Economists, anti-poverty advocates and Labor MPs are among those calling on the government to raise the “cruel” rate of the JobSeeker allowance.
Less than two weeks from the budget, Prime Minister Anthony Albanese and Treasurer Jim Chalmers were dampening expectations that these calls would (or could) be heeded.
But sources within the Labor caucus have told TND the issue remains live and is actively contested with “considerable support” among MPs for forcing a change.
The existing rate of JobSeeker is about $50 a day, or about 60 per cent of the aged pension, and just under 900,000 Australians receive the unemployment support payment.
Five government backbenchers – Louise Miller-Frost, Alicia Payne, Kate Thwaites and Dr Michelle Ananda-Rajah and Peter Khalil – signed an open letter in support of a substantial increase to the JobSeeker payment.
One Labor MP told TND these concerns were shared by many more MPs, including members of the cabinet.
Another agreed and said the issue had not yet been “settled”.
One former Treasury official and economist said that the government was even presented with a rare opportunity to fund an increase to the JobSeeker allowance by shaving off the controversial forthcoming Stage 3 tax cuts for higher-income earners.
“Such opportunities don’t emerge often,” said Stephen Hamilton, an assistant professor of economics at George Washington University.
In their first full year Stage 3 tax cuts would cost the budget about $18 billion, or significantly more than the entire JobSeeker payment.
An increase in the daily base rate of JobSeeker from less than $50 to $70 would amount to a $6 billion impost on the budget.
The issue of scrapping the Stage 3 tax cuts was raised last year by Dr Chalmers but a handful of MPs, led by a junior minister Andrew Leigh, came out against Labor changing its position on the tax cuts.
Former Treasury secretary and NAB chairman Ken Henry described the current payments as a cruelty.
“We know that about 80 per cent of those people will have to rely on these payments for more than 12 months, despite the tightest labour market that Australia has had in 50 years,” he said.
Being cruel ‘doesn’t work’
“If this tells us one thing, it should tell us that being cruel to people doesn’t work. It’s not what is going to get them into a job.”
Australian Council of Social Service chief executive Cassandra Goldie said MPs supporting a push to raise the rate are listening to their communities.
“We now have the lowest unemployment payment in 50 years and Australia is a wealthy country,” she said.
Liberal MP Bridget Archer, independents and Greens MPs also signed the letter.
Dr Chalmers said the budget would prioritise the most vulnerable Australians.
“I recognise that it is tough to live on the JobSeeker payment and that’s why we want to move as many people as we can off that payment and into good, secure, well-paid jobs,” he told reporters in Sydney.
“I have a lot of respect for the people who have made this suggestion in the letter that has been released. These are good people making suggestions in good faith.”
Cabinet’s Expenditure Review Committee met on Wednesday.
