Federal budget 2020: Welfare recipients get bonus $500 cash payment

Welfare recipients will soon score a surprise gift from the government, with two $250 payments hitting bank accounts within months.

Scores of Aussies on welfare benefits will soon pocket up to $500 in bonus payments as part of an unexpected Budget sweetener.

Those on a number of government payments, including the age pension, disability support pension, carer payment, family tax benefit or family tax benefit lump sum, double orphan pension, carer allowance, Commonwealth seniors health card, pensioner concession card or veteran card, will receive two separate $250 injections, with one payment to be rolled out in December and the second in March 2021.

Pensioners ordinarily receive two Consumer Price Index (CPI) increases per year, but the government announced a freeze on the automatic hike after the pandemic caused inflation to go backwards.

There has been a massive push to reverse that decision as vulnerable Australians struggled through the coronavirus crisis, and Treasurer Josh Frydenberg and Prime Minister Scott Morrison previously promised to review the indexation freeze in the lead up to the Budget.

The $500 payments are designed to stimulate the economy and help Australia through the coronavirus recession – the nation’s first in almost 30 years.

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Prime Minister Scott Morrison and Treasurer Josh Frydenberg prepare to hand down the “most important budget since World War II”. Picture: Adam Taylor for PMO via NCA NewsWire

“We know that lower income households tend to spend the money that they have … so this is a really good idea,” deputy director of the Bankwest Curtin Economics Centre, Rebecca Cassells, told Radio National.

“The tax cuts on the other hand, they’re actually going to impact more on higher income households. And we know the higher income households are actually hanging onto their cash.”

The payments have been announced as part of the 2020 Federal Budget, which was officially handed down by Treasurer Josh Frydenberg on Tuesday evening.

The Budget, which was supposed to be announced back in May but was pushed back as a result of the COVID-19 pandemic, has been described as the “most important budget since World War II”.

The new payments come on the back of two previous payments given to millions of Australians receiving Centrelink assistance at the height of the pandemic.

In March, around 6.6 million Australians pocketed $750, while five million received a second $750 injection three months later.

While the new $500 payments will likely be welcomed by those struggling through the coronavirus crisis, much of the budget buzz so far has centred on the government’s controversial proposed tax cuts, which have been slammed by critics as “tax cuts for the rich”.

On last night’s Q&A, health expert and former head of Australia’s Finance Department Jane Halton questioned the value of tax cuts in stimulating the nation’s finances.

“We know people on lower incomes, if you put money in their pocket, they will spend it. We know that if you put money in the pocket of people on higher incomes, they’re more inclined to save it,” she said.

There has also been controversy in the lead up to the Budget announcement after Finance Minister Mathias Cormann confirmed a decision on the rate of the JobSeeker payments would not be included, despite a nationwide campaign to raise it.

At the moment, the JobSeeker coronavirus supplement – which has already been cut – is due to expire completely on December 31 this year.

There are fears the payment will revert back to its pre-coronavirus level, which equates to just $40 a day.

The Australian Council of Social Service (ACOSS) argues that prior to the coronavirus outbreak, the Newstart payment – which JobSeeker was formerly known as – had not been increased in real terms for 25 years while the cost of living has “gone through the roof”.