The three myths that keep Australians in poverty
by Danielle Wood
The federal government’s “economic inclusion committee” is unequivocal: the single biggest thing the government could do to make a difference to Australia’s most vulnerable would be to increase the JobSeeker payment. Substantially. The Labor government, while making sympathetic noises about the plight of Australians living in poverty, immediately rules it out. What is going on?
The economic inclusion committee found that the current level of the JobSeeker payment and related payments such as Youth Allowance are “seriously inadequate”. The maximum rate of Jobseeker – $347 a week for a single person, or $440 a week with full rent assistance and supplements – does not allow people to meet minimum basic needs. People on these payments face the highest levels of financial stress in Australia. They are forced to choose between paying for their medicine, or energy bills, or food. They struggle to find affordable rental properties.
For 20 years, Australia’s unemployment benefits have been slipping further and further behind community living standards. Today, Australia’s unemployment benefits are among the lowest (and on some measures the lowest) in the OECD.
Yet despite the acute need, many Australians are still unmoved by the case for an increase. The Resolve Strategic Monitor polling published two days ago in this masthead showed only 43 per cent of Australians support or strongly support an increase in the JobSeeker payment. Just under a third oppose any increase.
Australians generally care about those in need. So why the public antipathy to providing a leg up for the most vulnerable?
I think the answer lies in the national myths we tell ourselves about welfare recipients. These myths help us justify the status quo.
The first and most pervasive is the myth of the Gen Z slacker. If your mental model of a welfare recipient is a work-shy twenty-something playing video games in their parents’ basement, you may be in the hold of this myth. The truth is that the median age of someone receiving JobSeeker or non-student Youth Allowance is 45. And more than half of the recipients over the age of 45 are women.
Changes in eligibility for the Disability Support Pension, single parenting payment, and the Age Pension made over the past two decades have pushed a much broader group of Australians onto JobSeeker. Many require support for a long time – more than half have been on JobSeeker for more than a year.
The second, related myth is that finding a job is easy. It is true that demand for labour is higher than it has been in a long time. The unemployment rate has “a three in front”, and many people who used to be at the fringes of the labour market have found work. This is great – but it doesn’t follow that getting a job is straightforward for everyone.
About 40 per cent of people on JobSeeker have some form of disability or caring responsibility that limits their capacity to work. Some have lower levels of skills and education that restrict their capacity to fill jobs on offer. Policies to build people’s capacity to work – rather than restricting people to a hand-to-mouth existence – are more likely to support their long-term workforce participation.
Which brings me to the third myth: that unemployment benefits need to be very low so that people have an incentive to find work. While financial incentives of course shape people’s decisions, this is a long way from being a major concern with raising the JobSeeker payment given its current level.
Even the sizeable ($132 a week) increase to JobSeeker proposed by the Economic Inclusion Committee would only take the payment to just over half the minimum wage – leaving a very significant financial incentive to work. The clawback of benefits as work hours increase can be a disincentive to working more and deserves further consideration. But the truth is that the current JobSeeker payment is so low that it actually creates a barrier to job search.
The three myths are ultimately driven by a fear of people taking us for a ride. But in our efforts to stop a single dollar landing in the hands of the undeserving, we have pushed almost one million of our fellow citizens into a financially precarious position.
Once we dispel these myths, the inadequacy of the payment becomes much harder to justify.
So where does this leave the government?
One non-myth is that increasing JobSeeker will be costly. Going as far as the Economic Inclusion Committee recommends would cost almost $6 billion this year; not easy for a government with a big and growing structural budget challenge.
But budgets are about priorities. Governments could make room to boost JobSeeker, but they will only take on that challenge if the public demands it. To get there, we all need to be myth busters.
While you’re here…
Grattan Institute is an independent not-for-profit think tank. We don’t take money from political parties or vested interests. Yet we believe in free access to information. All our research is available online, so that more people can benefit from our work.
Which is why we rely on donations from readers like you, so that we can continue our nation-changing research without fear or favour. Your support enables Grattan to improve the lives of all Australians.
Danielle Wood – CEO