Ending JobSeeker boost will axe 145,000 jobs, shrink economy by $31.3bn
Getting rid of the JobSeeker boost will result in 145,000 full-time jobs lost, hurt some of Australia’s most vulnerable people and shrink Australia’s economy by $31.3 billion, new analysis has revealed.
The Federal Government’s decision to effectively double welfare support in late March has provided a “supercharged boost to the economy” and done a “striking amount of heavy lifting” in easing regional inequality, said a new report by Deloitte Access Economics commissioned by the Australian Council of Social Services (ACOSS).
“[The] Coronavirus Supplement [has] helped ensure that those worst off had a strong safety net through this crisis, and more than closing the large gap that had been wedged between wages and unemployment benefits over the last two decades,” the report said.
The current $550 Coronavirus Supplement is scheduled to taper down to $250 after 24 September, and then disappear entirely when the year ends.
But while withdrawing this support will save the government $23 billion across 2020-2022, the consequence to the economy will be greater.
“The average annual impact of that reduced expenditure across the broader economy is equal to a reduction in the size of the economy of $31.3 billion and an average loss of 145,000 full-time equivalent jobs over that two-year horizon.”
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The reduction will be a “large and sustained negative shock”, particularly to the very Australians who are most willing to spend.
“One would therefore expect... for there to be a measurable contraction in the broader Australian economy.
“The economy is in a deep recession, and so reducing government spending would hurt more than if the economy were in good shape.
“There’s a much stronger than usual argument for boosting these payments when times are tough.”
ACOSS CEO Cassandra Goldie said the $550 boost had meant some Australians could afford basic essentials for the first time in a long time.
“But they now face a deeply uncertain future, with the prospect of these devastating cuts to their already tight budgets and 12 people receiving JobSeeker for every job vacancy, with this being 28 people for every vacancy in regional areas,” she said.
“There are a lot of things that are not in our control in this pandemic but one thing that the Government does have control over is ensuring that everyone has enough to cover the basics of life, including a safe place to live.
“Not only is this the right thing to do, it’s one of the best things we can do to support jobs now and on the long, hard road to full recovery.”
She called on the Government to extend the existing Coronavirus Supplement rate of $550 and to permanently raise the JobSeeker base rate.
Slashing JobSeeker boost will hit where it hurts
Not only will the economy contract and jobs be lost if the $550 Coronavirus Supplement is entirely withdrawn at some point, but regions which are already facing greater disadvantage – particularly in regional Northern Territory and Western Australia – will suffer more.
“In Victoria, elevated case numbers and the extended lockdown restrictions are likely to result in higher unemployment figures than elsewhere. As such, the removal of the Coronavirus Supplement is likely to be more damaging,” the report said.
“Again, regional communities will be most impacted by its removal as investment shifts to other regions weighing heavily on Victorian construction and mining.”
Recent research from the Australian National University revealed that the coronavirus supplement has also reduced poverty by a third.
Analysis from thinktank the Australia Institute from late July found the reduction of the supplement from $550 to $300 pushed 370,000 Australians into poverty, including 80,000 children.
“This will not only have serious negative social consequences for decades to come, but it also makes for terrible economic policy by effectively withdrawing much needed stimulus,” said the Australia Institute’s Noah Schultz-Byard at the time.
Keeping JobSeeker “stronger for longer” would be “vital in filling in the cracks”, the report warned.
“Premature removal of the Coronavirus Supplement, and a failure to permanently lift the base rate, would hit hard not only for those among our most disadvantaged, but also for Australian society as a whole.”
Deloitte is among one of many corporate voices who have called for a permanent boost to the JobSeeker rate.
Other supporters for increasing JobSeeker include Labor, the Greens, the Reserve Bank, social services groups, and business lobby groups.
In April, a Senate Inquiry into the JobSeeker rate said it received “compelling evidence” that the current income support payments were inadequate.
“Significantly, the committee found that the income support system is not meeting its objective of ensuring a minimum standard of living for working-age jobseekers, as too many live in poverty,” the review said.
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