The Coronavirus Boost — is the new JobSeeker Payment as generous as it seems?

“Income support payments have been so badly eroded over recent decades that, even with an unprecedented boost, many families will still be forced to live on the poverty line,” said David Richardson, senior research fellow at The Australia Institute.

On Sunday 22 March the Prime Minister, Scott Morrison, and Treasurer, Josh Frydenberg, announced a new Coronavirus Supplement to the Jobseeker Payment (formerly Newstart) to be paid at $550 per fortnight.

This is a significant and unprecedented increase in Newstart, and it is true that it virtually doubles the basic rate of payment. However, things are more complicated when we look at the different family types.

In Figure 1 below we provide estimates of where the JobSeeker payment is now and how it will look after the Coronavirus Supplement for different family types, compared to the poverty line.

Figure 1: JobSeeker payments for different family types expressed as a percentage of the Henderson Poverty Line

As you can see, both the proportionate increases in the payment and the excess over the poverty line decline as the family size increases. That is because the supplement is less, as a proportion of an unemployed family’s income, as the size of the family increases.

“The boost to the Jobseeker payment is a good thing, but it should reflect the size of the family being assisted and needs be made permanent. Plunging millions of Australians back into desperate poverty six months from now would have a very harmful effect on the economy, the community and people’s lives.” Mr Richardson said.

There is no doubt that an increase in income support will be a major improvement for Australian families, but it would be far-fetched to suggest that the new temporary rate is in any way unprecedented.

The graph in Figure 2 shows the Jobseeker Payment for a family of four, compared to what the same family would have received under previous payments, relative to the poverty line.

Figure 2: Family of four: JobSeeker compared with the Henderson Poverty Line (% gap)

The Coronavirus Supplement takes the family of four from almost 20 per cent below the poverty line to almost 7 per cent above the line. While the scale of the boost is indeed unprecedented, the actual rate that is being paid once it kicks in is anything but. A family with two children will still receive less support than was the case under the Hawke Government and around the same amount as was offered in the early years of the Howard Government.

“This analysis shows just how critically low income support payments have become in Australia and why it is so important to turn this temporary boost into a permanent investment in the social and economic health of our nation,” Mr Richardson concluded.

David Richardson’s full report, ‘A Generous Increase in Newstart?’ is available to download here.

an independent think-tank based in Canberra > australia.org.au

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