‘Cruel and damaging’: JobSeeker decision held until December budget update

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Millions of Australians on JobSeeker benefits won't know how much income support they'll receive next year until December, sparking concerns this will be too late for a Christmas spending recovery.

Finance Minister Mathias Cormann said on Thursday the federal government would be in a better position to decide whether elevated JobSeeker payments would continue by the mid-year budget update after reviewing the labour market.

Finance Minister Mathias Cormann said the ongoing JobSeeker rate would be based on advice and economic data in “the context of the half-yearly budget update at the end of the year”.Credit:Alex Ellinghausen

The timing has frustrated Labor and retail groups who want an earlier assurance there won't be a drop back to the pre-coronavirus $40-a-day unemployment benefits.

"Clearly we didn't think we had sufficiently reliable data in the lead-up to the [October] budget to make final judgement about ongoing arrangements … We will be in a better position to make that judgement at the half-yearly budget update later this year," Senator Cormann told Senate estimates on Thursday.

It's unclear whether this would mean a change to the base rate, which is currently $565.70 a fortnight for singles, or any extension of the coronavirus supplement, which is also received by those on a range of benefits including partner, widow and youth allowance, Austudy and parenting payments. The supplement was cut at the end of September to $250 a fortnight until December 31, from $550 a fortnight at the height of the pandemic.

While a diverse group of economists, MPs and business and welfare organisations support an increase, there are concerns within the government that giving too much financial support becomes a disincentive to accept paid work.

Senator Cormann said the ongoing rate would be based on advice and economic data in "the context of the half-yearly budget update at the end of the year" but noted 60 per cent of jobs lost at the height of the coronavirus pandemic had been restored and the situation was in flux.

Australian Bureau of Statistics data released on Thursday shows 7 per cent of businesses reported a drop in the number of employees in October, compared to 13 per cent in July. One in five medium and large businesses reported an increase in staff levels.

"It's sensible for us to make a decision closer to the time," Senator Cormann said. "We are seven or eight weeks away from the next budget update. I think it's entirely appropriate."

Labor senator Katy Gallagher said delaying the decision would affect confidence.

"There's no other example where you've given people two weeks' notice about what the government's going to do," she said during estimates, adding 2 million people were expected to be reliant on the coronavirus supplement in December.

Australian Retailers Association chief executive Paul Zahra said an announcement sooner rather than later would help confidence, particularly in relation to consumer spending.

"JobSeeker recipients need to also be given the confidence that they may have some discretionary spending money ahead of Christmas, which we feel is the right thing to do," Mr Zahra said. "Waiting until possibly mid-December to make this decision would have a negative financial and mental health impact on so many people."

Australian Council of Social Service chief executive Cassandra Goldie said the government should "immediately" announce a permanent and adequate rate and introduce legislation.

"Leaving millions of people to deal with the uncertainty of not knowing whether they will have enough to cover the very basics, like their rent, food and power bills, come December is cruel and damaging," Ms Goldie said.

"We know that people on lower incomes will spend in the real economy. Fixing JobSeeker and other income support payments is vital to consumer confidence and supporting jobs, including in the retail and other sectors."

Labor spokeswoman for families and social services Linda Burney warned that those who had lost work would have less to spend, making it a tough Christmas. "Two weeks' notice is completely unreasonable for Australians doing it tough."

Australian Unemployed Workers' Union spokeswoman Kristin O'Connell described the reasoning behind the delay as "flimsy" and "political".

"The belated decision to confirm the rate of income support payments is overdue and should be announced immediately," Ms O'Connell said.

Ai Group chief executive Innes Willox said any decision should include longer-term considerations such as affordability, work incentives and whether increases in schemes such as rent assistance would be more helpful.

"Concerns about short-term stimulus measures are better addressed by temporary measures such as the coronavirus supplement, which has already been extended to the end of the year at a rate of $250 per fortnight," he said.

Business Council chief executive Jennifer Westacott said it had always considered the rate too low but the government was facing a difficult situation by spending $10 billion a month on JobKeeper wage subsidies while states had borders shut.

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