It’s a remarkable outcome without precedent in Australia.
From the end of September both will be cut. JobKeeper will fall to $1,200 per fortnight for those who previously worked 20 or more hours per week and to just $700 for those who previously worked less than 20 hours per week.
Beyond December, JobKeeper will fall to $1,000 and $650 per fortnight and the Coronavirus Supplement will end, returning JobSeeker to $565.70 per fortnight.
Three quarters of a million more
Our estimates suggest that by themselves these changes will push an extra 740,000 Australians into poverty, lifting the total number in poverty from from 1.1 million to 1.84 million.
These numbers tell us two important things.
One is that the Newstart unemployment benefit (now called JobSeeker) was too low.
The other is that without (and even with) JobKeeper, many, many more people would have been pushed on to it.
We define poverty an equivalised household income of less than half the median household income.
What it would do to the poverty gap
It’s in all of our interests to minimise it for any given level of government support.
How to minimise the damage
If the total level of welfare expenditure were to remain unchanged on pre-JobKeeper and Coronavirus supplement settings, the single JobSeeker would be increased substantially from $551 to $821 per fortnight and the age pension single rate from $902 to $915 per fortnight.
The increases would be offset by reductions in the Parenting Payment from $770 to $737 per fortnight (single), Family Tax Benefit Part A for children under 13 years of age from $218 to $154 per fortnight and Rent Assistance from $137 to $131 per fortnight.
We have also modelled the optimal setting for a 20% increase in government support and a 20% cut.
What our algorithm proposes wouldn’t eliminate poverty (it would cut it by between 14% and 15%) but it would enable to the government to achieve a lot without spending more money.
An essential part of whatever solution it adopts has to be an increase in JobSeeker. Without it an extra 740,000 Australians will be in poverty.
- ^ 2.2 million (csrm.cass.anu.edu.au)
- ^ JobKeeper (treasury.gov.au)
- ^ JobSeeker (treasury.gov.au)
- ^ $816 (csrm.cass.anu.edu.au)
- ^ $1,200 (treasury.gov.au)
- ^ $700 (treasury.gov.au)
- ^ $815 (treasury.gov.au)
- ^ Economic and Fiscal Update (budget.gov.au)
- ^ meet the costs of their groceries and other bills (ministers.treasury.gov.au)
- ^ poverty gap (csrm.cass.anu.edu.au)
- ^ A$5.9 billion (csrm.cass.anu.edu.au)
- ^ $6.5 billion (csrm.cass.anu.edu.au)
- ^ 10% (www.rba.gov.au)
- ^ $6.9 billion (csrm.cass.anu.edu.au)
- ^ The coronavirus supplement is the biggest boost to Indigenous incomes since Whitlam. It should be made permanent (theconversation.com)
- ^ algorithm (theconversation.com)
- ^ mix it suggests (csrm.cass.anu.edu.au)
- ^ $821 (csrm.cass.anu.edu.au)
- ^ When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week (theconversation.com)
Authors: Ben Phillips, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), Australian National University