Labor oversees welfare payments spike

JobSeeker and Youth Allowance recipients have increased by their highest monthly level since the 2022 election, with almost 900,000 relying on welfare payments despite low unemployment rates.

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

The largest monthly jump in the number of people on JobSeeker or Youth Allowance payments since the Albanese government was elected has left almost 900,000 relying on welfare ­support despite low unemployment rates.

The Weekend Australian can reveal 66,000 people have moved on to welfare payments in the six months since JobSeeker numbers plunged to their lowest post-­pandemic levels in September.

Department of ­Social Services data shows an ­additional 16,200 people – ­including almost 5000 younger Australians – moved onto JobSeeker and Youth ­Allowance (Other) payments in March.

Ahead of the May 14 budget, Jim Chalmers on Friday released the Economic Inclusion Advisory Committee report led by former Labor deputy leader Jenny Macklin, which called for increasing the JobSeeker rate to 90 per cent of the Age Pension.

The Treasurer is expected to reject the most expensive suggestions costing tens of billions of dollars but is expected to address some of the 22 recommendations in the budget.

Monthly financial statements released on Friday revealed Dr Chalmers was virtually guaranteed to bank a second straight surplus, with the underlying cash balance at the end of March showing a $1.8bn deficit – down from $6.1bn the previous month. Despite the expected surplus, the government has ruled out major cash splashes in a budget that will include targeted cost-of-living supports and energy bill relief.

Amid the ongoing fight against inflation, flat economic growth and a weaker labour market, there are concerns the upwards trajectory in jobless ­welfare numbers will continue this year.

The welfare trend, which pushed JobSeeker and Youth Allowance (Other) numbers to 892,220 at the end of March, will spur social groups and some ­inside Labor ranks to agitate for another JobSeeker rate increase in the budget.

Dr Chalmers rejected the committee’s JobSeeker recommendation last year, which would have cost up to $24bn. The 2023 budget included a more modest $40-a-fortnight increase for JobSeeker and other working-age payments at a cost of $4.9bn.

Factoring in last year’s budget hike and indexation, the Albanese government says the JobSeeker rate for those without children has increased by $120 a fortnight – or 18.7 per cent – since Labor won the 2022 election.

DSS data shows JobSeeker and Youth Allowance (Other) recipient levels are higher than before the pandemic, with growth in recipients across all states, territories and age groups from February to March. Australian Bureau of Statistics data this month revealed a slight increase in the unemployment rate to 3.8 per cent, with 6600 jobs shed in March.

Dr Chalmers did not respond on Friday to the latest JobSeeker data but last month told The Australian: “Treasury has forecast for some time that the labour market will soften as a result of global economic uncertainty, moderating but high inflation and higher interest rates. Despite the un­employment rate near historic lows, there have been some recent indications of weakness, including a fall in hours worked and a rise in payment recipients.”

Opposition Treasury spokesman Angus Taylor said: “More Australians are on welfare, almost one million Australians are now working second or third jobs, and youth unemployment is higher now than when the Labor came to government. There are now more unemployed people than at the last election, and a record number of people are working multiple jobs just to keep their heads above water because of Labor’s homegrown cost-of-living crisis.”

Business Council of Australia chief executive Bran Black, who represented employers on the economic inclusion committee, said the budget faced pressures including “how the government can assist in getting inflation down while providing sustainable support to those that need it most”.

Mr Black said government policies must be “consistent with the need for long-term budget sustainability, to ensure we have the fiscal capacity to support ­future generations to enjoy the quality of life we enjoy today”.

“We need a long-term vision that focuses on social inclusion to build the foundations for sustained employability, career ­development and advancement and economic participation for disadvantaged Australians,” he said. “Giving support to Australians so they have the opportunity to secure a job and realise their full potential is key.”

Independent economist Saul Eslake said employers were hoarding labour, rather than laying people off when they didn’t have work for them. “Employers perhaps scarred by their difficulty in finding labour as we came out of Covid … are hoarding labour,” he said. “There are now more ­people who are working part-time, there are more people who are independent contractors, and employers have more flexibility than they used to, to adjust hours of work rather than number of workers and they’re using that flexibility you could say.”

AMP Capital chief economist Shane Oliver said the sharp rise in young unemployed people and a population boom were fuelling higher welfare recipient levels.

The Macklin-led committee, created before last year’s budget in return for independent ACT senator David Pocock’s vote on industrial relations reforms, ­includes ACTU secretary Sally McManus, ACOSS chief executive Cassandra Goldie, and university, economic and Indigenous experts. Treasury secretary Steven Kennedy and Department of Social Services secretary Ray Griggs are ex-officio members.

Jenny Macklin, Anthony Albanese, Kevin Rudd and Linda Burney at the National Apology Anniversary breakfast in 2023. Picture: Gary Ramage/NCA NewsWire

“An increase in the rate of JobSeeker and related payments to 90 per cent of the Age Pension would cost approximately $4.6bn per annum and represent around 0.43 per cent of total household consumption and 0.16 per cent of GDP,” the committee report said.

“There may be a one-off marginal increase to inflation if the additional payments fully flowed through to household spending, but any change is likely to be small to negligible and depend on how such a change is implemented.”

The committee was advised that “any impact would likely be small to negligible … this is primarily because the increases represent a small share of overall expenditure in the economy”.

Dr Chalmers and Social Services Minister Amanda Rishworth said the government had already rolled out $2.5bn a year in increases to social security payments.

“While we can’t fund every good idea and everything we would like to do, our record shows we have delivered responsible budgets as well as helping people doing it tough,” they said.

The committee said substantial increases to JobSeeker payments were needed because indexing them had resulted in relative base rates “falling significantly below existing benchmarks such as the age pension”.