8 million Australians vulnerable as JobKeeper and JobSeeker cuts loom
The government’s fiscal stimulus efforts have helped put a floor to Australia’s financial problems, but a fast approaching deadline will put households to the test.
From 28 September, JobKeeper payments will be reduced from $1,500 a fortnight to $1,200 a fortnight for full-time workers and just $750 a fortnight for part-time workers.
Meanwhile, an unemployed person on JobSeeker who is currently receiving $1,115.70 a fortnight will have their payment cut to $815.70.
The JobKeeper and JobSeeker payments have been a much-needed lifeline for millions of Australians, with half of all recipients Mozo surveyed admitting the payments were keeping them financially afloat.
But for many, the support measures have been less than adequate. One-third of respondents (33%) felt that the amount they are currently receiving is not enough to keep on top of their finances.
The changes to payment rates from late September will only make things more difficult for this cohort. They will also be keenly felt across Victoria, where the prospect of an extended lockdown has renewed fears of widespread business closures.
“More than one in four Australians currently receiving the government assistance say what they’re receiving is not enough to come and go on, painting a bleak picture for October onwards,” said Mozo Director, Kirsty Lamont.
Millions of Australians on the brink
Around 8.2 million Australians are currently receiving either JobSeeker or JobKeeper, meaning roughly half the adult population is on some form of government assistance.
Those aged 25-34 are more likely to receive the income support payments than any other age group. Mozo also found a slightly higher proportion of women are receiving assistance than men.
While JobKeeper was originally scheduled to wrap up this month, the Morrison government has agreed to extend the wage subsidy until 28 March 2021.
The extension will come as relief to many Australians. Among those surveyed by Mozo, one in five said they wouldn’t be able to afford their current residence or even groceries if the flow of government assistance was shut off.
But the upcoming reductions will put added pressure on households that are already being pushed to scrimp and save. According to the latest national figures, the household savings ratio has risen from 6% to 19.8% — a 46-year high.
“As a nation, we’ve seen a major cut back on spending as Australians worry about their financial future and try to safeguard themselves,” said Lamont.
“This is a perfectly natural and financially savvy response, but the catch-22 is that as we pull away from spending, our economy continues to tumble.”
What exactly is changing?
Right now, the JobKeeper rate is $1,500 per fortnight, which is paid out to all eligible Australians. But from 28 September 2020 to 3 January 2021, a two-tiered structure will apply based on hours worked.
If you worked 20 hours or more a week in the two fortnightly pay periods before 1 March or 1 July, you’ll receive $1,200 per fortnight. If you worked for less than 20 hours a week in those periods, you’ll receive $750 per fortnight.
The original scheme was also fairly loose with its eligibility requirements. So long as a business showed losses of at least 30%, it would have secured the JobKeeper payment for the full six months for its employees.
Under JobKeeper 2.0, a rolling eligibility system will be introduced. That means businesses will have to re-apply for the payment and demonstrate they meet the relevant decline in turnover tests for the September quarter.
As for the Coronavirus Supplement, it will be extended through to 31 December 2020. However, the payment amount will be decreased from $550 a fortnight to $250 from 25 September.
For more information about the assistance available to households and businesses, along with tips to keep your finances in good health amid the current crisis, browse our guide to coronavirus and your finances.
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