In 2022 Josh Frydenberg gave the budget game away when he was reported justifying the many billions of dollars spent on Aukus by saying, “everything is affordable if it’s a priority”. Julia Gillard in 2014 also revealed the budget reality when she told the audience at the Joan Kirner justice oration “Budgets are made of choices. They make us … think about what we care about the most”.
When we put those two lines together it becomes what I call the Budget Commandment: “Everything is affordable if we choose to care about it”.
Over the next two weeks we are going to hear a great deal from the government about not being able to afford everything. What it means is that it has decided not to spend money on something because it has decided it is not a priority that it cares about the most.
This is relevant because last week the government’s Economic Inclusion Advisory Committee (EIAC) released its second report. It recommended help for those in poverty, especially those who were unemployed.
The first recommendation was to raise the level of jobseeker to 90% of the age pension.
Unemployment benefits used to be around this level but in 1997 the Howard government “benchmarked” the age pension to 25% of “male total average weekly earnings”, while unemployment benefits were raised in line with inflation.
Because earnings usually rise faster than inflation, the age pension has grown much faster than unemployment benefits.
One of the easiest things the government could do is index jobseeker to whichever is highest of the CPI or wage price index. Doing so would cost only about $600m over the next four years.
In 2009 the Rudd government also implemented recommendations from the “Harmer review”, which greatly increased the age pension but not unemployment benefits.
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The other issue is that age pensioners also receive a “pension supplement” – now a maximum of $81.60 a fortnight. They also get $14.10 a fortnight for the “energy supplement” while those on jobseeker get just $8.80.
It means the total age pension is now $558.15 a week while jobseeker is $385.75 – only 69% of the age pension. To get it to 90% of the pension would require a $116 a week boost to $502.34.
The first thing to note about this is that it would still mean those on jobseeker are in poverty:
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The second thing to note is this would cost about $4.6bn in the first year.
A lot of money, yes. But remember the Budget Commandment – the government chooses what it cares about, and, if it cares about it, it is affordable.
During the pandemic the Morrison government chose to temporarily double jobseeker to keep people out of poverty.
And then it chose to send people on jobseeker back into poverty and the Albanese government has chosen to continue that state of affairs.
If that sounds harsh, I refer you to the lines above – everything is affordable if it’s a priority.
Also remember increasing jobseeker will not be a cash splash that raises inflation.
Jobseeker is not a labour cost so no one needs to raise their prices. And those unemployed will not think “Woohoo, flat screen TV for me!”. No they’ll think they might be a chance to pay the energy bill and rent on time.
If the government were to raise jobseeker to 90% of the age pension and index it to the higher of either CPI or the wage price index, the budget would be forecast to be in surplus a year later than is currently estimated:
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Is that really a case of “cannot afford”?
And consider the capital gains discount is set to deliver about $12.7bn in 2024-25 to the richest 10% of taxpayers, and the mining industry is estimated to receive the same amount it would cost to increase jobseeker in fuel tax credits.
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Right now, the government chooses to keep jobseekers in poverty.
The government also chooses to keep jobseekers subject to the horrors of the privatised employment services industry where 70% of people have had their payments automatically suspended, despite a parliamentary committee last year finding that number “ridiculous” given the actual levels of welfare fraud are “minuscule”.
The government also chooses to subject jobseekers to “mutual obligations” which deliver no discernible economic benefit but do treat the unemployed with a level of degradation.
The EIAC found that mutual obligations are “killing unemployed people’s intrinsic motivations and efforts to seek work, by drowning them and those paid to help them in a mountain of red tape, compliance requirements and pointless mandatory activities”.
They recommend “immediate reform”. Personally, I would just dump them for the bad idea they are.
The government also chooses to allow those on the age pension to earn $2,436.60 a fortnight before the pension cuts out, whereas those on jobseeker can only earn $1,453.50.
The government chooses to do these things.
This budget is not about what the government can afford but what it chooses are the things it cares about.
We should not allow it to get away with saying it cannot afford things but rather demand the government own the choices it makes, and demand it makes better ones.
• Greg Jericho is a Guardian Australia columnist
