Economists are warning of a $31.3 billion hit to the economy over two years if the Jobseeker welfare payment reverts to pre-pandemic levels.
A Deloitte Access Economics analysis commissioned by the Australian Council of Social Services (ACOSS) found winding back the supplement this month, and then removing it entirely in December, would reduce the size of the economy by $31.3 billion over two years — equivalent to almost 1 per cent of GDP.
The analysis also predicted a return of the JobSeeker payment to pre-pandemic levels of $40 a day would lead to about 145,000 job losses.
Economist at Deloitte Nicki Hutley said financial support for unemployed Australians and low-income earners would be critical to the nation’s economic recovery.
“If we take it away too soon and too harshly, we will end up adding to the unemployment queue,” Ms Hutley said.
Ms Hutley said every dollar invested in JobSeeker was generating significant economic return.
“If people don’t have the supplement, they can’t consume as much,” she said.
“That affects demand for all sorts products right across the Australian economy but particularly the services sector and that’s where we will see the biggest job losses.”
The Federal Government effectively doubled the JobSeeker payment — formally known as Newstart — by introducing a $550 “coronavirus supplement” when the pandemic first took hold and forced the mass shutdown of businesses.
The temporary supplement will be cut by $300 a fortnight on September 25. The Government is yet to reveal what the future of the payment will be beyond the end of December.
ACOSS chief executive officer Cassandra Goldie reiterated the organisation’s calls for the Prime Minister to stop the imminent cut to the supplement and instead legislate a permanent increase.
“There are a lot of things that are not in our control in this pandemic but one thing that the Government does have control over is ensuring that everyone has enough to cover the basics of life, including a safe place to live,” she said.
“Not only is this the right thing to do, it’s one of the best things we can do to support jobs now and on the long, hard road to full recovery.”
Prime Minister Scott Morrison previously said he was “leaning heavily” towards extending the supplement in some form beyond the end of the year.