Welfare boost for millions to address cost of living concerns

Nearly five million Australians will have their social security payments bolstered as the Albanese government moves to address cost of living concerns.

Social Services Minister Amanda Rishworth. Picture: NCA NewsWire/Dylan Coker

Nearly five million Australians will have their social security payments bolstered as the Albanese government moves to address cost of living concerns, with the Reserve Bank expected to raise the cash rate to 2.35 per cent on Tuesday.

Social Services Minister Amanda Rishworth said the pension would have its biggest indexation increase in 12 years while allowances such as JobSeeker would have their highest rise in three decades.

From September 20, the aged pension, disability support pension and carer payment will rise $38.90 a fortnight for singles and $58.80 for couples.

This brings the maximum rate of the pension to $1026.50 for singles and $1547.60 for couples.

The rate of ABSTUDY and JobSeeker for singles without children will rise $25.70 a fortnight to $677.20.

Payments to single parent carers will increase $35.20 a fortnight to $927.40.

The cost of the increases to welfare payments will be revealed in the October 26 budget.

Former prime minister Scott Morrison’s decision to increase JobSeeker by nearly $50 a fortnight last year was forecast to cost the budget $9bn over four years.

Ms Rishworth said the government wanted to ensure Australia had a “strong social security safety net to protect our most disadvantaged”, with the indexation being driven by rising inflation.

“Our guiding principles as a government are ensuring no one is left behind and no one is held back and this indexation increase will help those on government payments keep up with the cost of living,” Ms Rishworth said.

There are expected to be further cost of living pressures this week, with economists from Westpac, NAB and the Commonwealth Bank predicting the Reserve Bank of Australia will lift the cash rate by 50 basis points.

“All focus will be on the outlook and whether the language supports a step down to 25 basis point hike increments after September,” said NAB head of economics Tapas Strickland.

Leading economist Chris Richardson said the RBA would “most probably” lift the cash rate to 2.35 per cent.

Economist Chris Richardson.

“The Reserve Bank is still sprinting in the fight against inflation but this is probably the last super-sized increase,” Mr Richardson said.

“What the Reserve Bank is trying to head off is a wage-price spiral. Wage growth in Australia is rising but it is absolutely not spiralling.

“The ongoing outlook for inflation in Australia looks to be increasingly in hand.

“Petrol might have gone up in recent weeks but it is well off its highs.”

Independent economist Saul Eslake also expects the RBA to raise the cash rate by 50 basis points.

“This will take them close to what they have said is their assessment of the so-called neutral rate,” Mr Eslake said.

“I don’t think they will necessarily stop there but I think they will probably get to 2.60 and stop and assess the impact of what they have done.”

Treasurer Jim Chalmers said the government understood that rate rises put cost of living pressures on Australians.

“The jobs and skills summit helped us make important progress on some of our nation’s big economic challenges – but we can’t fix overnight all the problems we inherited from the previous government,” he said.