The jobseeker increase is pathetic – and so is the spin to justify the paltry amount
Predictably, the increase to jobseeker was miserable. Equally predictable and miserable was the spin used to justify the paltry amount.
On Tuesday the government announced that it would raise the base rate of the jobseeker allowance by $25 a week. The government phrased it as $50 a fortnight, and everyone else quickly worked out it was just $3.57 a day extra which is ... well ... not much.
A more accurate way to think of it is as a $100-a-fortnight cut, because the Covid-19 bonus payment of $150 is to end at the end of March and will now be replaced with a $50 increase.
But of course the government does not wish anyone to think of it that way because that $150 bonus (which itself had been cut from an initial $550) was intended to be, in Scott Morrison’s words, a “short-term emergency measure”.
It was needed because, the prime minister told reporters on Tuesday, the pandemic meant “the social safety net that we had would soon become overwhelmed by the level of demand that would be placed upon that”.
Except that argument is complete drivel.
A correctly set safety net does not get “overwhelmed”.
Rather it absorbs extra people, allows them to survive while looking for work and also acts as an automatic stabiliser so the economy doesn’t go the way of the Great Depression.
What Morrison was really saying is that the previous base rate of $282.50 a week was completely unfit for purpose – and it was politically untenable to have 800,000 extra people suddenly discover just how unfit.
But that was then.
Now most of those people have gone back to some form of work and so the government can return to treating the unemployed with the contempt it always has – including increased mutual obligations and employer dobin call lines just to ensure they feel suitably dehumanised.
But there had also been a loud call for the rate to be raised, and so politically something needed to be done.
I suspect a $50-a-fortnight increase was the bare minimum they were able to do that could be spun as at least sounding significant without actually being so.
Yet Morrison suggested there was some science behind it.
He told the media that it “puts the jobseeker payment at 41.2% of the national minimum wage, which is commensurate with what it was during the time of the Howard government”. He then repeated: “This brings it up from 37.5% up to 41.2%. That is commensurate with where it sat during the period of the Howard government.” But is it though?
Yes, the old rate was 37.5% of the minimum wage, and yes, $310.40 is 42.2% of the minimum wage of $753.80 a week, but that was hardly the level “during the time of the Howard government”.
More correctly it was the level right at the end of the Howard government:
Graph not displaying? Click here In 1997, when the Howard government fully abandoned indexing unemployment benefits with earnings, Newstart was 44.7% of the minimum wage.
If it had remained at that level, the jobseeker rate would now be $337.15 – some $54 higher than the current rate and still $26 higher than the new rate: Graph not displaying? Click here
But the problem is since 1997 the minimum wage has also declined in value compared with average earnings: Graph not displaying? Click here Using the minimum wage as the benchmark thus ensures jobseeker will also fall well behind average earnings: Graph not displaying? Click here When the Howard government came into power in 1996, Newstart was worth 20.6% of the average male fulltime weekly earnings; by the end of 2007 it was down to 17.5%; now it is 14.9%.
Morrison is more than happy to use average full-time earnings when selling the government’s high income tax cuts.
He told parliament that the tax cuts would mean “if you are on the average full-time earnings you are not on the second highest tax bracket”, and that “Australian workers pay on average in their wages some 23.8%. That is what the average full-time wage earner in Australia pays across their entire income.”
So if average full-time earnings are good enough when he is trying to sell tax cuts, let them also be good enough when trying to gauge the worth of the jobseeker increase.
If jobseeker was at the ratio to average full-time earnings it was in 1997 when John Howard decided the aged pension should be linked to earnings but Newstart should not be, the current rate would be $383.99 a week – $101 a week higher than now:
Graph not displaying? Click here That puts it just above the current rate with the $150-a-fortnight Covidbonus payment of $357.85.
The $25-a-week increase merely puts the ratio back to around where it was at the end of the Howard years, but no more than that:
Graph not displaying? Click here And so the $25-a-week increase undoes the past decade of decline but leaves the damage done by the Howard years unrepaired. It certainly does not return it back to the level “commensurate with where it sat during the period of the Howard government”.
It is a pathetic increase and one that must only be viewed as the start, not the end.