Lifting JobSeeker must be balanced with cutting debt

The Albanese government’s task of restoring the federal budget to surplus and retiring debt will be made harder by an independent review into welfare that is likely to push for an increase in JobSeeker payments. The review was set up to secure the vote of independent ACT senator David Pocock for industrial reforms in early December. Like the ‘‘cash for clunkers’’ scheme to allow low-income earners to replace their gas stoves and heaters with electric appliances, created to secure Greens support for the government’s energy legislation, taxpayers will foot the bill.

The review group, chaired by former Labor minister Jenny Macklin, is dominated by long-time advocates of higher dole payments, such as the Brotherhood of St Laurence, academics, and the Australian Council of Social Service. ACTU secretary Sally McManus and BCA chief Jennifer Westacott are also members. The review’s recommendations will be made public at least 14 days before the budget.

Pressure on the May budget is emerging, with two-thirds of public and private chief economists surveyed by the World Economic Forum, meeting in Davos, Switzerland, expecting a global recession this year. “The current high-inflation, low-growth, high-debt and high-fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” WEF managing director Saadia Zahidi said in a statement. A PwC survey of chief executives, released in Davos on Monday, also painted a gloomy picture as the war in Ukraine and rising interest rates continue.

The RBA board meets on February 7 and is likely to lift rates again after the Consumer Price Index rose 7.3 per cent in the year to November. Members of the welfare review committee told The Australian that the JobSeeker rate needed to be increased by as much as $25 a day.

In September, ACOSS said six in 10 Australians on income support were eating less or had reported difficulties in accessing medicines or care. “No one should have to choose between food and medicine, but these are exactly the choices being forced on people in Australia, one of the world’s wealthiest nations,’’ ACOSS deputy chief executive Edwina McDonald said. That month, 4.7 million Australians received a boost to their social security payments when the Albanese government announced the largest indexation increase to payments in more than 30 years for allowances and 12 years for pensions. The rate of JobSeeker payments for singles without children was increased by $25.70 a fortnight to $677.20, including the energy supplement.

On Monday, ACOSS chief executive Cassandra Goldie said the government needed to “urgently” raise the JobSeeker rate to at least $73 a day.

“Even before the cost-of-living crisis, income support payments weren’t nearly enough to cover basic expenses,” she said. “But in the last 12 months, rents have risen by 18 per cent and food by about 9 per cent … people on income supports are worst-affected by these rising costs. ’’

Jim Chalmers has not ruled out an increase. But it needs to be weighed against fiscal challenges. “None of these proposals … come without a hefty price tag and my job is to make it all add up in the context of a trillion dollars of debt,’’ the Treasurer said.

Deficit and debt reduction are essential for Australia to avoid remaining vulnerable to a new global economic shock or pandemic.