Close to 150,000 jobs at risk due to welfare cuts
15 September 2020 at 5:02 pm
Community groups say welfare recipients are facing a deeply uncertain future
The looming cuts to the Coronavirus Supplement will cost the economy billions of dollars and could result in almost 150,000 full-time job losses over the next two years, economists warn.
New analysis from Deloitte Access Economics looks at the ramifications of the incoming $300 reduction to the supplement, which has gone to around 2.3 million unemployed people, students, and parents.
The Deloitte report said if the government goes ahead with plans to cut the Coronavirus Supplement on September 25 and then fully remove it at the end of December, this would reduce the size of the economy by $31.3 billion.
Returning to the pre-pandemic JobSeeker rate of $40 a day is also predicted to cause 145,000 full-time equivalent jobs cuts across 2020-21 and 2021-22, with the worst impact occurring in regional communities.
Deloitte Access Economics partner Nicki Hutley said every dollar that the government invests in JobSeeker generates a significant economic return and helps “pave the road out of recession”.
She said giving people without work enough to get by was highly effective economic stimulus, since they needed to spend straight away on essentials.
“People on higher incomes have the option of saving, which many are doing right now given the uncertainty of the pandemic. This is why other measures, such as income tax cuts, would not be as effective in getting us out of this recession,” Hutley said.
“Our analysis clearly shows that the government’s plans to reduce income support would set back the economy even further.
“We also know that this would take a serious toll on the wellbeing of millions of people who are without paid work, especially those in regional communities.”
This research was commissioned by Australian Council for Social Service (ACOSS), which recently found through a survey that the Coronavirus Supplement has had an overwhelmingly positive impact on people’s lives.
Over 80 per cent of the people surveyed reported eating better and more regularly, while 70 per cent said they had been able to catch-up on bills and expenses.
ACOSS CEO Dr Cassandra Goldie said the temporary doubling of JobSeeker after 26 years without a real increase has seen welfare recipients finally being able to afford the basics.
But she said the looming cuts meant they now faced a “deeply uncertain future”.
“There are a lot of things that are not in our control in this pandemic but one thing that the government does have control over is ensuring that everyone has enough to cover the basics of life, including a safe place to live,” Goldie said.
“Not only is this the right thing to do, it’s one of the best things we can do to support jobs now and on the long, hard road to full recovery.”
ACOSS is calling on the government to extend the existing Coronavirus Supplement and move quickly to implement a “permanent, adequate JobSeeker rate”.
The full report can be seen here.