A ministerial agreement to permanently increase the base rate of JobSeeker was put to the Coalition party room meeting on Tuesday, before it was announced that the rate will come into effect once the $150 coronavirus supplement expires at the end of March.
During the pandemic, the federal government doubled the unemployment benefit to $550 a week, while the JobSeeker base payment is currently $565 a fortnight for singles without children, with the $150 COVID-19 supplement set to end next month.
Speaking at a press conference on Tuesday, Prime Minister Scott Morrison said that his government is confident that it will “once again” be able to provide a social safety net to Australians coming out of the COVID-19 recession without work.
“That puts JobSeeker at 41.2 per cent of the national minimum wage, which is commensurate with what it was during the Howard government,” Mr Morrison said.
“It is true that it is the single largest increase in the JobSeeker payment since the mid-80s, year-on-year, that is true.”
The increase will apply to JobSeeker, as well as a rise to Youth Allowance, Austudy, Abstudy, and Parenting Payments, expected to cost close to $9 billion over four years.
The government is also set to increase the income-free area by $150 a fortnight, allowing recipients to earn more money before their payments are reduced.
The increase comes after the Reserve Bank of Australia, Labor, the Greens and a selection of peak bodies warned against lowering JobSeeker to pre-pandemic rates.
Speaking at the National Press Club earlier this month, Reserve Bank governor Philip Lowe said a cut to wage subsidies in March could cause “some slowing in employment growth”, with economic recovery through the COVID-19 recession expected to translate to growth of 3.5 per cent over the next two years.
Despite the increase, doubts remain over whether the boost is enough. In a statement on Tuesday, CPA Australia welcomed the permanent increase, but echoed concerns of welfare groups who had pushed for a more “substantial” increase of $175 a fortnight.
“For many unemployed workers, the JobSeeker payment doesn’t provide adequate support or security,” said CPA Australia chief executive Andrew Hunter. “An increase was overdue before the pandemic.
“One of the surest ways to get money circulating in an economy is to assist people who will spend it.
“JobSeeker recipients have limited capacity to save and will use additional amounts to buy goods and services that support business and the economy.”
CPA Australia has urged the government to establish a regular review process for JobSeeker, similar to the annual wage reviews conducted by the Fair Work Commission.
“From a public interest perspective, people who are unable to find work shouldn’t be denied the ability to afford the basics; they shouldn’t be excluded from actively participating in society,” Mr Hunter said.
“It doesn’t make sense to leave so many households struggling to make ends meet in these difficult times.”
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.