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Cuts to JobSeeker to cost 145,000 full-time jobs

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The Morrison Government’s planned cuts to the Coronavirus Supplement for people on JobSeeker, Youth Allowance and parenting payments would see the economy lose $31.3 billion and 145,000 full-time jobs over the next two years, finds analysis by Deloitte Access Economics commissioned by The Australian Council of Social Service.

The old Newstart rate was effectively doubled when the Federal Government brought in the temporary Coronavirus Supplement in March. At the same time, the name of the payment was changed from Newstart to JobSeeker.

The Government is planning to cut the Coronavirus Supplement on September 25, reducing incomes of people on JobSeeker by $300 per fortnight.

Unless the Government steps in, the Supplement will be removed entirely at the end of December, sending the incomes of people on JobSeeker down to the appallingly low old Newstart rate of just $40 per day.

The Deloitte report, released today, finds that if the Government cuts the Coronavirus Supplement on September 25 and then fully removes the Supplement at the end of December, this would reduce the size of the economy by $31.3 billion and see an average loss of 145,000 Full-Time Equivalent jobs across 2020-21 and 2021-22, and have the worst impact in regional communities.

Deloitte Access Economics Partner Nicki Hutley said: “Every dollar that the Government invests in JobSeeker is generating a significant economic return, helping to pave the road out of recession. Providing people without paid work with enough to get by is highly effective economic stimulus, as they have little choice but to spend straight away on essentials.”

“People on higher incomes have the option of saving, which many are doing right now given the uncertainty of the pandemic. This is why other measures, such as income tax cuts, would not be as effective in getting us out of this recession,” he added.

Their analysis clearly shows that the Government’s plans to reduce income support would set back the economy even further. They also know that this would take a serious toll on the wellbeing of millions of people who are without paid work, especially those in regional communities.

Australian Council of Social Service CEO Dr Cassandra Goldie said: “The doubling of Newstart at the start of the pandemic came as a huge relief. After 26 years without a real increase to Newstart, people without paid work were finally able to afford the basics.”

“But they now face a deeply uncertain future, with the prospect of these devastating cuts to their already tight budgets and 12 people receiving JobSeeker for every job vacancy, with this being 28 people for every vacancy in regional areas,” she said.

Goldie said, “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. Not only is this the right thing to do, it’s one of the best thing we can do to support jobs now and on the long, hard road to full recovery.”

“People and businesses need this certainty in order to be able to rebuild – they need to know that the Government has their backs,” she said. “We’re calling on the Government to extending the existing Coronavirus Supplement to prevent income cuts in two weeks and move quickly to legislate a permanent, adequate JobSeeker rate that means people can cover the basics.”

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