Why the Jobseeker increase could have been a bit higher

Pity the fool – or government – who has to decide how much money to give unemployed Australians. A fresh battle now rages.

It’s not surprising the Morrison Government’s $50 a fortnight – about $3.50 a day – permanent rise in Jobseeker unemployment benefits has gone down like a lead balloon with welfare groups.

They had wanted an increase of $200 to $350 a fortnight – which was never going to happen – and described the smaller rise announced last week as a “heartless betrayal”.

And they’re not the only ones disappointed by the dole increase. Some economists and business leaders also suggest the rise should have been at least a little higher.

Financially and economically, there’s some merit in their argument.

Giving more money to those who don’t have a lot is a great way to ensure it helps the economy. That’s a key reason why many Aussie businesses had a good 2020 – the temporary Jobseeker supplement of $300, and later $150, a fortnight went straight into their cash registers.

COVID caused long queues at Centrelink last year. Picture: William West/AFP

Financially, it’s a good time in history for extra government spending because interest rates are at record lows and debt servicing costs are manageable despite the huge COVID blowout in government borrowings.

However, there are several reasons to argue why $3.50 a day is enough.

The Federal Government doesn’t want to bake in permanent extra welfare spending into its Budget over the long term, because interest rates will rise.

Its budgeted social security and welfare spending already sits at $228bn for this financial year – more than twice as much as national health spending ($94bn) and at least five times higher than its education and defence budgets.

The $50 fortnightly rise from April 1 adds $9bn to the Budget over four years. If the government had agreed to welfare groups’ requests, that cost could eclipse $50bn.

The government also doesn’t want to reduce the desire of people to find jobs. At current levels the dole is about 40 per cent of the minimum wage. If it gets a lot higher we may have more Australians preferring to stay at home.

I know several employers who struggled to find job applicants in the past year because of the expanded Jobseeker supplements made people too financially comfortable living on welfare.

And the argument unemployed people will only receive $44 a day is a bit flimsy.

Most get rental assistance of up to $140 a fortnight, more if they have kids, there’s also Family Tax Benefits that can total hundreds of dollars a fortnight, plus benefits from the Low Income Health Care Card.

Have a play with Centrelink’s online Payment and Service Finder and you may be surprised at the financial help available.

Of course, many unemployed Aussies struggle financially on Jobseeker, and many others do fine by pooling their payments with family members or housemates.

There are those who cheat the system, and those who are let down by the system.

Online polls showed a 50-50 split among respondents about whether the Jobseeker rise is too much or too little, which suggests the government may have got its numbers right. Even if it does get described as a heartless betrayal.

@keanemoney