Axing jobseeker Covid-19 payment would push 650,000 Australians into poverty, thinktank reports.

Extract from The Guardian

Australian politics

Government says supplement is ‘not an ongoing arrangement’ despite pressure for permanent increase in unemployment benefits

Katharine Murphy Political editor

@murpharoo

Mon 20 Jul 2020 03.30 AEST

The number of Australians living in poverty before coronavirus hit was about 3.7m and decreased to about 3.3m ‘by increasing one payment’, a research paper by the Australia Institute says. Photograph: Stefan Postles/AAP

Axing the coronavirus supplement in the jobseeker payment would push more than 650,000 Australians into poverty – including 120,000 children under the age of 14, new research from a progressive thinktank has found.
With the finance minister Mathias Cormann signalling on Sunday the current supplement was “not an ongoing arrangement”, analysis by the Australia Institute finds the introduction of the payment during the first wave of the pandemic lifted 425,000 Australians out of poverty.
The research paper also notes if the Morrison government chooses to axe the supplement in jobseeker which effectively doubles the rate of the unemployment benefit, and replace that with a $75 increase to the base rate of unemployment benefits – one change that has been mooted – that overhaul would still confine 505,000 Australians to poverty.

The Morrison government has been telegraphing for the best part of a fortnight that the income support rolled out during the pandemic will be extended beyond the initial cut off, which was September. But with its economic statement looming this Thursday, the government is also signalling the payments will be adjusted.
Cormann said on Sunday the jobkeeper wage subsidy would be extended after September but in a different form, hinting it may evolve beyond a single flat payment, with tighter targeting.
“Once we get to the end of September it will be a matter of making sure that any ongoing support is appropriately targeted to those businesses who genuinely need it,” he said. Cormann signalled businesses would need to test to ensure they remained eligible for the payment, not just set and forget for six months, which has been the situation in the opening phase.
When it comes to jobkeeper, there has been concern inside government that the higher rate of the current payment could provide a disincentive to work. Cormann said on Sunday the current enhanced rate would remain until September, but after that, “crisis level” fiscal support would be wound back.

He said the Covid supplement was “not an ongoing arrangement”. It would be phased back into “more situation as normal moving forward” – but he said any future adjustment would happen in a responsible way.
There has been some speculation that the government intends to remove the current supplement and implement a $75 weekly rise in the jobseeker allowance base rate after the pandemic.
Pressure for a permanent increase in unemployment benefits has been building for some time – including from within the Coalition’s own ranks. Business groups have also urged the government to retain higher unemployment benefits, arguing that a benefit that keeps people in poverty does not equip them to chase job opportunities.
The new research from the Australia Institute comes as the Australian Council of Social Service will on Monday propose a six-point plan to help Australians manage the transition while income support is being reduced, including a jobs and training guarantee for people unemployed long term, including young people unemployed for six months or more and people 25 years and older for 1-2 years or more.
As well as the guarantee, Acoss wants the government to accelerate reforms to employment services to ensure that more disadvantaged people in the labour market are given additional help, and to expand training, career guidance and support services to help unemployed people find a job.
New figures released by the Australian Bureau of Statistics last week indicate that close to a million Australians are now unemployed, and the effective unemployment rate is several points higher than the official rate of 7.4%.

Acoss says long-term unemployment is hard to shift. It says the last recession in the 1990s saw a peak of people on unemployment benefits in 1993, with the number of recipients halving 14 years later (890,000 to 464,000). But during that same period, the number of long-term recipients only declined by 20%, going from 348,000 to 276,000.
The number of people on the jobseeker payment doubled during the pandemic, going from 800,000 in March to 1.6m in June. Acoss says some cohorts are particularly vulnerable to falling into long-term unemployment because of the coronavirus recession: recipients who were already on Newstart or the youth allowance for more than 12 months; young people entering the paid workforce this year, including 300,000 on jobseeker and youth allowance payments; women; and the 400,000 workers who have been stood down from their jobs, many of whom will face unemployment once the jobkeeper wage subsidy is phased out.
The Australia Institute’s paper says the number of Australians living in poverty before the coronavirus hit was about 3.7m and this decreased to about 3.3m “by increasing one payment”.

“The coronavirus supplement has been an essential part of our nation’s response to this recession and has improved the lives of nearly half a million Australians,” said Ben Oquist, the executive director of the Australia Institute. “In fact, no other government has ever lifted so many people out of poverty so quickly.”