Cutting JobSeeker could cost 145,000 jobs

Daniel McCulloch
(Australian Associated Press)

At least 145,000 jobs could be lost if pandemic-boosted welfare payments are slashed as planned.

Mental health experts also fear the looming reduction could have significant psychological impacts.

JobSeeker unemployment benefits have been temporarily doubled since April, but will be cut by $300 a fortnight at the end of next week.

The payment is due to go back to the original Newstart allowance of $40 a day in December, unless the government changes its policy.

Analysis by Deloitte Access Economics commissioned by the Australian Council of Social Service has found cuts to coronavirus supplements for welfare recipients will cost the economy $31 billion.

The report also contends 145,000 full-time jobs are at risk over the next two years if JobSeeker is cut.

Deloitte Access Economics partner Nicki Hutley said every dollar the government invested in JobSeeker generated a significant economic return.

"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," she said.

"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."

ACOSS CEO Cassandra Goldie urged the government to extend the existing coronavirus supplement and legislate a permanent JobSeeker rate that allowed people to cover basic living costs.

"There are a lot of things that are not in our control in this pandemic," she said.

"But one thing that the government does have control over is ensuring that everyone has enough to cover the basics of life, including a safe place to live."

Community Mental Health Australia chief executive Bill Gye has warned federal politicians winding back coronavirus supplements will have a big impact.

"The reduction of JobSeeker will have a really significant negative impact on the mental health of Australians," he told a parliamentary committee on Tuesday.

ACOSS wants the permanent base rate of JobKeeper increased by between $185 and $275 a week.

Prime Minister Scott Morrison has signalled he has no intention of going back to the original Newstart rate of $40 a day, but has given no indication of how much the payment will be beyond the end of the year.