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In a country that likes to think egalitarianism and fairness are among its core values, Reserve Bank governor Phil Lowe left the Morrison government with little option but to increase the $565.70-a-fortnight pittance this nation gives our poorest residents.
“It’s not a macroeconomic management issue, it is a fairness issue,” he said in early February as he destroyed any argument an increase to JobSeeker could be stopped on economic grounds.
So what was a “fair” increase in the minds of the government?
It turns out an extra $3.60 a day, or a cheap cup of coffee, is where fairness meets the budget bottom line.
Within the government, $50-a-fortnight was perceived as the “bare minimum” that could end the political debate over the rate of JobSeeker without creating public and internal political tensions.
This trade-off was evident in the strange way the government sought to explain the rationale for a $50 increase in JobSeeker when so many experts – from business to economists – had been arguing for something much more substantial.
The Prime Minister explained the current rate of JobSeeker was 37.5 per cent of the national minimum wage (which is $1507 a fortnight).
The planned increase would take it to 41.2 per cent, which Morrison said was “commensurate with what it was during the Howard government”.
There was no explanation of why this 41.2 per cent proportion was special or important. Just that it was a level reached at some point during the Howard government.
It was the Howard government’s change to the indexation of unemployment benefits that largely led to the problem the Morrison government has sought to address. From 1997, the then-Newstart rate has increased in line with inflation, meaning that over the past 25 years it never grew in real terms as wages and other welfare payments lifted.
Where once Newstart was around 90 per cent of the rate of the age pension, it is now around 60 per cent. That indexation change (and a $30-a-week lift in the age pension by the Rudd government) led to the huge gap.
Through the Henry Tax Review (which in 2010 called for almost a $50 a week increase), the OECD, submissions from the business community, the McClure report into welfare, nothing was done to address the shrinking unemployment benefit. The Rudd, Gillard, Abbott and Turnbull governments waved the issue by.
Even John Howard has changed his mind, saying the freeze his own government introduced had gone on for too long. That was in 2018.
That it took a pandemic and the worst economic situation since the Great Depression for the unemployed to get some relief tells you just how difficult it is for a government of any persuasion to get close to meeting Phil Lowe’s fairness test around JobSeeker.
Both sides of politics have failed the nation’s unemployed for too long. But they’ve been protected by the cold political calculation that there are no votes to be won by helping those out of work.
Even in announcing the biggest increase in unemployment assistance since the 1980s, the government tightened mutual obligation rules as if there is an army of potential workers out there resisting a job because living on $44-a-day is such a doddle.
The government has often talked about the “very Australian” approach it has taken to many of its policy prescriptions through the pandemic.
When told of the $50-a-week increase, one economist used another very Australian word to describe the move.
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