Coronavirus Australia: JobSeeker payments to be slashed

The Prime Minister and Treasurer have revealed just how much they’ll cut dole payments by, confirming JobSeeker payments will be slashed under new changes.

Nearly two million Australians forced to rely on JobSeeker unemployment payments as a result of Government-ordered shutdowns will have their payments slashed to $815 a fortnight under changes to be announced today.

But the increased dole will remain at the current rate of $1100 a fortnight until the end of September and the coronavirus supplement will be extended for another six months, at a lower rate.

The changes will slash the temporary doubling of the dole. Instead of a supplement of $550 a fortnight, the unemployed will secure only $250 a fortnight on top of a base rate of $565.

But even this temporary and could be removed by the end of the year.

Announcing the changes today, Treasurer Josh Frydenberg said the extension of the JobSeeker supplement would cost $3.8 billion to December.

The eligibility tests for qualifying for unemployment payments will also be tightened, after a Treasury report found that the generosity of the current increased dole payments could act as a disincentive for the jobless to take on extra work.

The number of Australians on the JobSeeker payment doubled in the wake of the COVID-19 pandemic to 1.7 million workers.

That suggests nearly a million Australians who lost their jobs can be directly linked to the government’s decision to shutdown the economy to save lives.

But to reflect that fact, the Morrison Government also doubled unemployment payments in March from $565 a fortnight to $1,100 by increasing the payment with a new, temporary coronavirus supplement of $550 a fortnight.

These payments will now be reduced, a grim prospect for thousands of families who could never have imagined the impact that the coronavirus could have on the economy just months ago.

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People queued outside a Centrelink office in Melbourne in April. Picture: William West / AFP

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Finance Minister Mathias Cormann said today the increased payments will be extended, but at a lower rate. The original $1,100 payments will remain in place as legislated until September.

“As part of a temporary crisis level support measure, we effectively doubled it through the $550 COVID supplement. And what we’ve decided to do is extend the level of elevated transitional support by a further six months, including by continuing to provide enhanced JobSeeker payments, even though some are somewhat lower levels than in the first six months,’’ he told ABC TV.

But he declined to discuss whether the government would announce a permanent increase to the $565 base rate of JobSeeker, which even business groups have argued for years are inadequate.

“I’m not going to make announcements now about what may or may not be part of the budget in October. What I can say is that the elevated JobSeeker payments will be lower than for the first six months,’’ he said.

The Australia Institute warned this week that axing the coronavirus supplement in the JobSeeker payment would push more than 650,000 Australians into poverty – including 120,000 children under the age of 14.

One reason why the Morrison Government argues it needs to reduce the payment is that it is also reducing JobKeeper from $1500 a fortnight.

The wage subsidy would be not much higher than the doubled dole payments unless that is also adjusted.

The Treasury review into JobKeeper to be announced today has found the scheme is working but cannot continue forever because it creates “zombie jobs” in companies that are not viable and in some cases is too generous to encourage workers to move around to other jobs.

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The Treasury review found the current JobKeeper scheme is creating ‘zombie jobs’. Picture: Jenny Evans/Getty Images

“Under current JobSeeker policy settings – including no waiting period and a gradual reintroduction of mutual obligation requirements from 9 June – the $1,124.50 per fortnight maximum payment available to single, no-dependent JobSeeker Payment recipients effectively forms a new reservation wage or floor for this group,’’ it states.

“For businesses that are beginning to recover and re-hire staff who they may have made redundant, or looking to hire a replacement for a JobKeeper eligible employee who has quit their position, this floor may limit the available supply of labour depending on the hours and

wage rate on offer.

“While unemployment levels are high, and given the benefits other than income to working, the adverse impacts outlined above would be expected to be modest, but they could rise over time.

“This is a key rationale for JobKeeper being a time-limited, rather than ongoing, program.”