Economists have warned of massive job losses and a $31.3 billion hit to the economy if the JobSeeker COVID-19 supplement payments are removed by the Federal Government.
The warning comes from analysis from Deloitte Access Economics, who says that winding back the JobSeeker payment supplement and eventually removing it entirely would amount to $31.3 billion in losses for the economy over a 24-month period; equal to 1% of Australia’s GDP.
As it stands, the Federal Government is slated to reduce the COVID-19 supplement from JobSeeker payments – which stand at $1,115 per fortnight – by $300 per fortnight on September 24.
These reduced coronavirus supplements will be added onto JobSeeker payments until December 31. There is no official word from the government on what social welfare payments will look like after the December cut-off date for the coronavirus supplement.
Economists are warning, however, that the impact on the wider economy’s GDP, as well as job numbers could be disastrous. Deloitte Access Economics was commissioned by the Australian Council of Social Services (ACOSS) to produce the report, which says that cuts to the supplement would result in a $31.3 billion reduction in the economy, and would cost hundreds of thousands of jobs.
Nicki Hutley, co-author of the report and economist with Deloitte Access Economics has told the ABC that assisting low-income earners is essential to a full economic recovery for Australia.
“If we take it away too soon and too harshly, we will end up adding to the unemployment queue,” Hutley said, adding that “we will remove growth from the economy.”
“This means we will get less revenue for the Government, so you’re actually giving yourself a bit of a slap in the face if you take it away.”
Hutley argues that for each dollar invested in social welfare payments to JobSeeker recipients, the return on investment is significant for the economy, and will encourage additional spending to aid the economy’s recovery.
“If people don’t have the supplement, they can’t consume as much… that affects demand for all sorts of products right across the Australian economy but particularly the services sector and that’s where we will see the biggest job losses.”
Cassandra Goldie, Chief Executive Officer of the Australian Council of Social Services – who commissioned the report – has said that it is in the best interest of the government to continue the supplement to spur economic growth and accelerate the recovery.
“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,” Goldie added.
While there is no official word from the government, Scott Morrison has said previously that he is “leaning heavily” in the direction of extending the supplement in some form, however, exactly how much that supplement will be remains unknown.