The COVID-19 pandemic has been a social and economic disaster of almost unprecedented proportions in recent history. But, for one group of people, last year’s silver linings outshone the hardships.
“When we had the coronavirus supplement, I was able to pay my rent, I could pay my bills on time, I got to pay off debts that I’d had for years, I was able to buy food and clothes,” says current Austudy recipient Teddy White, who was on JobSeeker for most of last year.
White says he was able to buy new winter clothes, pyjamas and bedding for the first time in years.
Without the anxiety of living hand to mouth, he found the headspace to consider his future, escape from a treadmill of unsuitable jobs that exacerbated his health problems, and enrol in university.
Wendy Morgan also had a very positive 2020.
“Last year was fantastic because I didn’t have to make do without electricity at all last year,” says the long-term JobSeeker recipient.
She lost her last stable employment in 2012 and has since experienced evictions, homelessness and being repeatedly cut off from essential utilities.
But keeping the lights on is not the only reason why Morgan can now see her crochet properly.
“My lenses alone were over $750 and I just couldn’t afford that on the Newstart payment, and I’d been from 2012 until last year without any new glasses,” she explains.
But the coronavirus supplement that started at $275 a week and ended in March at $75 has been replaced by a permanent increase in JobSeeker of just $25 a week, leaving income support recipients feeling like they’re back where they started before the pandemic.
Morgan is once again behind on her electricity payments as she juggles bills.
“After paying my rent, I get just over $400 a fortnight left over and out of that I’ve got to pay electricity and phone, internet is essential – you can’t look for a job without the internet these days, so I need to have a laptop,” she explains.
She also needed to replace her laptop and phone when they were stolen in a break-in a couple of months ago, something she struggled to afford on the regular JobSeeker rate.
But while she lives in a rough neighbourhood, Morgan is lucky to live in relatively low-rent Adelaide. Since the supplements ended, White’s situation in Melbourne is even more desperate.
“I get $580 a fortnight from Centrelink and $520 of that has to go towards my rent each fortnight, which leaves me with $60 to cover literally every other living expense. So food, meds, clothes, transport, everything.”
Sixty dollars a fortnight simply cannot cover all of White’s essentials.
“I can’t buy phone credit, I can’t pay my internet bill, I can’t buy money to put on my Myki [travel card],” he laments.
“There’s just no way to stretch it to cover everything.”
Anglicare and Australians back basic income
It’s experiences like these with the COVID support payments that have prompted charity Anglicare to come out in support of a basic income.
The charity’s executive director Kasy Chambers says the pandemic welfare supplements proved that lifting people above the poverty line was economically possible with political will.
“This clearly showed us it is a choice and, when we made it, the sky didn’t fall in, people didn’t stop applying for work, people still wanted to work,” she tells The Business.
A survey of a thousand people commissioned by the charity shows more than three-quarters of Australians back a basic income guarantee above the poverty line.
In fact, more than half strongly support the concept, while only 3 per cent are strongly opposed.
It is an even stronger finding of support than one revealed in a YouGov survey conducted for the Green Institute late last year.
Kasy Chambers believes the pandemic and associated recession have increased empathy for those who’ve fallen on hard times.
“I think many, many more people who hadn’t previously experienced poverty or didn’t know somebody who was living in poverty now do.”
UBI price tag ‘not chump change’
Sydney University political economy lecturer Troy Henderson wrote his PhD about basic income schemes and is co-director of the new cross-institution Australian Basic Income Lab with colleagues from Macquarie and ANU.
He argues the pandemic has highlighted what’s financially possible for governments when there’s political will.
“Providing a basic income floor for all Australians might cost in the order of $15-40 billion,” he says.
“Now, that’s not chump change, but we’re still looking at an amount of money that is probably only 1-2 per cent of Australia’s GDP and is therefore eminently affordable.”
Kasy Chambers says that could easily be funded by reducing tax concessions and government transfer payments for the better off.
“$68.5 billion went to the top 20 per cent of income earners and only $6.1 billion went to the lowest 20 per cent,” she observes, citing previous research for Anglicare conducted by the Per Capita think tank.
The kind of payment that provides would be $457 a week – around aged pension level – for all those out of work, including some not currently eligible for JobSeeker.
It’s not a truly universal basic income, which, at that level of payment for all adults, regardless of their other income, would cost close to half a trillion dollars a year (although much of this would be taxed back from those earning money from wages, rents, investments or business profits).
Simon Cowan from the Centre for Independent Studies think tank, a critic of the universal basic income (UBI) concept, argues this highlights the “impossible trinity” of a UBI as explained by Canadian economics professor Kevin Milligan.
“You can have a broad amount of coverage, you can have a generous payment or it can be affordable,” says Cowan.
“Unfortunately, as Milligan showed, you can really only pursue two of those at once.”
But Troy Henderson argues a slightly more generous and less restricted unemployment benefit would be superior to the one-off welfare top-ups put in place during COVID.
“If we did have that type of scheme in place from the get-go we would not be suffering as we are at the moment from these ad hoc, piecemeal policy interventions that always create a significant number of losers during a time of extreme crisis.”
The two aren’t in total disagreement, with Simon Cowan arguing for a different long-term welfare reform.
“Basically split the unemployment payment into two,” he says.
“Have a relatively contained payment for people who are short-term unemployed, transitioning from one job to the other, which was the original design of Newstart, and then have perhaps a more generous payment for long-term unemployed people.”
‘Catastrophic’ mutual obligation system doesn’t work
Another area where Cowan, Henderson and Chambers all agree is dropping the current blanket mutual obligation requirements for job seekers to submit at least 20 applications a month, including for the long-term unemployed.
“There’s a lot of people who move onto Newstart and cycle off Newstart in a relatively short period of time, they’re actively looking for work and they will find it in the near term,” Cowan observed.
“They don’t need these additional requirements, they don’t need form-filling, they don’t need all of this government bureaucracy, they just need to be allowed to find a new job.
“For those who do need additional support, the general obligation doesn’t actually do much for them either because they’re not really going to get a job without that targeted support, even if they send in a hundred job applications.”
Aside from an increase in payments, those who have been subject to the mutual obligation requirements say it’s the one change that would make the biggest difference to living on JobSeeker.
“It drives your mental health into the ground,” says Wendy Morgan.
“You feel hopeless because you’re applying for job, after job, after job and most of the jobs you’re applying for are often jobs that you’re not even qualified for.”
“It’s catastrophic,” agrees Teddy White.
“It’s so bad for anyone’s mental health to be essentially press-ganged into accepting jobs that just will not work for you.”
Kasy Chambers says it is also often counter-productive for the unemployed, with the applications taking up time many would otherwise use to volunteer or engage in community activities.
“So, often it’s actually voluntary work that leads to employment, that links people and locks them into their community and that gives people real meaning and satisfaction in their lives,” she explains, noting that volunteering generally doesn’t count towards Centrelink’s activity tests.
Anglicare’s survey reveals that, aside from paying down debts and saving (38 per cent), the most common behavioural changes in response to a UBI would be volunteering more, spending more time caring for others, spending more time on sports or hobbies, and doing further education.
The punishment for not applying for enough jobs, failing to comply with your job plan or knocking back any work is a potential suspension of your payment.
“Having your payments stopped is terrifying,” says Morgan.
“Trying to live without payments for up to eight weeks is harder than anyone can imagine.”
Having previously had to sleep in her car for six months after losing her last stable job and rental house nearly a decade ago, homelessness is an experience Morgan never wants to face again.
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