COVID-19: JobSeeker extended but cut by 40 per cent

COVID-19: JobSeeker extended but cut by 40 per cent

The COVID-19 supplementary payment intended to help almost half a million people find work again has been extended for three more months, but it’s also been cut by 40 per cent.

Prime Minister Scott Morrison announced a $3.2 billion package on Tuesday to extend the JobSeeker supplementary payment until March 31, only at a reduced $150 a fortnight -- a drop of $100.

About 428,100 people still have not gained employment since losing their jobs due to the COVID-19 pandemic, according to September figures from the Australian Bureau of Statistics (ABS).

“My number one priority is to get more Australians into work,” Mr Morrison said. “As the country is safely reopening and businesses start to return to full steam, we need to connect those seeking work with available jobs.”

Australians receiving the JobSeeker supplement can still earn up to $300 a fortnight without their social security repayment being reduced, Mr Morrison said, and waiting periods will continue to be waived until the supplement expires.

JobSeeker is paid in addition to the newstart unemployment allowance and other supplements people may be eligible to receive.

The maximum fortnightly payments will take effect from 1 January and are as follows:

  • Single: $715.70
  • Single, with a dependent child or children: $762
  • Single, 60 or older, after 9 continuous months on payment: $762
  • Partnered: $660.80
  • Single principal carer: $943.10

More people are forecast to be out of work

Unemployment surged after the COVID-19 pandemic dawned in March this year. It currently sits at 6.9 per cent with 937,400 people out of work, according to the ABS, well above its typical level of about 5 per cent.

And the number is expected to get worse. The Reserve Bank of Australia estimates it’ll climb to 8 per cent by the end of the year.

Underemployment is also high. The September figure is 11.4 per cent, about three per cent higher than its typical level.

The revised supplement will encourage people to look for work while helping the underemployed, Anne Ruston said, minister for families and social services.

“As the jobs market improves we want to encourage people to re-engage with the workforce because we know that even a few hours of work a week while on payment can have a dramatic impact on the pathway off income support,” she said.

A sombre tone to the holidays

The decision to cut the COVID-19 supplement was criticised by the Australian Council of Social Service, an advocacy group campaigning to reduce poverty and inequality in Australia.

Chief executive Dr Cassandra Goldie described the government’s policy as “out-of-touch with the reality of what people are going through”.

“There is currently only one job vacancy available for every 12 people without paid work or enough paid work, with even less in regional areas,” she said.

“The reduced rate from January to March is only $10 a day more than the old, unlivable Newstart rate, which had not been increased in real terms in more than a quarter of a century.

“The end of the year is often the most expensive time for families and this Christmas is going to be a really hard one for millions, with record-high unemployment.”

Labour market is key to the recovery

Government stimulus payments, RBA policies and bank relief packages have helped buoy people’s confidence in the Australian economy even though it is operating against the backdrop of a pandemic.

The Westpac-Melbourne Institute of Consumer Sentiment, a survey of 1200 adults in the first week of November, increased by 2.5 per cent to 107.7, a high not seen in seven years.

“Given the high degree of uncertainty this Christmas, and the headwinds from the high unemployment rate, it is a very encouraging sign that Australians are planning for a ‘normal’ Christmas,” Bill Evans said, chief economist at Westpac.

But the Unemployment Expectations Index, considered a reliable indicator for sustainable economic recovery, didn’t offer the same optimistic promise.

It rose by 6.2 per cent in November, representing a deterioration in labour market conditions as people anticipate rising unemployment, Mr Evans said.

The result was still 19.7 per cent below its peak in April and 7.3 per cent below the six month average leading up to March.

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Learn more about savings accounts

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

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As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

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Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

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It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

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The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

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A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

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