This report summarises evidence on the impact of the COVID-19 recession and recovery on income inequality and poverty in Australia, including new ABS data tracking inequality during 2020 and 2021. The data tell a tale of two very different pandemic experiences.

Key findings:

• In 2020, income inequality and poverty declined during the ‘Alpha’ wave of the pandemic despite the deepest recession in a century and an ‘effective unemployment rate’ reaching 17%, due to robust public income supports – JobKeeper payment and Coronavirus Supplement.
• In the first half of 2021, employment and earnings recovered but these income supports were withdrawn. The available evidence indicates that income inequality and poverty increased above pre-pandemic levels.
• In September 2021, with half the population back under lockdown in response to the ‘Delta’ wave of the pandemic, the effective unemployment rate was 9%.
• COVID income supports in response to the 'Delta' wave were much weaker, as over 80% of people on the lowest income support payments were excluded from the COVID disaster payment. Those payments have now been phased out.
• The legacy of the two pandemic experiences is likely to be higher inequality and poverty than beforehand, despite remarkable progress in reducing both in 2020. By September 2021 there were 1.7 million people on the lowest income support payments (25% more than before the pandemic) and those payments still sit below the poverty line.