Eight people are competing for every available job yet the Morrison Government continues to blame people themselves for being unemployed, putting the Coalition in breach of a key international treaty for as long as it refuses to raise JobSeeker to the poverty line. A Senate Committee hands down its report into JobSeeker when Parliament resumes next week. A clear commitment to increase the rate by of $250 a fortnight is vital to put pressure on the Government to do the right thing, legally and morally. Emma Dawson reports.
So much talk from the Coalition Government about the importance of the rule of law. So much hypocrisy because the Coalition continues to be in breach of a key international legal treaty yet is showing no desire to rectify that breach.
The right to an “adequate standard of living” and the right to social security are key planks of the International Covenant on Economic, Social and Cultural Rights. The Covenant is legally binding on nations that have ratified it, which Australia did in 1975. In fact Australia was a key driver in creating the Treaty.
Yet far from providing an adequate standard of living, government policy has, for 25 years, deliberately kept in poverty people reliant on unemployment benefits. The base rate of JobSeeker is $570.80 per fortnight, and the government recently announced a $50 a fortnight boost to lift it to just $620.80.
Back to 2007
While this first real increase since the 1980s is welcome, this amount is manifestly inadequate and simply takes it back to where it was in 2007 – at 41% of the minimum wage. It will keep those reliant on it living well below the poverty line.
There are a number of ways to calculate the poverty line. We have used the measure that offers the lowest increase the government needs to put on the table so it can claim JobSeeker is above poverty levels.
Researchers at the Centre for Social Research and Methods (CSRM) at the Australian National University define the poverty line as being one in which a household’s income “is less than half the value of the median household disposable income across all households”.
By this calculation, which is lower than some other poverty line measures, the increase to JobSeeker needs to be at least $250 a fortnight. In defending its paltry $50 a fortnight offer, the Government argues that a low rate is necessary to provide an incentive for people to work.
This claim has been thoroughly debunked by labour market experts. Professor Jeff Borland at the University of Melbourne has found that “[t]he size of the JobSeeker payment could increase by a substantial amount without significantly reducing the relative monetary returns from working compared to receiving only the payment”.
Indeed, Borland’s research shows that an increase of $250 per fortnight would put JobSeeker at only 54.1 per cent of the national minimum wage. With 99 per cent of full time workers in Australia earning more than the increased payment, there would still be a significant financial incentive for people to seek more hours of work.
And although the Government trots out claims that employers are finding it hard to fill minimum wage jobs because people are “better off” on JobSeeker, there is no empirical evidence of this.
Even at the much higher rate of JobSeeker under the full Coronavirus Supplement of $550 a fortnight in place last year, labour force data showed the number of people moving off JobSeeker and into (more) paid work did not fall.
Cuts to JobSeeker, Jobkeeper: out of the frying pan and into the fire
Unemployment benefits have fallen so far below the poverty line since the 1990s is because of the way cost-of-living increases are calculated. In 1997, the Howard Government introduced automatic benchmarking of the age pension to 25% of Male Total Average Weekly Earnings, but deliberately did not include working age income support payments in the relevant legislation, instead leaving them linked to the Consumer Price Index (CPI).
It is wages, not CPI, that establishes living standards in Australia. Because wages grow faster than the rate of CPI increase, John Howard’s decision has seen the standard of living of people who are unemployed fall far behind those not just of working Australians but also of age pensioners over the past 24 years.
It is critical that the rate of JobSeeker be indexed to wages. If not, un- and under-employed Australians will continue to fall further into relative poverty – and remain there for increasing periods of time.
For far too many people, unemployment is not a short-term experience. In fact, since the Coalition Government came to power in 2013, the number of people who rely on unemployment payments for more than five years has doubled to more than 200,000.
Where are the jobs, PM?
On average, eight people are competing for every available job. The jobs needed to provide work to all who it just aren’t there. Meaningful job creation policies from the Morrison Government are hard to find, beyond its ill-conceived JobMaker hiring credit.
The Senate Community Affairs Committee met this past week to consider the Government’s legislation to increase the rate of working age income support payments, including JobSeeker, by just $50 per fortnight.
The Senate has already passed a motion calling on the Government to increase JobSeeker to at least the poverty line, with only government senators voting against it. The Community Affairs Committee hands down its report before Parliament resumes next week. We should expect it to support of an increase of at least $250 a fortnight – the minimum required to meet the poverty line.
A clear alternative figure, one that is grounded in economic fact and supported by the Labor Opposition, is needed to put pressure on the Morrison Government to do the right thing, legally and morally.
Emma Dawson is Executive Director of public policy think tank Per Capita. She has worked as a researcher at Monash University and the University of Melbourne; in policy and public affairs for SBS and Telstra; and as a senior policy adviser in the Rudd and Gillard Governments.