JobSeeker cut will cost economy billions: Deloitte

Lachlan Maddock
— 1 minute read

The government’s move to cut JobSeeker will cost the economy $31.3 billion and 145,000 full-time jobs, according to analysis from Deloitte.

The government is planning to cut the Coronavirus Supplement to the Newstart Payment on 25 September, reducing payment by $300 a fortnight in a move that Deloitte warns “would set back the economy even further”. 

“Every dollar that the government invests in JobSeeker is generating a significant economic return, helping to pave the road out of recession,” said Deloitte Access Economics partner Nicki Hutley.


“Providing people without paid work with enough to get by is highly effective economic stimulus, as they have little choice but to spend straight away on essentials. People on higher incomes have the option of saving, which many are doing right now given the uncertainty of the pandemic. This is why other measures, such as income tax cuts, would not be as effective in getting us out of this recession.”

Treasurer Josh Frydenberg has previously indicated that tax cuts would be at the forefront of the budget agenda and expects that reopening would restore consumer confidence. Prime Minister Scott Morrison has also said that it’s unlikely that JobSeeker would return to its base rate by the end of December, but is yet to commit to a permanent increase.

The report was commissioned by the Australian Council of Social Service (ACOSS), which says the findings strengthen the case for a permanent increase to the Newstart Allowance.

“Not only is this the right thing to do, it’s one of the best things we can do to support jobs now and on the long, hard road to full recovery,” said ACOSS CEO Dr Cassandra Goldie.

“People and businesses need this certainty in order to be able to rebuild – they need to know that the government has their backs.”

Deloitte cited research from the Australian National University that suggested the Coronavirus Supplement has reduced poverty by almost a third during the worst recession since the Great Depression and warned that with the unemployment rate likely to remain stubbornly high for years, there is a strong argument for a permanent increase. 

“The doubling of Newstart at the start of the pandemic came as a huge relief. After 26 years without a real increase to Newstart, people without paid work were finally able to afford the basics,” Ms Goldie said.

“But they now face a deeply uncertain future, with the prospect of these devastating cuts to their already tight budgets and 12 people receiving JobSeeker for every job vacancy, with this being 28 people for every vacancy in regional areas.”


JobSeeker cut will cost economy billions: Deloitte
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