Federal Treasurer Jim Chalmers and Secretary of Social Affairs Amanda Rishworth established an Economic Integration Advisory Committee in December 2022 to advise the government on ways to lift economic inclusion and reduce deprivation.
I’m on that committee, which was supposed to report to the government at least two weeks before the federal budget in May — plenty of time to include a response to the budget.
The commission delivered its report to the government at the end of February. The government made made it public yesterday.
There are 37 recommendations – too many to discuss in detail here. The most pressing concern, and the most important one for immediate policy action, is a significant increase in job seekers’ benefits for the unemployed.
Other than a temporary boost during the COVID-19 pandemic, the benefit (formerly known as the NewStart Allowance) has been declining relative to median income and other Social Security benefits for decades.
Jobseeker’s benefit compared to old-age pension, 2000 to 2021
Interim Economic Inclusion Advisory Committee, 2023-2024 Report to the Australian Government
The committee recommended restoring the theory of relativity from the mid-1990s, when unemployment benefits amounted to approximately 90% of the state pension. This would require raising the current rate for singles (now 65% of the old age pension) from A$693 to $958 every two weeks – or from about $49.50 to about $68 a day.
How we made our decision
We compared the JobSeeker’s payment against a range of metrics, such as old-age pension, minimum wage, budget standards, average weekly income, and various poverty lines, such as the Henderson Poverty Line maintained by the University of Melbourne.
There is no one right level for JobSeeker (or any other Social Security benefit) and no single method that provides all the answers.
But all the stats tell the same story: JobSeeker has fallen behind all of these benchmarks, largely because it’s indexed to the consumer price index rather than wages or incomes.
Jobseeker Payment in relation to half-median equivalised disposable income, 2000 to 2021
Interim Economic Inclusion Advisory Committee, 2023-2024 Report to the Australian Government
As the committee only had a few months to prepare a report, it was not possible to cover all aspects of the social security system – such as old-age pensions, disability benefits and family benefits – or the many other aspects that influence economic inclusion. , to watch.
Read more: There are many poverty lines and JobSeeker is not above them
The greatest, most urgent need
Nevertheless, our assessment is that the evidence shows that the most pressing need for policy attention is the precarious financial situation of nearly 1 million Australians who depend on JobKeeper and associated payments such as child benefit
The 4 million Australians who receive other payments (age pension, disability pension, veteran’s pension, parental benefits and carer payments) are more likely to meet adequacy benchmarks. After 2009, there was a substantial increase in most pension payments Harmer Pension Overview.
The committee also found Help with rent inadequate and not keeping up with rent costs for most low-income households. Here, too, an urgent and substantial increase is needed.
But the highest priority has JobSeeker, as the most effective payment to reduce financial stress and poverty. JobSeeker has a larger budget and is better targeted than Rent Assistance at those who need it most financially.
What will it cost?
Increasing jobseeker’s benefits and associated working age would cost the federal budget about $5.7 billion by 2023, according to the Australian National University PolicyMod model of the Australian tax and transfer system. Over the three years of future estimates (2023 to 2026), the cost would be about $24 billion.
The total cost of social benefits in 2023-24 is expected to reach A$145 billion. So $5.7 billion, while a significant additional expense, represents only a 4% increase in Social Security benefits and less than 1% of the total federal budget.
The available evidence outlined in the report suggests that the recommended raise is unlikely to have a major impact on participation, as the pay would still be significantly below the minimum wage. Indeed, the committee’s assessment was that leaving it at the current pace may have a net negative effect on participation, as poverty is a barrier to employment.
Read more: Australia’s ‘underclass’ don’t like work? Our research shows that vulnerable job seekers do not get the help they need
Australia’s social security system is supposed to provide an adequate safety net, but for nearly a million Australians, the system is failing to achieve this essential goal.
The government has a chance in the next budget to right a significant injustice to a group of some of the most disadvantaged people in an otherwise prosperous nation.
