Unemployment benefits in Australia, under whatever name, have fallen over several decades, to well below poverty level. In its present incarnation as JobSeeker, it stands to revert towards $40 a day at the end of March next year.
When covid-19 boosted the number out of work and posed the Morrison government with a political dilemma, the temporary supplement came, and this was a kind of admission that the rate had been far too low.
But now that Australia is moving out of the Corona-19 restrictions, and the government no longer sees it politically necessary, the aim is to return payments towards $287.25 per week.
As the graph below shows, unemployment benefits are a long way below the age pension, which is not very high in itself.
Graph from Ben Phillips ANU/Services Australia
The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle. A majority of 24 out of 45 called for an increase to JobSeeker of at least $100 a week. Seven said that it should be $150 a week. Four of them called for the restoration of the full $287 a week supplement.
Two thirds agreed that future payment adjustments should be in line with increases in wages.
Economists are a particularly conservative lot. Most of them have long been rooted in the economic beliefs that feed the Morrison government. That they are talking about a major increase to JobSeeker is significant. It indicates that the old orthodoxy is weakening its hold,
A traditional argument, and one consistently used by Australian governments, is that any major increase would be a disincentive to look for work. But evidence provided by this year’s supplement shows that this is not the case.
What it did do is provide the ability to avoid financial crisis and improve capacity to engage with the community. Spending the money on daily necessities acted as a stimulus to the economy.
Returning to rate that is only halfway to the poverty line, the evidence would suggest, puts the unemployed in the position that they cannot cover the costs of looking for a job.
Economists are realising that his creates a barrier against employers using this group as an available labour force, and this has an impact on the economy.
None of those in the survey showed concern over the impact on the government’s budget by the $4.8 billion per year cost of a $95 increase. The deficit no longer looms as such a big problem.