The imminent slashing of JobSeeker will cost the economy billions, see 145,000 jobs go

Respected analysts Deloitte Access Economics have crunched the numbers on the Morrison Government‘s plans to cut welfare payments to the unemployed this month by $300 a fortnight.

And what they‘ve found is that the sharp reduction in spending that will follow, as one million families are forced to do more with less, will reduce spending so much that it will force thousands of more workers on to the dole queue.

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

“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.”

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The ‘dole’ or JobSeeker payment was doubled to help newly laid off workers cope earlier this year but the temporary coronavirus supplement is being phased out from September 24.

Under the changes, the unemployed will have their payments cut by $300 a fortnight but they will also have more flexibility to earn up to $300 a fortnight to ‘top up’ the welfare payments if they can find work.

But that‘s not an option for millions of workers in Melbourne, who remain the subject of some of the toughest restrictions in the world.

Just before Christmas, the same workers face the prospect of JobSeeker being slashed again down to the original Newstart rate of just $40 per day.

“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,‘’ Australian Council of Social Service CEO Dr Cassandra Goldie said.

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

“There are a lot of things that are not in our control in this pandemic 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.

“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.

“We’re calling on the Government to extend the existing Coronavirus Supplement to prevent income cuts in two weeks and move quickly to legislate a permanent, adequate JobSeeker rate that means people can cover the basics.”

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JobSeeker is set to be cut and it will hurt, economists warn. Picture: Getty Images

The grim prediction follows warnings more than 400,000 Australians are set to join the dole queues as the government tightens eligibility for COVID-19 wage subsidies, forcing companies to make more staff redundant.

Labor‘s treasury spokesman Jim Chalmers has urged the Morrison Government to reconsider plans to also cut the wage subsidy JobKeeper by $300 in September.

“We‘ve got a million unemployed, and something like 400,000 expected to join the unemployment queues between now and Christmas,’’ Dr Chalmers said.

“When the Government decided to cut JobKeeper it was on the assumption that Victoria would be open and going fine, and that the international border would be opening soon. These things turned out not to be true.

“Our view is that they should reconsider cutting JobKeeper while unemployment is rising and we‘re in the worst recession we’ve been in for almost 100 years.”

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