Cutting JobSeeker Would Put 650,000 into Poverty, Including 120,000 Children

New economic modelling from The Australia Institute has shown that if the government removes the JobSeeker Coronavirus Supplement in September it will be forcing more than 650,000 Australians, including 120,000 children, to live in poverty.

The new report, from The Australia Institute’s senior economist Matt Grudnoff, also shows that if the supplement is cut, hundreds of thousands of Australians would struggle to pay rent or service their mortgages, putting acute pressure on the housing market.

Key findings:

–          Introducing the JobSeeker Coronavirus Supplement instantly lifted 425,000 Australians out of poverty.

–          If the government removes the supplement in September, more than 650,000 Australians will be pushed into poverty.

  • This includes 120,000 children aged 0 to 14.

–          If the government removes the supplement but provides a $75 increase in the weekly JobSeeker rate, 505,000 Australians will be pushed into poverty.

  • This includes 90,000 children aged 0 to 14.

–          If the government removes the supplement, 242,000 renters and 246,000 mortgagees who were not in poverty before COVID-19 will be forced into poverty.

  • This is expected to lead to significant difficulties in paying rent and servicing mortgages, which could negatively affect Australians who have investment properties.

“The Coronavirus Supplement has been an essential part of our nation’s response to this recession and has improved the lives of nearly half a million Australians. In fact, no other government has ever lifted so many people out of poverty so quickly,” said Ben Oquist, Executive Director of The Australia Institute.

“Removing the supplement would put more than 600,000 Australians, including more than 100,000 children, into poverty. This will not only have serious negative social effects for decades to come but makes terrible economic policy by effectively withdrawing much needed stimulus.

“Our research shows that even if the government removes the supplement but increases the old rate of JobSeeker by $75 per week there will be a half a million person increase in poverty.”

The Australia Institute’s Senior Economist Matt Grudnoff said Australians with investment properties could also be affected by the government’s plan to end the Coronavirus Supplement.

“As unemployment has increased over recent months, the JobSeeker supplement has been the only thing standing between many recently jobless Australians and poverty,” Mr Grudnoff said.

“If JobSeeker is cut in half, hundreds of thousands of Australians will find themselves struggling to pay the rent or service their mortgages for the first time.

“This will impact homelessness, put pressure on the banking system and have a knock-on effect to property investors. Those who own residential investment properties should be particularly concerned about the government ending the coronavirus supplement.”

The full report, ‘Poverty in the age of Coronavirus’, is available here

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