problems at home</a>. </p>
<p>Once homeless, and where a return home is not an option, finding housing as quickly as possible is the imperative.</p>
<p>Prevention and intervening early are particularly important for young people, the report says, “to ensure that experiences of homelessness and disadvantage at a young age do not affect the life chances of an individual and increase the likelihood of ongoing homelessness into adulthood”. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-we-realised-the-true-cost-of-homelessness-wed-fix-it-overnight-143998">If we realised the true cost of homelessness, we'd fix it overnight</a>
</strong>
</em>
</p>
<hr>
<h2>Identifying programs that work</h2>
<p>The innovative “community of schools and services” (COSS) model of early intervention, pioneered in Geelong, was examined in detail. The report concludes:</p>
<blockquote>
<p><em>“[…] the COSS model should be expanded to other parts of the state. The evidence presented suggests that it will have substantial benefits, including reducing the incidence of youth homelessness and providing overall cost savings.”</em></p>
</blockquote>
<p>It recommends a minimum expansion to seven pilot sites. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/dQu3a0s8oDQ?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Pioneered by the Geelong Project, the success of the COSS model has attracted global attention.</span></figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/6-steps-towards-remaking-the-homelessness-system-so-it-works-for-young-people-136385">6 steps towards remaking the homelessness system so it works for young people</a>
</strong>
</em>
</p>
<hr>
<p>The <a href="https://www.kuc.org.au/what-we-do/">Kids Under Cover</a> model of providing one- or two-bedroom studios (with bathroom) on the properties of families where a young person is at risk of becoming homeless was also found to be successful. Not every family situation has space for a studio, nor is it always appropriate for a young person to remain. Increased funding was recommended.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/O0TCZebsU2Q?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Kids Under Cover focuses on keeping young people connected to home, education and community.</span></figcaption>
</figure>
<p>The <a href="https://www.efyfoyers.org.au/">Education First Youth Foyers</a> model for people aged 16-24 who are homeless or at risk of becoming homeless was identified as promising. The model provides accommodation co-located with a TAFE to make it easier for residents of the foyer to study. Notwithstanding <a href="https://www.ahuri.edu.au/__data/assets/pdf_file/0016/60631/AHURI-Final-Report-327-Redesign-of-a-homelessness-service-system-for-young-people.pdf">criticism</a> of the model’s intake criteria and effectiveness, the report recommends the Victorian government assess its suitability for other metropolitan and regional areas. </p>
<p>Committee chair Fiona Patten, speaking on behalf of her multiparty committee, summed up what must be done: </p>
<blockquote>
<p><em>“We need to be smarter about where we direct our efforts. The two best things we can do are strengthen early intervention services and provide more secure, long-term housing for the homeless.”</em></p>
</blockquote>
<p>It’s now a matter of whether the government heeds the report’s findings and implements its key recommendations. If that happens, this will prove to be a landmark report.</p><img src="https://counter.theconversation.com/content/156945/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David MacKenzie led a group submission to the Inquiry into homelessness in Victoria . He has been involved homelessness research and policy advocacy for some 30 years. David has worked with the Geelong community on The Geelong Project as a researcher and co-designer of the COSS Model since the beginnings in 2010. David is Director of Upstream Australia, the systemic backbone support NGO platform formed to support the scale-up of the COSS Model and associated systems reforms. David MacKenzie has received funding from Barwon Child Youth & Family in Geelong as partner in The Geelong project.</span></em></p>JobKeeper, the COVID boost to JobSeeker, and moratoriums on rent increases and evictions all ended this month. Only smarter policies will prevent homelessness, as a landmark Victorian report explains.David MacKenzie, Associate Professor, School of Psychology, Social Work & Social Policy, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1580682021-03-30T04:59:48Z2021-03-30T04:59:48ZThere are lots of poverty lines, and JobSeeker isn’t above any of them<figure><img src="https://images.theconversation.com/files/392428/original/file-20210330-15-14bjme9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Joel Carrett/AAP</span></span></figcaption></figure><p>This week, many Australians are holding their breath. </p>
<p>On Sunday, we saw the end of the JobKeeper payment, with an estimated <a href="https://www.news.com.au/finance/economy/australian-economy/150000-australians-jobs-at-risk-when-jobkeeper-ends-treasury/news-story/0a49dbb702008dd91498499edac3f221">150,000 people</a> expected to now lose their jobs as a result. On Wednesday, the Coronavirus Supplement (which boosted the JobSeeker payment) will also stop. </p>
<p>Taking into account a recent $50-a-fortnight rise in the base rate of JobSeeker, this will see most people on JobSeeker earn about <a href="https://www.abc.net.au/news/2021-03-18/how-much-is-jobseeker-when-does-it-end-what-are-new-rules/13259460">$620 a fortnight</a> or $44 a day. </p>
<hr>
<p>
<em>
<strong>
Read more:
<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">The $50 boost to JobSeeker will take Australia's payment from the lowest in the OECD to the second-lowest after Greece</a>
</strong>
</em>
</p>
<hr>
<p>The Australian Council of Social Service has been among those advocating for <a href="https://www.acoss.org.au/media_release/cuts-will-plunge-millions-further-into-poverty/">more support</a> for unemployed Australians, arguing people will “plunge into poverty” with these latest payment changes. </p>
<p>But this week, when interviewed about the impact of the cuts, Social Services Minister Anne Ruston cast doubt over the concept of a poverty line. As <a href="https://www.abc.net.au/radionational/programs/breakfast/the-economy-needs-to-start-doing-the-heavy-lifting-jobkeeper/13279520">she told</a> Radio National’s Fran Kelly, </p>
<blockquote>
<p>I’m not entirely sure I agree [there is an established line]“. </p>
</blockquote>
<p>Last year, <a href="https://www.theguardian.com/australia-news/2020/oct/28/australian-measure-of-poverty-unnecessary-because-welfare-is-comprehensive-and-targeted">Ruston also said</a> the government has never sought to have a "narrow” definition of poverty and does not consider a poverty line when setting welfare payments. </p>
<p>Technically, Ruston is correct. There is no agreed poverty line for Australia and the setting of welfare payments requires more thought than just the calculation of a single poverty line. </p>
<p>However, there are various estimates for the poverty line, and all are well above the JobSeeker rate for April and beyond.</p>
<h2>How to calculate poverty</h2>
<p>There are two main approaches to calculating poverty — you can either look at absolute poverty or relative poverty. </p>
<p>Absolute poverty is a concept that largely relates to developing countries and is mostly defined around the ability of a person or household to provide the most basic necessities such as food, water and shelter. Relative poverty is usually defined as a percentage of average or median incomes. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1321299809869979649"}"></div></p>
<p>A person or household in relative poverty would be one whose income is low enough that they will struggle to provide a living standard that is generally considered acceptable in our society. </p>
<p>For a developed country like Australia, the relative poverty concept is usually the most relevant. These families might struggle to afford items most people take for granted such as clothes to wear for job interviews, housing, the internet, or mobile phones. </p>
<p>Calculating relative poverty is usually based on the reported incomes from nationally representative household surveys such as the Australian Bureau of Statistics’ <a href="https://meteor.aihw.gov.au/content/index.phtml/itemId/657468">Survey of Income and Housing</a>. The usual definition used by researchers in Australia is any household whose income falls below 50% of the median (middle) income is in poverty. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/already-badly-off-single-parents-went-dramatically-backwards-during-covid-they-are-raising-our-future-adults-157767">Already badly off, single parents went dramatically backwards during COVID. They are raising our future adults</a>
</strong>
</em>
</p>
<hr>
<p>There are various minor complexities around the definition of income (disposable vs gross, whether to deduct housing costs, whether to use the median or 60% of income and how to adjust incomes for different household compositions and sizes). </p>
<p>Ultimately, the measures are all imperfect, but so long as they are consistent through time, they provide a useful guide. They show population-wide dimensions and trends about who is likely to be under considerable financial stress. </p>
<h2>The Melbourne Institute poverty line</h2>
<p>The only established “poverty line” in Australia is the <a href="https://melbourneinstitute.unimelb.edu.au/publications/poverty-lines">Melbourne Institute poverty line</a>. This measure is a mix of both absolute and relative poverty. Absolute, in that it was based on a basic basket of goods and services a person or family could survive on and relative in that it has been indexed through time using changes in per capita income. </p>
<p>This measure suggests the poverty line is around $1,100 per fortnight for a single person in the workforce and $891 for someone not in the labour force (such as a retiree). An unemployed person is considered to be part of the labour force. </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>This poverty line is based on research from the Henderson Inquiry into poverty in the early 1970s. While this inquiry is out of date, the numbers nevertheless remain reasonably sensible and consistent. </p>
<p>Relative poverty measures don’t usually discriminate between employed or unemployed or the family type as does the Melbourne Institute measure. Most relative poverty estimates would put the single adult poverty line at around <a href="https://newsroom.unsw.edu.au/news/social-affairs/unsw-and-acoss-report-shows-3m-australians-living-poverty">$800 to $1,000</a> per fortnight. </p>
<h2>Our modelling</h2>
<p>Colleagues and I have been doing <a href="https://csrm.cass.anu.edu.au/research/publications/covid-19-jobkeeper-and-jobseeker-impacts-poverty-and-housing-stress-under">modelling</a> on the impact of these cuts on poverty in Australia, particularly for those who rely on JobSeeker payments as their main source of income. </p>
<figure class="align-center ">
<img alt="Social Services Minister Anne Ruston/AAP" src="https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/392429/original/file-20210330-13-7lz7ez.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Social Services Minister Anne Ruston has consistently dismissed calls for a significant, permanent rise to JobSeeker Payment.</span>
<span class="attribution"><span class="source">Lukas Coch/AAP</span></span>
</figcaption>
</figure>
<p>As we told a Senate committee earlier this month, before COVID, the poverty rate for people receiving Newstart (the old name for JobSeeker) was 88%. When JobSeeker was doubled during COVID, this dropped to 26%. From April 1, poverty will balloon out again to 85%. </p>
<p>Not all households are the same: some are single, some have couples, some have children and some get other payments such as rent assistance or family payments. However, the majority of households whose main income source is the JobSeeker payment will still fall well under the poverty line, whichever way you calculate it. </p>
<h2>The problem with JobSeeker</h2>
<p>The problem with JobSeeker is the payment has been indexed with inflation, rather than incomes, since the mid-1990s. Since then, incomes have increased by about 50% more than inflation, so the JobSeeker rate has fallen behind the general living standard in Australia. The JobSeeker payment is also about 35% below the age pension payment.</p>
<p>The evidence is compelling that the old JobSeeker rate of around $570 per fortnight required a much more significant increase than $50 per fortnight. This is particularly so because from April, there is likely to be a very large number of people — in the range of 1.2 to 1.4 million — on the payment. This is based on current JobSeeker recipient trends and the expected additional recipients transferring from JobKeeper.</p>
<p>So yes, there are different ways to define and calculate a poverty line. But there can be no doubt JobSeeker is not enough to keep people above it — or any honest assessment of a decent safety net and standard of living.</p><img src="https://counter.theconversation.com/content/158068/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Phillips 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>With cuts to JobKeeper and JobSeeker set to bite, Social Services Minister Anne Ruston has cast doubt over the idea of a poverty line.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/1572442021-03-23T18:50:01Z2021-03-23T18:50:01Z2.6 million face poverty when COVID payments end, rental stress soars<figure><img src="https://images.theconversation.com/files/391025/original/file-20210323-15-hartj3.jpg?ixlib=rb-1.1.0&rect=568%2C0%2C5173%2C3529&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/middleaged-family-having-difficulties-paying-utility-693706726">Shutterstock</a></span></figcaption></figure><p>Many Australians whose jobs were decimated by the COVID business shutdowns will soon be waking up to new income shocks and the prospect of rental stress. This is because people whose employers can’t afford to keep them on will suddenly lose more than A$300 per week when the <a href="https://www.ato.gov.au/general/jobkeeper-payment/">JobKeeper</a> scheme <a href="https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-key-dates/">ends on March 28</a>. Worryingly, this income shock will happen just days before the payment to people on the <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment">JobSeeker</a> benefit is effectively <a href="https://www.ideas.org.au/blogs/jobkeeper-jobseeker-what-has-changed.html#:%7E:text=The%20JobSeeker%20Payment%20replaced%20the,This%20was%20announced%20in%20November.">cut by $100 per fortnight</a>. </p>
<p>At that point, all income support recipients – more than 2.6 million people – will be below the poverty line and many will face extreme rental stress.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">$1 billion per year (or less) could halve rental housing stress</a>
</strong>
</em>
</p>
<hr>
<p>This income shock has been anticipated for some time, but what does it means for rates of rental stress, particularly in Victoria? Despite <a href="https://www.theage.com.au/politics/federal/victoria-s-economic-recovery-to-outstrip-all-other-states-as-nation-bounces-back-20210115-p56ufo.html">promising signs of recovery</a>, Victorian jobs lost in the COVID-induced recession, such as in the hard-hit <a href="https://www.theage.com.au/national/victoria/business-tourism-on-its-knees-as-covid-19-casts-long-shadow-over-events-20210203-p56z2j.html">business tourism</a> and <a href="https://www.theguardian.com/culture/2021/feb/22/more-job-losses-ahead-for-australian-live-music-industry-operators-warn">live music industries</a>, have not bounced back at the same rate as others.</p>
<h2>What will happen to rental affordability?</h2>
<p>To illustrate this point we have modelled housing affordability for single people who were on either the full-time or part-time JobKeeper rate. In this scenario, they could also get JobSeeker payments at a part-rate because of the temporary increase in the <a href="https://www.servicesaustralia.gov.au/individuals/topics/income-test-jobseeker-payment/29411">income-free threshold to $300</a>. This made them eligible for <a href="https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance">Commonwealth Rent Assistance</a> too. </p>
<p>The chart below shows the impacts on income and rental affordability when JobKeeper and <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">Coronavirus Supplement</a> payments end. Their incomes and the amount of rent they can afford are roughly halved.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=221&fit=crop&dpr=1 600w, https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=221&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=221&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=278&fit=crop&dpr=1 754w, https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=278&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/389972/original/file-20210316-16-19zylll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=278&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Impacts of the loss of JobKeeper and Coronavirus Supplement on income and affordable rent.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Full-time and part-time single workers were able to afford weekly rent of $265 and $245 respectively before the withdrawal of JobKeeper. Afterwards, affordable rent goes down to $115 per week. That’s about $110 less than the <a href="https://www.dhhs.vic.gov.au/sites/default/files/documents/202011/DHHS%20Rental%20Report%20September%20quarter%202020.docx">$450 median rent</a> ($225 per person) for a two-bedroom share house in Melbourne.</p>
<p>Based on <a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">our earlier calculations</a>, this leaves these renters with only $17.57 per day to meet basic costs. They have a lavish $3.57 per day more than they did before the pandemic to pay for food, utilities and job-seeking costs such as mobile phone plans and travel cards (A$4.40 a day in Melbourne).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">City share-house rents eat up most of Newstart, leaving less than $100 a week to live on</a>
</strong>
</em>
</p>
<hr>
<p>What is different now than for pre-COVID unemployment was that business shutdowns thrust people who had reliable earnings – and accompanying high rents and mortgages in metropolitan areas – onto JobSeeker and JobKeeper payments.</p>
<p>The chart below shows the change in rental affordability for a number of household types before the pandemic and during the Coronavirus Supplement stages (i.e. payments of $550, then $250, then $150).</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=311&fit=crop&dpr=1 600w, https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=311&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=311&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=391&fit=crop&dpr=1 754w, https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=391&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/391075/original/file-20210323-19-yikwe6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=391&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Affordable rents by household types with supplement and without.</span>
</figcaption>
</figure>
<p>For example, when their income was highest during the $550 stage, two singles sharing could afford rent of $430 per week. Once the supplement ends and is replaced by the <a href="https://www.smh.com.au/politics/federal/it-breaks-my-heart-jobseekers-hit-back-at-25-a-week-dole-increase-20210225-p575p9.html">$25-a-week increase in JobSeeker</a> payment, affordable rent declines to only $230 per week or $115 each.</p>
<p>Rental affordability for single-parent households is notable here because the COVID Supplement was payable to one person only. Once the supplement is withdrawn, they will again be disadvantaged relative to other households because they will not be receiving the increase in the JobSeeker payment. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/after-covid-well-need-a-rethink-to-repair-australias-housing-system-and-the-economy-145437">After COVID, we'll need a rethink to repair Australia's housing system and the economy</a>
</strong>
</em>
</p>
<hr>
<h2>What sort of job losses can we expect?</h2>
<p>It is hard to predict exactly how many people will lose their jobs when JobKeeper ends. What we do know is the economic recovery in Victoria has lagged behind the other states. We also know that at the end of December 2020 <a href="https://theconversation.com/victorians-struggle-to-exit-jobkeeper-as-the-schemes-end-looms-155288">1.55 million people</a> were on JobKeeper and a large proportion of them (626,000) were in Victoria. </p>
<p>Economist Jeff Borland <a href="https://drive.google.com/file/d/1kE4f5qxNQwdh5Xp_6l2Cu-HrjiZvfkrB/view">conservatively estimates</a> national job losses could range between 125,000 and 250,000. It is reasonable to expect as many as half of these could be in Victoria.</p>
<p>Our analysis also shows there are worrying signs that the economic recovery celebrated in the January labour force data was not sustained in February. The latest data provided to a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/COVID-19/COVID19">Senate inquiry</a> into COVID-19 show JobSeeker recipients increased by 7,267 between <a href="https://www.aph.gov.au/DocumentStore.ashx?id=60c91b42-dde2-415f-9f9b-7d5fd3935cb6">January</a> and <a href="https://www.aph.gov.au/DocumentStore.ashx?id=9c1805cb-fe51-419b-8a7b-61315c64c302">February</a>. The increase in Victoria could be attributed to the temporary Christmas retail boom, but in states like New South Wales and Queensland claims decreased slightly.</p>
<p>While <a href="https://www.abc.net.au/news/2021-03-17/jobkeeper-end-will-hit-these-postcodes-hardest/13242400?nw=0">fewer people</a> will lose their jobs in other states than in Victoria when JobKeeper is withdrawn, they are not immune to this income shock. We created the chart below to show the overall scale of the coming problem of rental stress when the fortnightly $150 Coronavirus Supplement disappears and is replaced by the $50 JobSeeker increase.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=339&fit=crop&dpr=1 600w, https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=339&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=339&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/391066/original/file-20210323-21-1c3civ6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Households and people on income support falling under poverty line as COVID supplement reduces (based on DSS data February 2021)</span>
</figcaption>
</figure>
<p>Once the supplement reduced to $250 per fortnight, singles and single parents with two children were below the poverty line. When it was reduced to $150, the number of household types in poverty increased again. From April 1, all income support recipients – covering more than 2.6 million people including children – will be waking up to poverty and the prospect of extreme rental stress.</p>
<h2>What can be done to avoid this?</h2>
<p>So how can governments prevent people from falling off the rental cliff? It is unlikely to be achieved by introducing <a href="https://www.abc.net.au/news/2021-03-10/tourism-coronavirus-pandemic-assistance-package-cheap-flights/13235432">cut-price flights</a> to Far North Queensland. </p>
<p>A new range of strategies will be needed. These include options <a href="https://www.acoss.org.au/wp-content/uploads/2021/03/Strengthening-Income-Support-Bill-2021.pdf">advocated by ACOSS and others</a> to increase the maximum rate of Commonwealth Rent Assistance by 50%, increase the JobSeeker base rate above the poverty line and introduce rental stress grants targeted at individuals who need help.</p>
<p>Over the longer term, there is also a need to adopt strategic approaches to increase the supply of affordable rental housing such as those <a href="https://www.ahuri.edu.au/housing/policy-analysis/increasing-affordable-rental-supply">recommended by researchers</a> at the Australian Housing and Urban Research Institute (AHURI).</p><img src="https://counter.theconversation.com/content/157244/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Liss Ralston receives funding from AHURI</span></em></p><p class="fine-print"><em><span>Simone Casey 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>JobKeeper and the COVID Supplement to JobSeeker benefits will be gone in a week. The combined effect will be to halve some recipients’ incomes and the rent they can afford.Simone Casey, Research Associate, Future Social Service Institute, RMIT UniversityLiss Ralston, Adjunct associate, Swinburne University of TechnologyLicensed 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/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/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>
<figcaption>
<span class="caption"></span>
<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/1471982020-10-05T19:14:20Z2020-10-05T19:14:20ZCutting JobSeeker payments will cause crippling rental stress in our cities<figure><img src="https://images.theconversation.com/files/361514/original/file-20201005-20-1k6cqjd.jpg?ixlib=rb-1.1.0&rect=0%2C16%2C5472%2C3620&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sad-evicted-couple-moving-home-complaining-1383016025">Antonio Guillem/Shutterstock</a></span></figcaption></figure><p>As soon as the COVID-19 pandemic caused businesses to shut down, state governments acted to avoid evictions by <a href="https://theconversation.com/4-ways-to-be-a-good-landlord-in-a-time-of-coronavirus-136040">introducing moratoriums</a>, and the federal government <a href="https://theconversation.com/coronavirus-supplement-your-guide-to-the-australian-payments-that-will-go-to-the-extra-million-on-welfare-134358">introduced the Coronavirus Supplement</a> of A$550 on top of the fortnightly JobSeeker payment. These measures were intended to enable <a href="https://www.theguardian.com/australia-news/2020/jul/21/jobseeker-payment-economists-on-why-its-dangerous-to-cut-covid-19-welfare-subsidy">1.6 million Australians</a> to ride out the pandemic-related business shutdowns.</p>
<p>This welcome but temporary support is being withdrawn. The JobSeeker supplement <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">was reduced</a> to A$250 a fortnight from September 26. It will end in January 2021. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=94&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=94&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=94&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=118&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=118&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361469/original/file-20201004-14-1a9ioym.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=118&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Timeline of Coronavirus Supplement.</span>
</figcaption>
</figure>
<p>Our <a href="https://cdn.theconversation.com/static_files/files/1273/JobSeeker.pdf?1601859925">modelling for Victoria</a> shows the tapering down and withdrawal of the JobSeeker supplement will cause crippling rental stress for unemployed and underemployed private renters. In Melbourne, we have found the unemployed will face the same problem of rental stress as those on the former Newstart allowance experienced before the pandemic. (<a href="https://www.aihw.gov.au/reports/australias-welfare/housing-affordability">Rental stress</a> is defined as a low-income household spending more than 30% of its income on housing costs.)</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">City share-house rents eat up most of Newstart, leaving less than $100 a week to live on</a>
</strong>
</em>
</p>
<hr>
<p>Before COVID, private <a href="https://www.anglicare.asn.au/docs/default-source/default-document-library/rental-affordability-snapshot-2020.pdf?sfvrsn=4">rentals in nearly all capital cities</a> were <a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">already unaffordable</a> for unemployed and low-income renters <a href="https://theconversation.com/coronavirus-puts-casual-workers-at-risk-of-homelessness-unless-they-get-more-support-133782">even in typical share households</a>. What makes the scenario worse than before COVID are the sheer numbers affected. Many of these people may have had incomes prior to the shock that enabled them to maintain higher rents.</p>
<p>To illustrate the extent of the rental stress crisis we modelled rental affordability for the typical low-income household types in Victoria. The first chart shows the effects of the withdrawal of the supplement on rent affordability for two and three sharers and lone-parent families. The second chart later in this article shows the effects across a range of household types. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=824&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=824&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=824&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1036&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1036&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361471/original/file-20201004-14-31clut.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1036&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Impacts of Coronavirus Supplement withdrawal on three household types. (Median rents calculated from Real Estate Institute of Australia June 2020 data. Income calculated to include Commonwealth Rent Assistance (CRA) and lone-parent income includes Parenting Payment Single with Family Tax Benefit.)</span>
</figcaption>
</figure>
<p>The modelling shows the interim rate (A$250) of the Coronavirus Supplement will help for a limited number of household types, particularly in the outer part of Melbourne and regional towns like Ballarat. However, it will not help many households in the inner region of Melbourne where rentals will remain unaffordable. This pattern is worrying because that’s <a href="https://theconversation.com/more-urban-sprawl-while-jobs-cluster-working-from-home-will-reshape-the-nation-144409">where many of the jobs will become available</a> once economic recovery is under way. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-coronavirus-will-deepen-the-inequality-of-our-suburbs-143432">Why coronavirus will deepen the inequality of our suburbs</a>
</strong>
</em>
</p>
<hr>
<p>Households with more than one adult receiving the supplement will be better off than lone-parent households. That is because all the adults in those households receive the supplement, and lone-parent households generally need to rent properties with more than one bedroom.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=2060&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=2060&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=2060&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=2588&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=2588&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361470/original/file-20201004-16-u4qjcm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=2588&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Impacts of Coronavirus Supplement withdrawal on major rental household types. (Median rents calculated from Real Estate Institute of Australia June 2020 data. Income calculated to include Commonwealth Rent Assistance (CRA) and lone-parent income includes Parenting Payment Single with Family Tax Benefit.)</span>
</figcaption>
</figure>
<p>The scenario here <a href="https://www.anglicare.asn.au/docs/default-source/default-document-library/special-release-rental-affordability-update.pdf?sfvrsn=4">plays out across Australia</a>, but is particularly bad for Victorians because the extended lockdown has deferred recovery. </p>
<h2>COVID impacts have hit low-income households hardest</h2>
<p>Is is important to note that the COVID economic shock has hit low-income households particularly hard. Those in <a href="https://theconversation.com/why-coronavirus-will-deepen-the-inequality-of-our-suburbs-143432">precarious work</a>, <a href="https://theconversation.com/5-charts-on-how-covid-19-is-hitting-australias-young-adults-hard-147254">young adults</a> and <a href="https://theconversation.com/low-paid-young-women-the-grim-truth-about-who-this-recession-is-hitting-hardest-141892">women</a> have had the biggest hits to their incomes and jobs. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=489&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=489&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=489&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=614&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=614&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361465/original/file-20201004-18-m19eli.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=614&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Map of JobSeeker increases indicating pandemic impacts on employment across Melbourne.</span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/coronavirus-puts-casual-workers-at-risk-of-homelessness-unless-they-get-more-support-133782">Coronavirus puts casual workers at risk of homelessness unless they get more support</a>
</strong>
</em>
</p>
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<p>In Melbourne increases in unemployment are concentrated in inner-city suburbs like Brunswick and St Kilda. This reflects the loss of jobs for young people in hospitality and retail. </p>
<p>Job losses have also occurred in working-class areas such as Brimbank, Melton and Hume. These losses reflect the impact of shutdowns in the processing, manufacturing and transport sectors.</p>
<p><a href="https://twitter.com/ANZ_Research/status/1305694447154466819">It is predicted</a> it will take some time for earnings to return to pre-COVID levels. This means renters who have not been able to get jobs will once again be in dire <a href="https://thenewdaily.com.au/finance/consumer/2020/09/01/rent-jobseeker-affordability/">rental stress in most capital cities</a> when the Coronavirus Supplement cuts out in January 2021.</p>
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<h2>What about household savings?</h2>
<p>The <a href="https://www.finder.com.au/cst">Finder Consumer Sentiment Tracker</a> shows household savings have temporarily increased. But it is difficult to assess how much reserve people on JobSeeker payment have been able to lay down, relative to the loss of normal earnings. Any optimism on this count needs to be tempered by the observation that the Coronavirus Supplement did not start until late April and early May — five to six weeks after the job losses started. </p>
<p>Our modelling shows that even during the temporary tapering down of the supplement until January 2021, there will be a rental crisis in cities like Melbourne. These findings can be extrapolated to other capital cities and the scenario will be worse in Sydney. </p>
<p>Cutting the JobSeeker supplement is risky policy because the labour market has not “snapped back”. People who depend on unemployment payments will now face the same problem of rental stress as those on NewStart experienced before the pandemic. But this stress <a href="https://thenewdaily.com.au/finance/consumer/2020/09/01/rent-jobseeker-affordability/">will be more widespread</a> than before. This underscores the need to develop policy that counters the risk of rental stress.</p>
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Read more:
<a href="https://theconversation.com/if-we-realised-the-true-cost-of-homelessness-wed-fix-it-overnight-143998">If we realised the true cost of homelessness, we'd fix it overnight</a>
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<img src="https://counter.theconversation.com/content/147198/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simone Casey is a Research Associate at Per Capita</span></em></p><p class="fine-print"><em><span>Liss Ralston Has received funding from AHURI.</span></em></p>The impacts of the pandemic on jobs and incomes have been so widespread and severe that low-income households can afford very few properties despite rents falling in some parts of our capital cities.Simone Casey, Research Associate, Future Social Service Institute, RMIT UniversityLiss Ralston, Adjunct associate, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1473692020-10-05T19:13:04Z2020-10-05T19:13:04ZDon’t worry about the debt: we need stimulus to avoid a recession<figure><img src="https://images.theconversation.com/files/361522/original/file-20201005-18-edk6w7.jpg?ixlib=rb-1.1.0&rect=5%2C0%2C3908%2C2132&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>After two decades equating budget surpluses with good economic management, it might seem convenient that the federal government has <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/speech-australian-chamber-commerce-and-industry-canberra">changed its fiscal strategy</a> just before the budget to focus on jobs over keeping the deficit in check. </p>
<p>But it’s the right move. The world has changed in ways that make government spending more necessary and government debt more sustainable than ever.</p>
<p>Debt talk still dominates <a href="https://www.afr.com/policy/economy/budget-must-chart-course-to-eliminate-debt-and-deficit-20200929-p5605q">newspaper headlines</a> and many of Treasurer Josh Frydenberg’s <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/interview-karl-stefanovic-today-show-1">media appearances</a>. But it shouldn’t. Here’s why.</p>
<h2>We are in the middle of a major economic shock</h2>
<p>The COVID-19 recession is the biggest economic shock since the Great Depression. GDP <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">fell 6.3%</a> in the year to June, the worst annual result since 1929.</p>
<p>The federal government should use its balance sheet to spread the costs of such a large shock over time. The alternative would be to leave those who lost their jobs or businesses in poverty.</p>
<p>The government’s emergency response saved businesses and jobs from going under in the short term. Now, as we emerge from the crisis into the recovery phase, large-scale stimulus is needed to boost demand and create new jobs. </p>
<h2>Debt has never been cheaper</h2>
<p>It has never been cheaper for governments to borrow. As the next chart shows, the interest rate on 10-year Australian Government Bonds is less than 1%. If inflation stays above 1%, as the Reserve Bank and Treasury expect, the “real” interest rate the federal government pays on the bond will be negative. That is, it will effectively be paid to borrow.</p>
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<img alt="Yields on 10 Year Australian Government Bonds." src="https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=437&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=437&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=437&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=550&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=550&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361517/original/file-20201005-20-1oqmgxs.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=550&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>These very low interest costs change the dynamics of managing debt we accrue now. Investments that boost future growth – including spending to reduce unemployment and close the output gap – will pay for themselves. </p>
<p>This is the fiscal “free lunch” spoken about by the former chief economist of the International Monetary Fund, <a href="https://www.aeaweb.org/articles?id=10.1257/aer.109.4.1197">Olivier Blanchard</a>, and the deputy governor of the Reserve Bank of Australia, <a href="https://www.rba.gov.au/speeches/2020/sp-dg-2020-09-22.html">Guy Debelle</a>. </p>
<h2>Extra stimulus won’t spook financial markets</h2>
<p>To get the unemployment rate below 5% by the end of 2022, the <a href="https://theconversation.com/now-well-need-100-120-billion-why-the-budget-has-to-spend-big-to-avoid-scarring-145489">Grattan Institute</a> estimates a further A$100 billion to A$120 billion of fiscal stimulus is needed on top of what governments have already announced.</p>
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Read more:
<a href="https://theconversation.com/now-well-need-100-120-billion-why-the-budget-has-to-spend-big-to-avoid-scarring-145489">Now we'll need $100-$120 billion. Why the budget has to spend big to avoid scarring</a>
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<p>This is unlikely to cause financial markets to break a sweat. Even if gross debt was to nudge 50% of GDP in the next few years, it would still be far below that of most other developed nations before the COVID crisis. At the end of 2018-19, the gross public debt in the UK was 85% of GDP, in the US 103%, and in Japan more than 200%. All have borrowed substantially more since then at very low rates.</p>
<p>There’s also no risk that significant government spending will cause wages or inflation to rise dramatically. In fact, Australia has the opposite problem. Wages were stagnant before the crisis and are forecast to remain so for years. Inflation has been persistently below the Reserve Bank’s inflation target and is forecast to remain so for years.</p>
<h2>We can manage debt without austerity</h2>
<p>Frydenberg has signalled that, as employment recovers, the government’s fiscal strategy will shift to stabilising and then reducing debt as a share of GDP. Although his stated threshold of “well under 6% unemployment” is <a href="https://theconversation.com/frydenberg-is-setting-his-budget-ambition-dangerously-low-146855">not ambitious enough</a>, the idea makes sense. </p>
<p>The good news is that with interest rates on government borrowing so low, debt as a share of GDP can be reduced without pursuing austerity in the form of deficit reduction.</p>
<p>The interest rate is one of three factors that affect the size of debt relative to GDP. The other two are the budget balance (the incremental contribution to debt) and nominal GDP growth, which depends on economic activity and inflation.</p>
<p>Even if interest rates were a little higher than now (say, 1.5%), the government can reduce debt relative to GDP even while continuing to run large deficits, provided that nominal GDP growth returns to a moderate level (say, 4.5%, as it was before the pandemic). </p>
<p>The next chart shows that under these circumstances the government can run deficits of up to $50 billion and still reduce debt as a share of GDP. </p>
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<a href="https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Gross debt-to-GDP projections based on different budget deficit scenarios." src="https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361518/original/file-20201005-24-r8s4ta.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"></a>
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<p>Different rates of GDP growth would change this story, as the next chart shows. With an even higher nominal growth rate, debt would shrink even faster relative to GDP. In a scenario of prolonged low growth, debt would increase relative to GDP a little, but remain very modest.</p>
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<img alt="Gross debt-to-GDP projections based on different GDP growth scenarios" src="https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361519/original/file-20201005-14-1f2z9na.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">
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<p>The government can do things to boost nominal growth in areas such as tax reform, education and skills, workforce participation, energy and climate policy, and land-use planning. The Reserve Bank should also do more by boosting inflation, which would support nominal growth.</p>
<h2>Don’t scrimp on stimulus</h2>
<p>There are many <a href="https://insidestory.org.au/the-biggest-bang-for-the-stimulus-buck/">urgent and valuable priorities</a> for government spending right now, such as permanently raising JobSeeker, boosting child-care support and building more social housing.</p>
<p>More debt might impose a small cost over a very long time. But the cost of insufficient stimulus and a prolonged recession would be vastly bigger.</p>
<p>The choice is simple. We should not let debt panic distract us from making it.</p><img src="https://counter.theconversation.com/content/147369/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.
Danielle Wood and Tom Crowley 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><p class="fine-print"><em><span>Danielle Wood 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>Borrowing to reduce unemployment and increase growth will pay for itself.Danielle Wood, Chief executive officer, Grattan InstituteTom Crowley, Associate, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.