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Slashing Centrelink payment will increase poverty, hurt economy: SACOSS

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Cutting Centrelink’s JobSeeker payment in September will not only throw thousands into poverty but damage an already struggling economy, welfare advocates say.

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Based on modelling from left-leaning think tank The Australia Institute, 22,000 South Australians including 3000 children will be pushed into poverty when the Federal Government’s coronavirus supplement is slashed by $150 per week from September 25.

Released on Friday, the Poverty in the Age of Coronavirus report examined the impact of changes to the Federal Government’s coronavirus supplement.

It followed an announcement last week that the temporarily increased JobSeeker rate would fall from $550 a fortnight to $250 until December 31.

It is unclear what will happen with the payment in the new year, although the government has flagged making further low-income payment announcements later in the year.

Under the increased supplement a single JobSeeker recipient receives a total of $1115 each fortnight. This will be cut to $815 per fortnight.

South Australian Council of Social Services chief executive officer Ross Womersley told InDaily cutting the JobSeeker payment would not only affect those receiving the payment but be felt right across the economy.

“The impact will be not just be for the individuals but for the people around them,” he said.

“That extra income has been good for our local economy and, in fact, good for jobs in the long-run – because it’s a job creator.

“We certainly would acknowledge that reducing the income of these families will not only throw them into poverty but it does have economic consequences for the South Australian community more broadly.

“This group of people spend almost everything that comes into their household because they have to use that to buy essentials.”

Womersley said the reduced payment would also place additional pressure on families who were already struggling amid the economic downturn and soaring unemployment levels.

“We continue to have enormously high levels of under and unemployment. They’re likely to persist for an extended period of time, that’s going to demand long-term investments by our government to help aid economic recovery,” Womersley said.

“In the meantime, we need to be taking care of all of those people who can’t find their way into work so that they can put their best foot forward and maintain optimism and remain hopeful that work will become available.

“One of the best ways we can do that is to make sure they have enough to live on during this period.”

The Australian Institute report was based on the Henderson poverty line which, as of December 2019, was $623.58 for a couple per week and $440.23 for singles.

According to the economic modelling, the coronavirus subsidy introduction in April lifted 42,000 South Australians out of poverty.

The increased low-income rate followed years of campaigning from business and welfare groups who argued the previous rate of JobSeeker, formerly known as Newstart, was too low.

“This has been a very important payment for people who, for the first time in ages, have been able to go to the supermarket without having to fear that they won’t be able to pay when they go to the checkout,” Womersley said.

“Or to be able to pay their bills they may not have been able to pay because it was such a low income supplement up until this point.

“We know this has given really major improvements for people and now they’re faced with losing that security, that income.

“This just reiterates, reinforces and illustrates how low the payment was and how important it is we raise this rate for good.”

A spokesperson for Minister for Families and Social Services Anne Ruston said the government had been “clear all along that the measures we are putting in place are temporary, targeted and scalable as we respond to this unprecedented crisis”.

“The extended coronavirus supplement reflects the gradually improving economic and labour market conditions and is designed to ensure there are appropriate incentives for all payment recipients to seek out employment or study opportunities,” the spokesperson said.

“The government is acting decisively in the national interest to support households and businesses and address the significant economic consequences of coronavirus.”

Prime Minister Scott Morrison last week flagged a further announcement regarding the JobSeeker payment rate beyond December for “a few months” time.

He said under the current scheme JobSeeker payments were “burning cash, their cash, taxpayers’ cash”.

He said the payments could not continue at the elevated level “forever”.

SACOSS has called for the government to make an announcement regarding the JobSeeker payment in the budget, which is due to be released on October 6.

“We think that it’s imperative that the government moves as soon as possible and, ideally, in the budget makes really clear they have unemployed people’s back,” Womersley said.

“And that they are going to ensure they have good levels of income that enables them to maintain the basics in their household, even if they’re not able to find work.”

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