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In the theatre of modern politics our leaders sometimes “create” problems so they can manipulate the 24-hour news cycle to publicise “fixing” them. On October 6 we will find out whether Morrison and Frydenberg are wise enough to use the Federal Budget to fix JobSeeker and spare more than 1.8 million Australians from poverty.
By Jackie Pearson
Serving the community’s most vulnerable is Jillian Hogan’s passion – she’s been doing it since raising money for charities as a volunteer schoolgirl and it has been her vocation for 40 years. She is “Head Honcho” of the San Remo Neighbourhood Centre on the NSW Central Coast but many locals know her as Mumma Goat. Jillian runs the annual Going Off At The Swamp (GOATS) drug- and alcohol-free family music festival at the San Remo Koala Park.
GOATS celebrated its 20th anniversary in April 2018 and “went off” again last year but, along with so many other great events around the world, GOATS didn’t happen in 2020.
Hogan has named the San Remo Neighbourhood Centre the Epicentre so it feels more like a community hub than a place of last resort. It’s in keeping with her preference for titles like Mumma Goat and Head Honcho over CEO or Manager. Oh, and she sits on the local Central Coast Council in her spare time.
Life as she knew it
Every year is tough for regional communities like San Remo and neighbouring Blue Haven. The streets of neat brick houses hide entrenched low incomes and, all too often, poverty. Hogan says that from both a client and staff perspective “really, nobody was coping before Coronavirus. People weren’t coping with the lack of money, lack of resources, affordable rental houses were difficult to get. Many people in this community were already in poverty.”
The Central Coast was one of the few regions on the east coast of NSW that went largely unscathed from last summer’s bushfires.
Blue Haven drew the short straw when a fire ripped through in the early hours of New Year’s Day and left many families homeless. A February East Coast Low caused extensive local flooding, again leaving scores of families homeless. The Federal Government provided assistance for the fires but decided the damage didn’t warrant emergency assistance for floods so the neighbourhood centre’s services were in huge demand well before the COVID crisis reached the Coast.
“When people were hit with both bush fires and floods, that created a lot of fear and a lot of anger,” Hogan says.
“People were already facing insecure housing and insecure work. Drug and alcohol use can be a product of unemployment or underemployment which can lead to domestic violence. The pressure of one partner commuting to Sydney or Newcastle for work while the other cares for children, and still not being able to feed the family, has major consequences.”
The Epicentre receives Commonwealth Emergency Relief Funding to deliver services that help people pay for basic needs in times of crisis. Emergency relief is meant to be a safety net for people experiencing financial distress or hardship so they can pay their utility bills and cover essentials like food and medicine.
Hogan says such crisis funding is her community’s “bread and butter”. She manages to stretch her $100,000 annual funding budget to the max. “Prior to COVID, annually we would give out approximately 2000 retail vouchers per year for things like groceries, petrol and prescription medicines. On top of that we would feed, clothe, provide material resources and food hampers to about 5000 families per year.
“Referrals are also really high. We refer to domestic violence and homelessness services and to counselling and financial counselling services. There is a lot of household debt.”
Along came ‘Rona
“We were one of the services on the Coast that kept operating during COVID. We were very proactive at setting up a phone service so people could be assessed and then volunteers would home deliver emergency relief vouchers and material aid,” Hogan explains.
The centre has re-opened with COVID-19 measures in place. “Now that we are back at the centre we are finding people want that personal contact because it is not just about food and shelter, it is about being able to talk to someone, the social contact – being heard with empathy and caring.
“We are finding that we have so many more clients that we would never have seen before. We see families who aren’t used to asking for help and we are seeing more people experiencing domestic violence because of the added financial and social pressures.”
Having survived the immediate crisis, Hogan believes communities like hers will have much more hardship to go through before Australia sees off the COVID economic downturn. She thinks an increase in incidence of domestic violence will be one outcome.
As the NSW eviction moratorium came to an end Hogan saw more people being evicted for non-payment of rent.
“We knew that was going to happen because people don’t have the capacity to recover from the arrears accumulated during the eviction moratorium. The level of evictions will depend on how willing landlords are to reach fair repayment agreements with their tenants.”
And then there are Hogan’s fears about what will happen in the months ahead as the JobSeeker Coronavirus Supplement and JobKeeper are phased out.
Raise the rate
Hogan had been advocating for the Federal Government to “raise the rate” of NewStart (now JobSeeker) long before bushfires, floods or coronavirus.
“I was part of the Raise the Rate campaign that was looking at increasing JobSeeker by around $75 a week. If that doesn’t happen we will see more poverty than we have ever seen especially when JobKeeper ends.
“The consequences will be far reaching. If people cannot afford a decent morning tea and lunch for their children, I know they will keep them home from school, so education will fall behind. People’s emotional wellbeing will be compromised far greater than we have already seen.
“I expect that we will have double the amount of people accessing our services and we will not be able to keep up with demand.”
The Morrison Government, which had stubbornly refused to raise the rate, did exactly that in response to COVID-19. From April 27 everyone receiving unemployment, student and parenting income support payments received the $550 per fortnight Coronavirus Supplement.
It reduced to $250 per fortnight on September 24 and then runs out altogether at the end of the year, potentially dropping JobSeeker back to that $40 per day.
According to the Australian Council of Social Services/Deloitte Access Economics Report, Estimating the economic impacts of lowering the levels of income support payments (September 2020), “removing the Coronavirus Supplement is going to hurt most in the most disadvantaged areas … Overwhelmingly, the regions most impacted from the removal of the Coronavirus Supplement are those already experiencing the most hardship.”
Hogan says it is too early to predict what the numbers will look like. ACOSS/DAE have optimistically based their report on no further Coronavirus outbreaks, lockdowns or economic shocks. They’ve gone with predicting the number of persons in poverty increasing to 740,000 because of the September 24 reduction in the supplement. “This number includes an additional ‘…212,000 persons [who] will be added to poverty compared to pre-COVID-19 economic and policy conditions’ – implying that more than 1.8 million people in Australia would be living in poverty after the reductions.”
According to Shadow Minister for Families and Social Services, Linda Burney MP, 145,000 jobs could be lost if JobSeeker returns to its old base of $40 per day.
“This report shows the severe impact the Morrison Government’s December JobSeeker snapback will have on jobs and the economy – estimated at removing $31.3 billion from the Australian economy or one per cent of GDP growth,” Burney says. “Australians on JobSeeker are anxious and have no idea what their future holds. The Government could provide them with certainty by delivering a permanent increase to JobSeeker,” she says.
Key findings
The ACOSS/Deloitte findings deserve the attention of the Prime Minister and the Treasurer if they intend to deliver a budget that is truly about recovery and not a return to their usual tax relief floats all boats rhetoric. Here are a few salient facts:
· Almost half of people in the workforce aged under 20 are either unemployed or underemployed.
· Job losses have been highest in industries with greater casualised workforces, including arts, recreation, accommodation and food services.
· Regions already suffering the greatest disadvantage pre-COVID-19 have been hit hardest by the economic fallout (not to mention those attempting to recover from the devastating 2019- 20 national bushfire crisis).
Even before COVID-19 hit our shores, the case to lift unemployment benefits in Australia has been strong for many years, the report continues:
· They’ve been a shrinking share of wages for a quarter of a century.
· Raising them would deliver the economy a boost (including through raising individuals’ well-being), and, most importantly,
· Doing so would help address this nation’s standout fairness fail of recent decades.
According to ACOSS/DAE, Hogan’s assessment that communities like hers are suffering deeply rings true: “Australia’s most disadvantaged regions have been hardest hit in the current crisis – relatively more jobs have been lost where unemployment rates were already the highest, so COVID-19 has markedly worsened regional inequality in Australia. In turn, that says the Coronavirus Supplement is doing a striking amount of heavy lifting in easing regional inequality.”
The Budget isn’t broken
The US Federal Reserve says official interest rates are not likely to move in any direction before at least 2023. That means the price of money is going to remain at historic lows for a long time. Yes, our government carries debt, but it is a great time to borrow.
According to the ACOSS/DAE report: “99 per cent of the Federal Government’s responses to the coronavirus crisis have been temporary rather than ongoing costs to the Budget. That’s not well understood. But it means that, if we can repair the economy, then that will repair the Budget. In turn, that says there remains room to move where it is needed most – to help Australian people doing it the toughest.”
Morrison says his government has “no intention of that going back to the original JobSeeker base payment certainly by the end of December and as I’ve flagged, I would be very surprised if we weren’t to extend it beyond then”.
Unless the Prime Minister is true to his word and delivers positive JobSeeker news in the Federal Budget, the impacts of reduced JobSeeker payments “will be felt harder in regions already facing greater levels of disadvantage”.
“As the Parliamentary Budget Office has noted, government debt could increase – depending on virus driven scenarios – by up to $800 billion over the coming decade even though policy decisions are set to ‘only’ cost $192 billion,” ACOSS/DAE argues.
“That says that as little as a quarter of the increase in debt will be due to this nation’s policy response to the coronavirus crisis, whereas as much as three-quarters will be due to the impact of the weaker economy on spending and (especially) tax receipts. Many people don’t understand that, so they are chasing down imaginary problems – such as arguing for immediate budget repair.
“The smart play remains fixing the Budget by fixing the economy. Removing the Coronavirus Supplement from JobSeeker payments in isolation won’t make a material difference to the future path of Australian Government debt. But doing so too quickly and without a plan to address the reduction in incomes could make a material difference to the economy. In turn, that would place pressure on the Budget via reductions in revenue.”
What of the Keeper?
ACOSS/DAE point out that “in addition to the traditional social welfare system, people have been supported by the JobKeeper wage subsidy through the COVID-19 crisis.
“Introduced at the end of March, JobKeeper initially consisted of a flat $1,500 per fortnight payment to eligible employees (fulltime, part-time, and casual employees who have been employed on a regular basis for at least 12 months) where their employer had suffered a significant decline in turnover.
“Without this policy, the number of people receiving JobSeeker would have been significantly higher. In its July Economic and Fiscal Outlook, the Commonwealth Treasury estimated the ‘effective’ unemployment rate was close to 15 per cent in April.
“A review of JobKeeper in June introduced a tiered payment system beginning on 28 September: a $1,200 per fortnight payment for individuals working over 20 hours a week, and $750 for those working under 20 hours a week. This will be further reduced to $1,000 and $640 per fortnight, respectively, from January 4. JobKeeper is set to conclude on March 28, 2021.
“At this point, it is expected that many of those remaining on JobKeeper will transition to JobSeeker payments – and, depending on where the economy is placed at this point in time, an influx of people onto the lower JobSeeker payment would further exacerbate the economic impact of the removal of the Coronavirus Supplement.
“And with JobKeeper extended to March, this potential shift will come at a time when the Coronavirus Supplement has already been removed, making the income drop from JobKeeper to JobSeeker much greater than it is right now.”
Back at the Epicentre
Hogan believes peeling back JobKeeper will have a significant outcome in her local area and those like it around Australia.
“Businesses will look at their workforce, they will restructure, and will have less people working for them. Those on JobKeeper will slip over onto JobSeeker and then we will have a real problem. Those who have been on JobKeeper will have mortgage debt, car debt, schooling fees. JobSeeker will nowhere near support their living standards. There will be mortgage defaults, those people will be forced into the rental market.
“We get federal funding but we won’t know whether it is enough until we get further into the evolving situation. Our current funding of $100,000 per year was increased by about $35,000 for COVID,” Hogan says.
“We will do our best to keep up with demand but instead of being able to provide a single person a $40 voucher you can only provide a $20 voucher which will only feed them for a day. Because of COVID we have had to give out far more because a family is not going to live for a week on $40, we have had to give them $100-$120, depending on the number of children.”
According to ACOSS/DAE: “The complexity of exiting from this emergency is high. And things keep changing fast. So, over and above existing reasons to have higher unemployment benefits anyway, keeping JobSeeker stronger for longer will be vital in filling the cracks as emergency safety nets morph or disappear.”
Jillian Hogan’s final piece of advice is a little more down home. Every day she sees how a punitive, insufficient social safety net forces people into poverty, keeps them stuck there and undermines their physical and mental health, not to mention the opportunities available to their children. All at great cost to our society and economy.
Remember, Josh and Scotty, Newstart (and now JobSeeker) hasn’t risen in line with national living standards for a quarter of a century.
“To break the cycle, people need a hand up,” Hogan says. “They need to be valued. Everybody has talent, everybody has skills but we need those people to reach their potential,” Hogan says.
