Despite the calamity of a once-in-a-century pandemic that led to almost a million jobs being lost, household income went up in the June quarter due to record social security payments, the nation’s statistical body revealed.
Households had about 2.2 per cent more income during the months of April, May and June this year, the Australian Bureau of Statistics (ABS) said, even though there was widespread unemployment, a record drop in work hours and a fall in compensation.
The extra money in people’s wallets was a result of record government subsidy payments, namely Jobseeker and Jobkeeper, which helped hedge the financial impact of the COVID-19 pandemic, Dr David Gruen said, the Australian Statistician heading the ABS.
"One after another, statistical records toppled in the June quarter, demonstrating the unprecedented impact on Australia of the pandemic,” he said.
“We saw a 9.8 per cent fall in hours worked, while JobKeeper and Boosting Cash Flow for Employers were the largest and second largest subsidies ever recorded in the National Accounts.”
Stimulus payments did some heavy lifting, but not all of it: ABS
Social assistance payments -- such as the $550 COVID-19 fortnightly supplement and the one-off $750 economic support payment -- pushed the increase in social support payments to 41.6 per cent for the June quarter.
The lift in social security benefits coincided with 932,000 jobs being shed in the first half of the year, the ABS said, the vast majority due to the rippling consequences of COVID-19. The number could’ve been higher were it not for the government’s JobKeeper business subsidy, an initiative that totalled $31 billion in payments over the June quarter, the ABS said.
The subsidies were not the only reasons behind the extra money in people’s wallets. Investment income -- from rent and dividend payments -- was attributed for the lift too.
But the sting of the pandemic did affect the returns these investments were paying, according to the ABS. Rental income dropped 25.7 per cent, while many businesses reduced their dividend payments or deferred them altogether, the ABS said.
A savings bunker: ABS
There was more money coming in, but people spent less and banked more of it, according to the ABS data.
Household spending tumbled over the quarter by 12.1 per cent -- pushing the figure down for the year by 2.6 per cent.
Meanwhile, the household-savings-to-income ratio increased from 6 per cent to 19.8 per cent in the June quarter -- to its highest level since June 1974.
In dollars, net savings went up from $42 billion to $59.5 billion.
A fall and rebound in household borrowing: ABS
The lockdowns instituted in response to the coronavirus pandemic took a toll on the housing market as loan commitments dropped, the ABS said.
“These restrictions, in combination with the broader economic uncertainty caused by COVID-19, drove a sharp decline in housing market activity with large falls in the value of new housing loan commitments in April and May,” they said.
“The 11.6 per cent seasonally adjusted fall in May was the largest in the history of the series.”
With the general easing of restrictions came a rebounding in commitments in the quarter.
June recovered by 6.2 per cent, but this was still down 10 per cent compared to the recent peak in January, the ABS said, and it wasn’t enough to offset the downturn.
The first rental fall in almost 50 years: ABS
Property investors felt the first fall in the rental market since 1972 and it was a drop of 1.3 per cent, according to the ABS data.
The fall is owed to a confluence of factors wrought by the COVID-19 pandemic, such as a drop in overseas travellers and international students, as well as lockdown restrictions.
The drop in these prospective tenants happened as newly built properties were being let onto the market, the ABS said, and the resulting oversupply could have contributed to rising vacancy rates and falling rents in some capital cities.