Not a good day for job-keeping

~2.2 million Australians are relying on the supplement for JobSeeker, Youth Allowance and parenting payments and this week JobSeeker payments will reduce by $300 to $1,200.

Those who worked less than 20 hours a week will go to a part time rate of $750/fortnight – half the payment initially received by their employers.

On 4 January 2021 JobKeeper will drop to $1,200/fortnight and part time to $650/fortnight.

Part-time workers and small businesses that employ them, will be affected most by these cuts, particularly those in Victoria where few businesses are able to operate.

We will say it again. It is women, young people and low-income earners, particularly in regional areas, who are bearing the brunt of Covid-19 and they are the ones most likely to spend whatever income they receive, thus assisting with economic stimulus. 

Cash handouts are of course not a long term solution but it’s too early to be reducing them with little by way of job-creating investment.

Cash handouts are of course not a long term solution but it’s too early to be reducing them with little by way of job-creating investment.

A key challenge is how to transition out such measures once the worst economic impacts of the pandemic (and lockdowns) have passed. This is made particularly difficult given the uneven spread of the pandemic in each state not to mention the disproportionate impact upon already vulnerable groups in society. 

We agree with the Reserve Bank Governor’s statements to the Parliament’s Standing Committee on economics on 14 August, that ultimately, stimulus should focus on job-creating investment rather than income support and other cash handouts. Fortunately, there are compelling investments in electricity, transport and other infrastructure that can be made now to stimulate and drive the transformation. 

Australian Democrats Economic stimulus, energy and infrastructure plan

Deloitte research, commissioned by ACOSS, says the economy will lose $31 billion and 145,000 full-time jobs over the next two years as a result of today’s cut and those ahead. Regional areas will be impacted most with one job vacancy for every 28 unemployed people. See here for the full report. 

Here’s their case for higher unemployment benefits:

  • More people: just over 5% of people in the Australian workforce were unemployed before this crisis hit, but that number is expected to have doubled to 10% within months. So, were the unemployment benefit to return to $40 a day, then this nation’s fundamental fairness fail would be two times worse than it was at the start of 2020. 
  • A bigger boost: every dollar getting pumped back into the Australian economy is doing more good than ever before – unemployment is really high, and the Reserve Bank is already doing pretty much everything it can. And a dollar that goes to the unemployed is much more likely to be spent than a dollar to others. So a higher unemployment benefit currently provides a supercharged boost to the economy – because there are more people on the benefit, but also as the economy is in greater need. 
  • Where it’s needed most: Australia’s most disadvantaged regions have been hardest hit in the current crisis – relatively more jobs have been lost where unemployment rates were already the highest, so COVID-19 has markedly worsened regional inequality in Australia. In turn, that says the Coronavirus Supplement is doing a striking amount of heavy lifting in easing regional inequality. 
  • A cheaper borrowing cost: yes, there are more dollars. But governments have never been able to borrow at cheaper rates. 
  • The Budget isn’t broken: 99% of the Federal Government’s responses to the coronavirus crisis have been temporary rather than ongoing costs to the Budget. That’s not well understood. But it means that, if we can repair the economy, then that will repair the Budget. In turn, that says there remains room to move where it is needed most – to help Australian people doing it the toughest. 

Photo by M.Fildza Fadzil on Unsplash

Photo top by Anggun Tan on Unsplash

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