What was Treasurer Jim Chalmers thinking?
Late last year, he set up a committee that he specifically asked to tell him how bad JobSeeker was.
The exact wording in the terms of reference required it to advise him on the “adequacy, effectiveness and sustainability of income support payments”.
It is true that he was more or less forced into it. Independent Senator David Pocock made the committee a condition of supporting an unrelated labor relations bill in the Senate. The findings were to be published fourteen days before each budget.
Still, Chalmers chose to assemble a group whose findings would be hard to ignore. He installed one of Australia’s leading experts on payment adequacy, Professor Peter Whiteford; one of Australia’s leading experts on labor markets, Professor Jeff Borland; and one of Australia’s leading experts in calculating arrears, Associate Professor Ben Phillips.
To add weight to the “interim advisory committee on economic integration,” he added the head of the trade union movement, the head of the Works Council, the head of the Council of Social Services and the head of the Treasury.
In short, Chalmers set up a committee he couldn’t ignore. So why is he now so happy to talk about anything but the number one recommendation?
Impossible to ignore
Sometimes such committees come up with so many recommendations that a minister can choose from.
And this committee made 37 recommendations, as Treasury Secretary Katy Gallagher noted this week, saying she “won’t be able to do everything”.
But unusually, this committee went to great lengths to ensure that one recommendation stood out above all others.
It reported that, given the short time frame, it had:
decided to focus on the needs of the largest number of Australians living in poverty and deprivation today, namely those with jobseekers, youth benefits and related working age payments.
It found that every available indicator showed that current rates of job seekers and related payments were grossly inadequate, whether measured against payments abroad, against the minimum wage, against pensions or against poverty lines.
Measured against other members of the Organization for Economic Co-operation and Development, the Australian job seeker’s pay for a newly unemployed bachelor was the third worst.
When the higher rental rates available abroad were factored in, this turned out to be the absolute worst.
While a quarter of a century ago unemployment benefits in Australia were roughly in line with pensions, decades of raising one in line with prices and the other in line with wages have given us a base jobseeker rate of $347 per week ($49.51 per day), compared to a retirement age of $485 per week ($69 per day).
Too little to get medicine or work
Job seekers told the commission that $347 a week is so low that they kept searching their homes for things to sell. Some had to choose between medicine and electricity. Some were only able to fill part of their prescriptions. Others could barely afford the gas to go to medical appointments.
The committee’s findings were consistent with those of the OECD, which found 12 years ago Unemployment benefits in Australia had fallen so low in relation to costs that “problems arose about its effectiveness” in helping the unemployed find jobs.
The most important recommendation of the committee – more important than any other – was that the government
commit as a first priority to a substantial increase in base rates of jobseeker’s pay and related working age payments
It did not ask for JobSeeker and associated payments to be immediately lifted to the pension rate, although it did suggest that the ultimate goal should be 90% of the pension. Ben Phillips calculated that this would cost $5.7 billion a year, which is less than 1% of total government spending.
What the committee did not want was a small increase along the lines of the $25 per week ($3.60 per day) the coalition delivered as coronavirus payments expired in 2021, with no commitment to build anything substantial.
What is the government doing now in response? Chalmers and Gallagher seem to have decided it’s better to talk about something else.
Change the subject
Seven news has reported that while it will not change JobSeeker’s base rate and associated payments, the Albanian government will raise the rate for Australians aged 55 and over who have been unemployed for some time.
That’s even less of an obligation than it seems.
There are 920,640 Australians on it job seeker And Youth benefit (which is a reduced rate from JobSeeker for young Australians and is also paid to apprentices and students). Only 236,280 of them are 55 and older.
Many of those 236,280 are 60 and older already get an increased JobSeeker payment; an extra $26 a week ($3.70 a day) after being out of work for nine months.
Read more: Top economists want JobSeeker to get more than $100 a week tied to wages
If all Chalmers plans is to extend the allowance for the long-term unemployed aged 60 and over to the long-term unemployed aged 55 and over, it will cost little, and the vast majority of those with incomes of $49 .51 a day hoping that things will improve.
Chalmers appeared verbal his committee on Tuesday by saying that women over 55 are the most vulnerable group among unemployed Australians.
While the committee said so (and while 56% of Australians on JobSeeker in that age group are women), it couldn’t have been clearer to recommend that JobSeeker’s base rate and associated payments be lifted for all Australians.
Chalmers says we should wait to see what’s in the budget, which is fair enough. But if a commitment to do what his hand-picked group of experts recommended isn’t in this budget, the committee will likely recommend it again two weeks before the next budget, and again two weeks before the next.
The treasurer has informed himself.
Read more: Boosting JobSeeker is the most effective way to tackle poverty: what the treasurer’s committee told him