Application Exercise 10x: Poverty, poverty lines and benefits during COVID-19
- Identify the impact of the Covid supplement on household incomes during 2020. Support your response with data.
During 2020, the Covid supplement increase household incomes by a total of $9.5 billion (an increase of 46.8%). Each of the JobSeeker payments for households with different compositions (single with and without children, and a couple with no children), were almost double, raising nearly all those households above the relevant Henderson Poverty Line.
- Identify which benefit recipients were living in relative poverty
a.) before the introduction of the Covid supplement
Before the introduction of the Covid supplement, all three household sizes and compositions listed (single with no children, single parent with 1 child, and a couple with no children) were living in relative poverty (below the Henderson Poverty Line).
b.) after the introduction of the Covid supplement
After the introduction of the Covid supplement, the only household size and composition listed that was still living in relative poverty was the household with a single parent and one child, who received a benefit of $581 per week, which was $20.20 below the relevant Henderson Poverty line, meaning they were still living in relative poverty.
c.) with the new rate of JobSeeker (as of March 2022)
With the new rate of JobSeeker (as of March 2022), all three household sizes and compositions listed (single with no children, single parent with 1 child, and a couple with no children) were once again living in relative poverty (below the Henderson Poverty Line), as shown by the rates in the second table above.
- As noted above, at the time of the government announcement of a permanent increase of $25 a week to the JobSeeker rate, many organisations stated it still wasn’t high enough. Campaigns such as #RaisetheRate argued in favour of a minimum payment of $70 a day.
a.) Calculate how much a single person with no children, receiving JobSeeker, would receive each week if the rate were raised to $70 a day. Compare this amount to the current rate of payment for JobSeeker.
If the rate were raised to $70 per day for a single person with no children, they would receive $490 per week for JobSeeker. This would be well above the current rate of JobSeeker for this person ($321.35 per week.)
b.) Identify whether or not a rate of $70 a day would lift a single person receiving JobSeeker out of relative poverty. Support your conclusion with evidence.
A rate of $70 per day for a single person with no children on JobSeeker would mean they received $490 per week as noted above. This is slightly below the relevant Henderson Poverty Line for this type of household, which is $495.66 per week. This person would not quite be lifted out of relative poverty – but they would come close.
- Use the Internet to research the current rate of the Minimum wage for an adult working full time in Australia. Write a statement comparing the minimum wage with the JobSeeker payment.
Currently the minimum wage for an adult working full time in Australia is $882.80 for a 38 hour week (before tax). The current JobSeeker payment is $321.35 for a single person with no children, and $345.50 for a single parent with one child. The minimum wage (the lowest amount that can legally be paid to a full time worker in Australia) is more than two and a half times the higher of these amounts (notwithstanding the fact that a full time worker would be required to pay income tax on their earnings, and would therefore not take home the full amount.)
- Use the Internet to research arguments in favour and against raising the JobSeeker rate permanently so that all recipients are living above the poverty line. Create a T-table (with one side summarising to arguments in favour and the other side summarising argument against raising the rate) and use it to respond to the following prompt:
Unemployment benefits in Australia are insufficient to provide a dignified standard of living to those who cannot find a job.
Responses to this task (including the T-table arguments and the student response to the prompt) will vary depending on student research and opinions.
Some possible arguments for the T-table could include:
Arguments in favour of permanently raising JobSeeker rates to above the poverty line | Arguments against permanently raising JobSeeker rates to above the poverty line |
Raising every recipient above the poverty line will improve social justice and fairness in the community | It will require the government to divert expenditure |
Increased payments will increase spending in the economy (as welfare recipients have a high marginal propensity to spend) and provide an injection to economic activity | It may require the government to raise income taxes on workers to fund the increase in JobSeeker payments (or tip the government’s budget into ongoing deficit) |
JobSeeker being well below the poverty line actually makes it harder for recipients to actively pursue employment as they can’t afford travel, clothing and haircuts that enhance the chances of securing a job | It may disincentivise job seekers from actively looking for work if they can receive enough to live on comfortably regardless |
Other government welfare payments are much higher even though those people have similar costs of living | The government should do more the help recipients into paid work (e.g. skills and training) rather than increase payments |
Australia is a wealthy country, and our income support payments are well targeted (i.e. generally only go to those who actually need them, since they are means tested), so it’s unfair to make those worst offer live on such low payments | It is ‘unfair’ to force taxpayers to support people who aren’t in ‘real need’ (since unemployment is currently very low making it easier for people to find a paid job |
(Adapted and updated from an idea published by Sally Jackman in VCTA Compak, July 2020).