Jim Chalmers has extended another helping hand to low-income renters, but has stopped short of increasing JobSeeker payments in a budget balancing act designed to stop rising inflation.
The Treasurer on Tuesday night unveiled a $1.9 billion support package over five years to increase top Commonwealth Rental Assistance (CRA) rates by 10 per cent in his budget, a a measure that is expected to benefit almost one million households.
This is in addition to the 15 percent increase in last year’s budget, marking the CRA’s first consecutive increase in more than three decades.
But Dr Chalmers has refused to increase the rate of payment for jobseekers, despite calls for a “substantial” increase in the subsidy from a government-appointed independent economic advisory committee.
The Treasurer on Tuesday night unveiled a $1.9 billion support package over five years to increase the Commonwealth’s Rental Assistance cap rates by 10 per cent in his budget. Pictured, a queue for a rental property in Bondi)
But Dr Chalmers has refused to increase the rate of payment for jobseekers, despite calls for a “substantial” increase in the subsidy from a government-appointed independent economic advisory committee.
The CRA increase means top rates will be more than 40 percent higher than in May 2022.
The move is designed to offer relief amid Australia’s worsening rental crisis, with rental vacancy rates now below one per cent in all capital cities.
“This is the first consecutive increase in Commonwealth Rental Assistance in more than 30 years,” Dr Chalmers said.
“And more much-needed help for young people and renters of all ages who are having a hard time.”
People qualify for the CRA when the rent paid exceeds a certain threshold of their income.
For example, the current rent threshold for a single JobSeeker recipient living alone is $143.40 a fortnight, meaning they would have to pay just under 20 per cent of their benefit payment in rent before start receiving payment.
The government said rents rose 7.8 per cent in the 12 months to the March quarter of this year.
But if they hadn’t boosted the CRA in last year’s budget, rents would have increased 9.5 percent over the same period.
This means that for single parents or couples with one or two children, the maximum CRA rate has increased by more than $70 per fortnight since May 2022.
The government’s 10 per cent increase in Commonwealth Rental Assistance comes on top of the 15 per cent increase in last year’s budget, marking the first consecutive increase to the CRA in more than three decades.
Increasing the rental assistance measure was one of the main recommendations of the Economic Inclusion Advisory Committee (EIAC)’s 2024 report to the government.
However, Dr Chalmers has ignored another of the committee’s key recommendations, which was to introduce “substantial” increases to the base payment rates of JobSeeker and working age-related payments.
The EIAC called for rates of income support and working-age supplements to be increased to 90 per cent of the pension rate.
But now just 5,000 additional Australians will qualify for the higher rate of unemployment benefits under new plans that will see total JobSeeker payments rise to $1.4 billion over the next four years.
While more people will qualify for the higher rate, actual payments received have not increased from the $40 a fortnight announced in the last budget.
This is largely due to Dr Chalmers’ repeated insistence that the Treasury needed to “meet the challenge of inflation”.
In short, more cash handouts would have raised inflation.
Instead, the Treasurer announced plans to expand the number of people eligible for last year’s increased JobSeeker payment to include single people who have been assessed as having a partial ability to work, totaling less than 14 hours a week.
Instead, the Treasurer announced plans to expand the number of people eligible for last year’s JobSeeker payment increase to include single people who have been assessed as having a partial capacity to work, totaling less than 14 hours per week.
Previously, the only people who were entitled to this higher level of payment were those over 55 years of age who had paid nine months in a row and people with dependents.
New recipients will receive a rise of at least $54.90 a fortnight, when the new JobSeeker payment is combined with a higher Energy Supplement rate.
The new qualification criteria, which will take effect from September 20, 2024, are expected to benefit about 4,700 individual beneficiaries and are expected to cost $41.2 million over the next five years.
But total government spending related to income support for job seekers is estimated to increase by $1.4 billion over the next four years.
This is likely due to the fact that the Treasury forecasts unemployment will rise from 3.8 per cent in April to 4.5 per cent in 2026-27.
About 740,800 Australians were receiving JobSeeker payments in March last year.
Dr Chalmers delivered his third budget on Tuesday night, revealing help for renters but no increase in subsidy payments.
The EIAC report concluded that JobSeeker and working age-related payments such as Youth Allowance, Austudy, ABSTUDY and Special Benefit were “too low”.
“Despite the $40 base rate increase provided for in last year’s Federal Budget, people receiving these payments told the Committee that they regularly go without essential items because they simply cannot afford them,” the report states.
Dr Chalmers previously said he could not implement all of the committee’s recommendations.
“We take it seriously (but) we cannot afford to implement all the recommendations that that committee makes to us,” he said earlier this month.
Social security and welfare continue to account for the largest share of government spending at $266.7 billion in 2024-25.