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Jobless benefits to be among worst in developed countries

Budget concerns

Money concerns: Despite mass unemployment and extended COVID-19 restrictions and lockdowns, the federal government plans to cut the supplement by $300 on September 25, reducing the base rate of benefits to about $1115 a fortnight.

A LOW-PAID Australian worker laid off during the pandemic will receive the third-lowest unemployment benefit amongst developed countries, when the coronavirus supplement is reduced, according to a social security expert.

Despite mass unemployment and extended COVID-19 restrictions and lockdowns, the federal government plans to cut the supplement by $300 on September 25, reducing the base rate of benefits to about $1115 a fortnight.

It’s a situation that the St Vincent de Paul Society, even before the cut, warned could entrench poverty and inequity with one in eight adults, and one in six children living in poverty.

Australian National University’s Professor Peter Whiteford has examined key indicators – Australia’s JobSeeker payment and commonwealth rent assistance – to find that these benefit payments, in comparative terms, mean recipients will be below all OECD nations except Greece and New Zealand.

Professor Whiteford’s analysis, reported in The Guardian, focused on a single person in their second month of unemployment who had been earning two-thirds of the average wage before losing their job.

With the $550-a-fortnight coronavirus boost, a person in this situation would receive 69 per cent of their past income in unemployment and housing benefits.

This lifted Australia’s unemployment payment closer to the OECD average.

Before the pandemic, the rate had been just $40 a day.

The Australia Institute said the government should raise JobKeeper in next month’s budget, instead of providing tax cuts.

In a new paper, the Institute predicted that the next phase of income tax cuts will deliver a windfall to high-income earners, with 91 per cent of the benefits going to just 20 per cent of taxpayers.

However, proposed cuts would likely do very little to boost the economy, with the bottom half of earners – those most likely to spend any extra cash – getting just one per cent of the benefit

The Australian Council of Social Service also called for the raising of JobKeeper, saying proposed tax cuts would only widen the inequality gap with millions of Australians hit by unemployment missing out on any tax benefit.

The government argues the tax cuts are needed to stimulate the economy, the institute has challenged the government and Labor to find a fairer form of stimulus.

The Coalition’s tax cuts, which were legislated with Labor and crossbench support, will lift the upper threshold of the 32.5 per cent tax rate from $37,000 to $45,000 and the 37 per cent bracket from $90,000 to $120,000, replacing the low and middle income tax offset in the second phase from July 2022.

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