Increased $550 coronavirus supplement payments start hitting bank accounts from Tuesday, but many were surprised and dismayed on Monday to learn that, contrary to previous statements from the government, payments may be delayed up to two weeks depending on their reporting date with Centrelink.
Labor MP for Bendigo, Lisa Chesters, on Monday became the first Labor MP to call on Prime Minister Scott Morrison to keep the higher rate of Newstart and Youth Allowance permanently. Coalition MPs also recently came out in support of keeping the increased rate much longer than the initial six month deadline.
Newstart (now Jobseeker) was so low that the majority of recipients were forced to skip meals to make ends meet, but Morrison has indicated the effectively doubled rate would revert back to the previous rate of $40 a day after six months.
“We were experiencing a hunger crisis before Covid and before the bushfires … in the lucky country that’s pretty concerning,” Foodbank Australia CEO Brianna Casey told Voice of Action.
Morrison said recently the economy “is hurting, it is hurting hard”, as Australia enters the biggest economic downturn in its history.
Casey said Foodbank, which via 2400 charities does 70% of the total food relief volume nationally, was now assisting an “unprecedented” 1.2 million Australians with food relief every month. This is a 50% increase compared to before covid and the bushfires hit.
“It would be mean and heartless to cut Newstart at the end of the pandemic,” said Emma King, CEO of Victorian Council of Social Service.
“Our social safety net has been revealed as threadbare. When times got really tough, it simply wasn’t up to the job.”
Labor shadow minister for families and social services, Linda Burney, told Voice of Action that Labor supports a “permanent increase” for Newstart but “we have not put a figure on it at this stage”.
Policy analyst, economic adviser and former Treasury official David Sligar told Voice of Action “poverty is a policy choice”, and that OECD data shows Australia’s poverty gap has steadily grown since at least 2004.
Andrew Charlton, who was an economic adviser to the Prime Minister during the GFC in 2008-09, wrote in the Sydney Morning Herald that lower income people often bear the brunt of recessions. He believes the pandemic may further increase inequality in Australia due to the severe impacts already being seen on some of the lowest paid industries (hospitality, food services, arts and entertainment) and most vulnerable workers (casuals, contractors and temporary workers).
Sligar said no serious analyst questions that increasing social security payments would substantially reduce poverty, but there had been a “shift in the balance of political power” towards the “big end of town”.
This can be seen in the government’s recent talk of “reforms” which has not been about increased social spending but corporate tax cuts, deregulation, watering down industrial relations protections and reducing environmental protections.
The dominance of big business can also be seen in the corporate-centred response to the crisis such as the extensive corporate bailouts and JobKeeper payments funelled through businesses, even as many small businesses complain they do not have the funds to front wages while waiting to be reimbursed by the government. The government is trying to cover up this policy failure by having banks extend loans to small businesses to fill the gap.
Sligar said empowering institutions like trade unions was the first step to reversing this power imbalance.
“There is no excuse for a rich country like Australia to have hundreds of thousands of its citizens struggle to afford food,” said Sligar.
“It’s time to put away the big stick to welfare and to open up the cheque book.”
Casey told Voice of Action she expects it could take years to recover.
“We would expect with a disaster of the scale and magnitude of Covid that we will be assisting people for years to come, because the recovery phase is going to lengthy, complex and really resource heavy,” she said.
Casey said “we’re coming from a baseline of extremely high demand for food relief”, adding permanently increasing Newstart above the poverty line would help make people more food secure.
“Food insecurity is the canary in the coal mine … it’s a signal that something is going wrong at the basic household budget level.”
Casey said the COVID-19 crisis had exacerbated the existing problem of families simply not having a buffer in their household budget to see them through even small economic shocks.
“We’re seeing families that were scraping by who are now no longer getting by but we’re also seeing a new cohort of people … who have never had to visit a food pantry or food relief before, they’re families that don’t even know where to look for assistance,” said Casey.
She said even middle class professionals had been seeking food relief.
King echoed comments made by many anti-poverty campaigners: “It’s only now that tough times have tragically hit the middle class as well that the government has decided to improve the system.”
King said many people were at crisis point even before the pandemic struck, choosing between heating their home or feeding their family.
“COVID-19 has simply turbocharged inequality in Australia and made the situation even more dire,” said King.
“Unfortunately, things are probably going to get worse before they get better.”
Casey said “just about every demographic you can imagine” had been seeking food relief but “a few groups are really sticking out at the moment”.
“We’re seeing a huge spike in demand for food relief from the student community and that includes international students, and we’re also seeing a spike in inquiries from temporary visa holders who are unable to access additional government measures and parts of the stimulus package,” she said.
A recent survey of 200 migrant workers in Australia found only half have enough savings to last the next two weeks.
Cassandra Goldie, CEO of the Australian Council of Social Service, applauded the temporarily doubled Jobseeker payment but said “we need to raise the rate for good”.
“We all know we can never go back to the old Newstart payment of just $40 a day,” Goldie told Voice of Action.
“This crisis has made it clear that we need a permanent raise for our social safety net: it was not working. At $40 a day, the rate of Newstart was brutal and trapped people into destitution and poverty.”
Sligar said it was important to reduce onerous mutual obligations placed on social security recipients which do little to promote work.
“Be sceptical about politicians promising to shift people from ‘welfare to work’ given that unemployment is effectively mandated by the Reserve Bank’s monetary policy framework,” he said.
Voice of Action heard from several Newstart recipients who reported skipping meals and other basic necessities in order to survive, but many were reluctant to speak on the record.
Evelyn, 33, from regional Victoria, has been on Newstart for over a year and on Tuesday becomes one of the first Jobseeker recipients to receive the increased payment. She plans to use the extra money to help out her parents more financially.
“We’re currently a one income household,” Evelyn told Voice of Action.
“I think it’s cruel of the government to revert back to the regular rate after the 6 months, for me it will mean that I would struggle to travel to and from Melbourne regularly for study (provided on campus study resumes later this year) and for many it will mean going without or struggling to make ends meet once again.”
Evelyn said she has had to rely on a food bank and charities like the Salvation Army in the past.
Casey said drought and panic buying at the start of the crisis had impacted heavily on Foodbank’s supply of food while the lockdown had created a shortage of volunteers.
Prior to Covid and the bushfires Foodbank was receiving less than a million dollars a year from the Federal Government for operations nationally. The organisation has been able to access $9.6 million in the first tranche of funding from the $200 million allocated to emergency relief (OzHarvest and SecondBite also received funding).
Foodbank needs over 1000 volunteers a week and many of its corporate volunteer base disappeared when companies went into lockdown, while the older Australians in the community who would normally volunteer are also having to isolate. The Army Reserve helped out in the NSW and ACT Foodbank warehouses for a few weeks while other state funding has helped employ paid staff to fill gaps.
The world has never faced a hunger emergency like the current crisis, The New York Times recently reported, with the United Nations agency World Food Program predicting a doubling in the number of people facing acute hunger to 265 million by the end of this year.