Morrison effectively doubled the rate of Newstart (now Jobseeker) in response to the COVID-19 crisis but indicated today the higher rate will not last beyond six months.
He was asked about keeping the rate today by The Guardian, which also asked Morrison if he accepts that people can’t live on the original rate of $40 a day.
“We put a Covid supplement in place for the period of the pandemic and that’s what we’ve budgeted for and that’s what our policy is,” Morrison said.
Asked again whether he acknowledged that $40 a day was not enough to live on, and whether or not he was open to extending the period of the higher rate, Morrison ignored the questions.
University of New South Wales research in 2017 found Newstart, Youth Allowance and related payments were inadequate to cover basic living costs, while a survey last year by the Australian Council of Social Service found 84% of Newstart and Youth Allowance recipients surveyed were skipping meals to save money.
Newstart recipients could not afford to rent in any Australian capital city, the Rental Affordability Index published in November last year shows.
“The vast majority of our members on Newstart were skipping meals to survive on the entitlement,” said Australian Unemployed Workers Union spokesman Jeremy Poxon.
“There is no way this huge new population of unemployed workers are all going to stroll back into full-time work in six months. The prime minister is going to have a hell of a time convincing these people that they deserve to starve.”
Greens senator Rachel Siewert said Greens will support retaining the higher rate and no one in a country as wealthy as Australia should be living in poverty.
“I am gobsmacked that the PM is thinking it is ok to return the Jobseeker payment to $40 a day in 6 months, condemning what is likely to be over a million people to living in poverty,” said Siewert.
“How can it be Gov policy for people to live below the poverty line?”
Morrison, who has been exceedingly generous when it comes to concessions and largesse for big business, said 587,585 Jobseeker applications have been processed – more than Services Australia usually does in a year.
Industry super funds face obliteration, with the government confirming today that 456,000 people (withdrawing $3.8 billion) have already applied for early access to their superannuation. Around 275,000 businesses have applied for the $1500 Jobkeeper wage subsidy, while 6.8 million people have received the $750 Covid supplement.
Reserve Bank governor Philip Low said Australia would experience the biggest contraction in national output and income seen since the 1930s. At least 6% of workers have lost their jobs in the past month, according to new data from the Australian Taxation Office and the Australian Bureau of Statistics that was analysed by The Guardian.
Opposition leader Anthony Albanese said longer term government support was required because the economy was not going to snap back any time soon.
“We won’t wake up one morning and be through this crisis and be back to where we were,” said Albanese.
“What we don’t need is a government that says after this crisis is over, we’ll just let the market rip. What we need is a government that’s prepared to invest in people, in skills.”
Dan Nahum, Economist at the Centre for Future Work, said the government’s temporary increase of Jobseeker/Newstart in the face of the COVID-19 crisis was an admission that “the rate was grossly inadequate” and that the government “has the financial firepower to ensure that the involuntarily unemployed can live with a degree of economic dignity”.
“The economic aftershocks of the COVID-19 downturn are still likely to be felt in six months time, so even if you draw a distinction between the people who became unemployed as a result of COVID-19, and those who were already unemployed, you are still liable to pull people from the former group onto the lower rate,” Nahum told Voice of Action.
“Macroeconomically, reducing the rate is a brake on our economic recovery – people on low incomes have the greatest propensity to spend, rather than save, any additional money they receive. So it’s an austerity measure, and we know that countries that put austerity programs in place take longer to recover from economic setbacks.”
Emma Dawson, executive director of progressive think tank Per Capita, said with unemployment forecast to be up to 25% it would be “indefensible” to return to the original rate, but she only supports keeping half of the increase permanently, arguing that leaving the rate at $1100/fortnight “would create perverse outcomes in the labour market”.
“Someone not working at all could be receiving more in income support than the earnings of someone working three days per week in a retail, services or care job, which, while vital during this crisis, are low paid jobs,” she told Voice of Action.
“This would have the effect of discouraging many people currently working.”
Poxon said employers would simply be forced to pay people more to do that essential work. “That’s the whole point of lifting Newstart, so there isn’t this starving reserve army driving conditions/wages down for all workers.”
On Sky News this morning Albanese said the government was concealing its agenda and had made changes last week to weaken industrial relations regulations without any consultation with the community, union movement or the Labor party.
“Regulations changed overnight by [Industrial Relations Minister] Christian Porter, which allow for an increase in power by employers by limiting the period of consultation for changes to awards to a 24-hour process so that individual workers and workers in particular workplaces would have a great deal of difficulty having proper advice and consultation on any proposed changes,” Albanese said.
Professor Peter Saunders and Megan Bedford from UNSW found in their 2017 research that for unemployed families receiving social security payments, disposable incomes are below the minimum income for healthy living in all cases, with the shortfall varying between $47 and $126 a week.
“These shortfalls cast serious doubt over the adequacy of existing social safety net provisions and suggest that increased payment levels are urgently needed, especially for those in receipt of [Newstart],” they found.
There have been a slew of reports of businesses rorting the government’s Jobkeeper allowance and mistreating staff in the wake of the crisis. The government has said clearly that it intends to continue its neoliberal ideology of small government, tax cuts for the wealthy, deregulation and reducing worker pay and conditions.
Former Treasurer Wayne Swan said in a piece for Chifley Research Centre that we are now heavily into the “socialise the losses” section of the business cycle that he remembers all too well from 12 years ago, when he was in the hot seat leading the response to the Global Financial Crisis.
“Businesspeople who laud themselves in the pages of the Australian and the Financial Review as globe-spanning capitalist demi-gods but are the first in line with their hands out to government when the market turns down,” he said
Swan said in a crisis the rich and powerful were well-insulated, but the deck was stacked against working people and those in precarious jobs across the economy.
He referred to 2015 research from the International Monetary Fund (“once a bastion of neoliberalism”), which found that a declining proportion of GDP going to low and middle-income earners was a handbrake on growth and living standards for all.
“Their empirical work shows conclusively that when the benefits of growth are concentrated growth is weaker and when the benefits are more fairly shared growth is stronger,” said Swan.
With Australia entering the worst downturn in its history, experts earlier this week said policies being advocated by the federal government and the business community could exacerbate poverty to the point of “bloodshed”.
Swan said that as COVID-19 threatens populations and smashes global growth the world was already experiencing “political volatility it hadn’t experienced since the 1930s”.
“It’s now well documented that the low wages and insecure work imposed on working class communities, along with the hollowing out of middle class, caused political polarisation that has led to the rise of radical right wing populist movements,” said Swan.