Even before COVID-19 hit Australia, the case to lift unemployment benefits in Australia had been promoted for many years.

The old Newstart rate was effectively doubled when the federal government brought in the temporary coronavirus supplement in March. At the same time, the name of the payment was changed from Newstart to JobSeeker. The government is planning to cut the coronavirus supplement on September 25, reducing incomes of people on JobSeeker by $300 per fortnight. Unless the government steps in, the supplement will be removed entirely at the end of December, sending the incomes of people on JobSeeker down to the appallingly low old Newstart rate of just $40 per day.

This report examines the implications of winding back – and then eliminating – the coronavirus supplement – for all recipients and for the broader economy. The report finds that this will have the following effects:

• The stepping down and then removal of the coronavirus supplement represents a direct reduction in government spending of an average of over $23 billion across 2020-21 and 2021-22.
• The average annual impact of that reduced expenditure across the broader economy is equal to a reduction in the size of the economy of $31.3 billion and an average loss of 145,000 Full-Time Equivalent jobs over that two-year horizon.