Economic self-harm

Australia is a comparatively wealthy country with GDP per capita approaching $70 000 in 2020 despite a slight decrease resulting from the COVID-19 pandemic. The most recent ABS data for median personal income is from 2017-18 when it was $49 805 ($957 pw) and that will have increased.

ACOSS reported in February 2020 that the poverty line (50% of median income) was $457 pw for a single adult and that 3.24 million people (13.6% of the population) were living below that line. That was before COVID-19 arrived and forced millions more out of work.

Standard JobSeeker allowance for a single person is just less than $283 pw which is well below the poverty line. The Coronavirus supplement of $275 pw took the payment a little above the poverty line but that was temporary, has already been decreased, first to $125 POW and now to $75 pw, and is set to be removed entirely by the end of March 2021.

The unemployment rate is expected to remain above the pre-pandemic level until at least the end of 2022. As a consequence, the number of people living below the poverty line will continue to be substantially greater than it was pre-pandemic. How is that justifiable in a country as rich as Australia?

What makes this worse is that the Reserve Bank has set its target unemployment rate at 4.5%, condemning almost 1 in 20 Australians of working age to live on JobSeeker which is clearly below the poverty line. In other words, the price of continued prosperity for most of us is that many of our fellow citizens must live in penury. Ironically, economists project that the loss of spending power among the unemployed will depress economic activity and create further unemployment.

Logically, a government that cares for the good of all its citizens has just two possible responses to these circumstances. One is to raise the rate of JobSeeker to a level that will enable all those that government requires to be unemployed to live at an acceptable standard. The other is to legislate for a ‘jobs guarantee’ so that all who are willing to work can have decently paid employment. In either case, the increased spending by those who benefit directly will stimulate economic activity and benefit us all. Not to do so is economic self-harm.