Wasted JobKeeper could have funded JobSeeker raise for five years

by Callum Foote | Nov 26, 2021 | Government

With an election looming, and the surfeit of corporate welfare in recent memory, the peak welfare agency is trying to drag Australia’s JobSeeker rate, the second-lowest in the OECD, back into the spotlight. However, with little pressure from the major parties, it seems like an uphill battle. Callum Foote reports.

The Morrison government threw a lot of money at the Covid pandemic as the nation went onto a semi-war footing in 2020-21. But history is likely to record that it failed to do everything it could have done to help the most vulnerable Australians.

Michael West Media has reported that forty billion dollars going to large corporations which did not need the money. (Less than 1% of it has been paid back.)

New calculations reveal what a slap to the face this was for struggling Australians. Treasurer Josh Frydenberg’s wasted $40 billion could have instead given the 826,000 Australians who have been on JobSeeker for more than 12 months the ACOSS recommended $69 a day for five and a half years.

Now the Australian Council of Social Service (ACOSS) has reinvigorated the debate surrounding increasing the JobSeeker rate from its current $312 per week with the release of an Ipsos poll and its Faces of Unemployment 2021 report.

The current rate of JobSeeker falls well below the recognised poverty line, being half of the median household income, at $450 per week. 

The ‘’relative poverty line’’ is used by the OECD, which reveals that Australia has the second-lowest payment for newly unemployed out of the 37 OECD countries, beating only Greece.

ACOSS CEO Edwina MacDonald told MWM: “We know that the single most effective thing a government could do to reduce poverty and inequality in Australia is to increase JobSeeker and other income support payments to $69 a day.

“This is why so many economists support lifting JobSeeker because it is the number one way to increase fairness as well as stimulate the economy.

“We urge this government to lift JobSeeker from $45 to $69 a day as part of the mid-year budget update so everyone can put food on the table and a roof over their head.”

The ACOSS recommended $69 a day matches the latest indexation of the pension and would put the JobSeeker rate above the poverty line for the first time.

Prime Minister Scott Morrison is unwilling to raise the rate, echoing Business Council of Australia CEO Innes Willox’s position that raising the rate would remove the incentive for people to look for work. 

This is despite there being no difference in the speed with which jobs were filled when the government lifted the JobSeeker rate by $150 a week with the Covid supplement.

The Big Grift: How the Top End of Town rorted Jobkeeper

Corporate, not human, welfare

The government has opposed raising the rate, citing the cost to the federal budget, already blown out by pandemic recovery measures. But the rorts were not coming from individual recipients, but companies.

Parliamentary questions on notice, as well as the JobKeeper three-month report prepared by the Treasury, revealed that Frydenberg knew that money was being rorted by profitable companies at the three-month mark, yet refused to amend the program to halt the cash gram.

Additional analysis prepared by the federal Treasury, as revealed by The Australian Financial Review, show that businesses either artificially lowered, or misreported the hit they took from the Covid pandemic in order to qualify for the $89 billion JobKeeper wage subsidy program.

A laudable palliative to the economic wasteland generated by the pandemic, JobKeeper at the hands of Treasurer Josh Frydenberg became a cash cow for everyone from big retail and pharmacists to a jeweller part-owned by a Monaco billionaire, via ritzy golf clubs, elite private schools and huge companies with foreign multinational shareholders

Faces of unemployment

According to the ACOSS Faces of Unemployment Report 2021, 80% of people receiving JobSeeker payments – a record high of 826,000 people – have had to rely on income support for more than a year.

Among people on income support for over two years, over half (54%) have a disability and almost half (46%) are over 55 years, underscoring widespread discrimination in the labour market against people with disabilities and older people.

Moreover, the effective unemployment rate (which accounts for people stood down and those who left the paid workforce) was 9.5% in September, double the conventional unemployment measure of 4.5%.

Hence the calculations that Frydenberg’s wasted $40 billion could have helped 826,000 people.

Marginal seats might make the difference

The Australian Council of Social Service commissioned Ipsos to survey 2588 people across five marginal electorates.

Across all seats, 69% agreed that income support payments should be above the poverty line (69%).

In Boothby SA, 70% of respondents thought the current rate of JobSeeker is too low.

Just over half (52%) said they would change their vote to support a party that committed to lifting JobSeeker to above $67 a day. Only 10% said this would turn them off a party, and 33% said it would make no difference to how they voted.

Economic benefit of raising the rate

Analysis conducted by economists at the Grattan institute, Brendan Coates and Tim Helm, has shown that “JobSeeker is one of the best forms of fiscal stimulus there is: since people are unemployed, they’re likely to spend most of what they receive.”

Coates also modelled that for every $50 a week cut from unemployment benefits, the Australian economy loses $5 billion annually.

According to Coates, “That’s likely to push the unemployment rate 0.1-to-0.15 per cent higher than if the current $75 a week supplement were kept. And that means up to 40,000 fewer jobs.”

The Reserve Bank governor, Philip Lowe, agrees, having argued recently increasing the rate would be “good for the economy”.

Callum Foote was a reporter for Michael West Media for four years.

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