On poverty and inequality, Treasurer Jim Chalmers’ budget has put a few coins in the cup of Australia’s most disadvantaged, but he left some crisp notes in his wallet.
After facing intense pressure to increase our woefully inadequate welfare payments, the government increased JobSeeker, the youth allowance, Austudy, the single-parenting payment, the youth disability support pension and other payments by $40 a fortnight. This will kick in from September 20, taking the single rate from $693.10 to $733.10.
This is a welcome change, and just the second permanent raise to JobSeeker in three decades — Scott Morrison raised it by $50 a fortnight in 2021. But it represents only a 5.7% increase, or $2.85 extra a day.
It’s 16% of what the government-appointed Economic Inclusion Advisory Committee (EIAC) recommended — it called for about $256 more a fortnight. It would take six-and-a-half 2023 budget-sized increases to get there.
And it still leaves our payments one of the least generous in the OECD — by some measures the most Scrooge-like.
The government also raised the maximum rates of Commonwealth rent assistance (CRA) by 15% — a welcome move considering rents have risen by approximately 10% across the board. However, for those in locations where rents are rising particularly fast — over 40% annually in some areas — it won’t be enough, nor does it represent the “substantial” change called for by the EIAC.
Some argue rent assistance just funnels money to landlords. But this isn’t true, because while only renters receive the payment, they aren’t forced to spend it on rent (unless they’re a public or social housing tenant). Landlords still face the possibility of renters shopping around for a better deal and spending the savings on other things.
The only problem is they can’t shop around much with rental vacancy rates at record lows. And the budget projects our population to grow and our housing construction to shrink. Yet it didn’t beef up government-backed homebuilding to compensate. The so-called housing accord remains unambitious, while newly announced tax breaks for build-to-rent homes will supposedly build a puny 1200 houses in each state — though Jason Murphy notes in Crikey that Treasury’s “weasel words” don’t even hold it to that inadequate promise.
In a move that stirred controversy after a leak in the lead-up to budget night, Chalmers lowered the eligibility age for higher singles JobSeeker payments from 60 to 55. He referenced this in his budget speech, saying that the mostly female over-55 recipients are “at risk of homelessness”.
This is true — older women are the fastest-growing cohort of homeless Australians. However, this oft-quoted statistic obscures the fact they’re growing from much lower rates, meaning younger people remain at much greater risk. One could perhaps justify the increased payment for older long-term jobseekers based on age discrimination in hiring, but if preventing homelessness is the aim, we should just raise JobSeeker by more for everyone.
The upshot of all this is, as economist Ben Phillips estimates, an approximate 0.3% reduction of the population living in poverty (from 13.6% to 13.3%). About 86% of households whose main source of income is JobSeeker will remain in poverty, though their distance from the poverty line will close by roughly 10%.
For single parents, who will benefit from Labor’s pre-announced partial reversal of Howard- and Gillard-era cuts to their dedicated payments, their poverty rate will shift down by approximately 3.4% (from 34.2% to 30.8%), while their “poverty gap” will reduce around 16%.
These changes aren’t nothing. But they aren’t yet approximating the sort of changes Chalmers’ beloved Hawke and Keating governments achieved.
But the substantial popular movement to “Raise the rate” isn’t going away. And they’ll be in a better position at next year’s budget to argue for another, higher raise to JobSeeker, especially if inflation ebbs further as predicted — if Chalmers wrote a cheque for 5.7% in constrained-spending mode, he’ll be under pressure to do more in election-profligacy mode.
Sure, a further increase is likely to be more expensive, as the budget projects our unemployment rate to rise. But our dwindling revenue and inequitable choices will be starker — next year’s budget will have to include the impact of the expensive, inequitable stage three tax cuts, if they’ve survived until then.
This year’s concertedly inoffensive budget saw many constituencies given just enough to feel noticed, if not truly placated. But it may prove the last of the honeymoon crowd-pleasers before tough calls must be made.
How did you fare from the budget’s bounty? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
