More than 10 Coalition MPs support cutting the JobSeeker supplement in the new year as new research shows increasing unemployment benefits by $200 a fortnight would cost $7 billion a year, but most do not think it should return to its pre-pandemic level of $40 a day.
The Morrison government is expected to reveal plans for the dole at the mid-year budget update in December, ahead of the scheduled end to the $250-a-fortnight coronavirus supplement currently being paid to about 1.4 million people, after analysing data on the jobs market and the economy. The supplement is also paid to those on other benefits, such as Austudy, parenting payments and Youth Allowance.
The temporary supplement was introduced at the height of the pandemic at a higher rate of $550-a-fortnight, in addition to the base rate worth $565.70 for singles ($1115.70 total), to help soften the blow of major restrictions and disruption.
A group of Coalition MPs and senators across the country interviewed by The Sun-Herald and The Sunday Age said the current payment was a disincentive to look for a job, however most did not believe the dole should drop to its pre-pandemic level.
Social Services Minister Anne Ruston said the government was focused on striking a balance between temporary support for the unemployed and incentivising people to take up work when it becomes available. In September it increased the amount social security recipients can earn before it affects their payment to $300 per fortnight.
“This means people on JobSeeker can work about two days a fortnight at minimum wage without losing a single cent of their social security cheque,” she said.
The Business Council of Australia’s recent budget submission recommended the rate be increased to between 75 per cent and 90 per cent of the age pension rate, currently worth $860.60 a fortnight for a single. Before the coronavirus pandemic the unemployment benefit rate was about 60 per cent of the age pension, down from previous highs of 90 per cent.
Modelling undertaken by Bankwest Curtin Economics Centre researchers Rebecca Cassells, Alan Duncan and Richard Seymour for The Sun-Herald and The Sunday Age shows increasing the JobSeeker rate to 80 per cent of the age pension would see the amount jump from pre-pandemic levels of $565.70 for a single person to $688.50 a fortnight. With 1.4 million people unemployed, this would cost $3.87 billion a year but should the jobless figure fall back to 1 million this would cost $2.57 billion. In total, the proposal would add 18 per cent to the cost of the scheme.
However, at this level and even with the maximum amount of rent assistance worth $139.60 and energy supplement worth $8.80, the researchers warn this would “still leave recipients substantially below the current Australian poverty line”. Curtin calculates the poverty line at $950-a-fortnight for a single person, which is roughly in line with the Australian Council of Social Service’s measure.
Raising the base rate to 90 per cent of the age pension would bring recipients to “just under” the poverty line when additional benefits are taken into account, the Curtin researchers found. The costs of this scheme would total $6.96 billion a year under the higher unemployment scenario, giving a single person a $208.80 boost to $774.50 a fortnight. It would cost $4.71 billion if the job market recovered. Labor, the Greens, social welfare groups and a range of economists back a permanent increase to the base rate. Prior to the virus, ACOSS had called for a $95 a week increase in JobSeeker.
Member for Cowper in NSW Pat Conaghan said the level “can’t stay at its current rate” with the supplement but he still believed it should be $75 to $90 a week more than the previous rate. “Returning to $280 a week would be fairly cruel and unusual punishment,” he said.
Member for New England in NSW Barnaby Joyce also said the old rate was too low but the supplement was unsustainable and would be “a disincentive” to finding work. “It still needs to be increased but we now have a massive debt,” Mr Joyce said. “The generosity possible pre-COVID will not be possible now.”
Member for Mackellar in NSW Jason Falinski said local businesses were struggling to fill job vacancies, which suggested the temporarily increased JobSeeker rate is too high. At the same time, he acknowledged there was a “fair amount of research” saying the pre-pandemic rate was too little. Two Coalition senators, speaking on condition of anonymity as the federal government has not yet revealed its position, also said the rate should not be reduced to its old level but the $250 supplement was too much.
Member for Bowman in Queensland Andrew Laming expected the government would cut the supplement in half before further reductions, as there were difficulties getting those out of jobs back to work. NSW member for Lyne David Gillespie also said the supplement was “definitely influencing” some not to look for work in regional areas.
Nationals senator Matthew Canavan said the supplement rate needed to come down for this reason. “I used to think the old rate was too low but that was before we had a trillion dollars in debt,” Senator Canavan said, “We have to get people back into work.”
Member for Victoria’s Mallee Anne Webster agreed, saying she did not think “any amount of welfare payment is enough … but it’s not supposed to be, it’s supposed to stimulate people to apply for jobs”.
Queensland Senator Gerard Rennick said the current rate, along with wage subsidy programs, was “killing” the budget. “It’s wealth for toil not wealth for welfare,” he said, but said he would still be “happy to compromise on not going back” to the previous rate.
Victorian Senator David Van said the public had “seen we’ve had their backs through coronavirus” and expected the support would continue but it had to strike a balance between encouraging people to work and providing support.
Nationals senator Perin Davey agreed it was tricky for regional Australia where there’s a high unemployment rate and a labour shortage, but was “pleased and comforted it’s still an ongoing discussion” as some struggle on the lower amount.