Yahoo Finance Children, renters, home owners: 650,000 face poverty in September
More than 4 million Australians in total will be pushed into poverty once the $550 JobSeeker boost ends in September, new analysis has revealed.
The ordinary JobSeeker rate of $550 per fortnight is being boosted by the $550 supplement to $1,100 per fortnight, and will effectively halve once the boost disappears.
But new analysis by the Australia Institute has found that 650,000 additional Australians would find themselves in poverty once the scheme wraps up, including 120,000 children and half a million renters and mortgage holders.
According to Australia Institute senior economist Matt Grudnoff, the coronavirus supplement has done an “enormous amount” to reduce poverty.
“With that single change 425,000 people were lifted out of poverty. However, the supplement has a legislated end date on the 24th of September 2020,” he wrote in the Poverty in the age of coronavirus report.
“If the coronavirus supplement is removed at the end of September as planned, the number of people in poverty will increase by more than 650,000, from 3.58 million to 4.24 million.”
The economic fall-out of the coronavirus crisis has meant many Australians are reliant on unemployment payments for the first time in their lives.
According to Grudnoff, 120,000 children under the age of 14 will be placed into poverty – and this will have long-term impacts.
“Poverty in childhood can have crippling lifelong effects on the child’s cognitive development, social, emotional and behavioural development as well as a range of adverse health outcomes,” he said.
And, compared to pre-pandemic numbers, ending the coronavirus supplement will push 242,000 more mortgage holders into poverty as well as 246,000 more renters.
If this many Australians fall into financial stress, there will be significant ripple effects for the broader economy, Grudnoff warned.
“This will not only mean a likely increase in homelessness but also increasing pressure on the banking system.”
Thousands of people falling into poverty at the same time will mean a heightened risk of people unable to make rent, he added, and they would all be looking for alternative means of housing – all at the same time.
And with tenants unable to make rent, Australian home-owners who rely on tenants for income may be unable to service their mortgages, the senior economist added.
“Investment property owners also face consequences as a result of the ending of the coronavirus supplement,” he said.
“Those who are renting out residential property should be concerned about the government’s plan to end the supplement.”
The government has indicated it will consider increasing the JobSeeker base rate, raising the hopes of many Australians.
Several groups have long advocated for the base rate of JobSeeker to be raised, including numerous unions, social services groups, the Business Council of Australia, Deloitte Access Economics, the Reserve Bank, charities and the Labor and Greens political parties.
Last week, the Australian Council of Social Services (ACOSS) and several other groups campaigned for Aussies to write to their local MPs to ‘raise the rate’.
“The $40 a day rate of NewStart was a poverty trap so low that it stopped people having the resources they needed to survive while looking for work,” said ACTU president Michele O’Neil.
“Any move to cut the rate will be opposed.
“A cut to the rate during the recovery would be a disaster for working people, devastating for those already out of work and would be a crushing blow to the economy.
“The Morrison Government could give security to hundreds of thousands of workers by guaranteeing they will not cut JobSeeker.”
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