Thousands more Australians stand to lose their jobs when the JobSeeker payment is dramatically reduced at the end of the year, Labor has warned as the nation officially slides into recession.
The boosted unemployment benefit, which currently stands at $1,115 a fortnight, will be cut to $815 on 24 September and then to $565 on 31 December.
Labor fears the reduction will cause mass job losses as a knock-on effect of people being given less money which could be spent in shops and local businesses.
Thousands more Australians stand to lose their jobs when the JobSeeker payment is dramatically reduced at the end of the year, Labor has warned. Pictured: A shop in Sydney
Australia has officially sunk into recession for the first time in almost 30 years with a quarterly slump worse than the 1930s Great Depression. Pictured: A Melbourne shop closing down
The grim forecast comes after the country suffered a quarterly slump worse than the 1930s Great Depression with a seven per cent drop in GDP in the June quarter.
Linda Burney, Shadow Minister for Families and Social Services, told Daily Mail Australia that the JobSeeker rate should be permanently increased in December to help support the economy.
‘Australians who are out of work or who have had hours reduced during this crisis are spending their JobSeeker payments on local businesses, sustaining local jobs,’ she said.
‘The Prime Minister’s snapback of JobSeeker in December is not a plan for jobs and threatens to leave out-of-work Australians behind.’
A woman wearing a face mask walks across Princes Bridge in Melbourne
Labor has refused to say how much the payment should be increased by.
Prime Minister Scott Morrison has said he will consider announcing a permanent increase in the October budget but he is focused on getting Aussies off JobSeeker and back into work.
The government estimates that 1.5million Australians will be on JobSeeker in December.
After December 31 they are due to get $250 less per fortnight, meaning $375million less will be pumped into the economy.
This amount is the equivalent to the average fortnightly wages of 143,711 Australians.
Mas Azemi of Mas Barber Shop closes his shop in the Melbourne suburb of Brunswick
National accounts figures released on Wednesday showed that consumer spending in the June quarter declined by $33.5 billion compared with the same period the previous year.
During the quarter the government spent about $6.3billion on the coronavirus supplement.
The prime minister doubled the payment in March to cushion the blow for hundreds of thousands of Australians who lost their jobs due to coronavirus restrictions.
A spokesman for Social Services Minster Anne Ruston said: ‘Labor continues to reveal its ignorance on economic management preferring to spend now and tax later.
‘Instead, our focus is targeting support where it’s need and getting people back to work because that is the best way to get the economy back on track.
‘More than 340,000 jobs have been created in the last two months, recovering about 40 per cent of the jobs lost since the start of the pandemic, and we will continue to support employment growth by investing in infrastructure, incentives for businesses and reskilling and retraining people.
‘As we’ve said since the pandemic began we are keeping a close eye on economic conditions and will continue to provide enhanced support to the community through this difficult period.’
How are the support payments changing from September?
* The elevated unemployment benefit will remain at $1,115.70 a fortnight until September 24
* From the next day until the end of the year the $550 coronavirus supplement will be cut to $250, taking overall fortnightly dole payments down to $815.70
* People will be able to earn up to $300 without having their payment reduced
* The mutual obligation rules requiring people to search for four jobs a month will restart on August 4
* Penalties for people refusing a job offer will be reintroduced
* Job search requirements will increase in September when the assets test will also return
* On 31 December the supplement is due to end. The permanent JobSeeker rate to take effect from January next year will be announced in the October 6 budget.
* The $1,500 fortnightly wage subsidy will continue until September 27
* From the end of September to January, JobKeeper will be reduced to $1,200 for full-time workers and $750 for people working 20 hours or less
* From January to March, the full-time rate will be $1,000 and part-time will reduce to $650
* Businesses turning over less than $1 billion will have to requalify for the program at both stages through showing a 30 per cent drop in revenue
* Businesses with more than $1billion in turnover have to demonstrate a 50 per cent fall
On Wednesday Australia officially sunk into recession for the first time in almost 30 years.
The economy plunged by a record seven per cent in the June quarter alone, the Australian Bureau of Statistics has confirmed.
On an annual basis, the economy shrunk by 6.3 per cent – a level unseen since the aftermath of World War II in 1945 when the troops returned home.
The national accounts data confirmed a technical recession for the first time since mid-1991, following a 0.3 per cent decline in gross domestic product during the March quarter.
Recessions in Australia
Up until the 1991 recession, Australia had suffered an economic contraction several times a decade, on average.
A prolonged recession that began in September 1982 lasted a year, during a period of prolonged drought and the devastating Ash Wednesday bushfires in Victoria and South Australia. That followed another recession in 1981.
Another recession also occurred in 1977, during an era of widespread strikes.
The economy also took a beating in the final two quarters of 1975, when Governor-General Sir John Kerr dismissed Gough Whitlam as Labor Prime Minister.
A recession also occurred in late 1971 and early 1972, several months before Billy McMahon lost the election, ending 23 years of Coalition rule.
A credit squeeze also sparked another recession during the June and September quarters of 1961, ending only two months before then Prime Minister Robert Menzies held on to power by one seat.
Source: Australian Bureau of Statistics national accounts GDP data
Until Wednesday, Australia officially held a 29-year world record for avoiding a recession but COVID-19 social distancing policies and border closures have ended that with a bang.
A recession is defined as two consecutive quarters of GDP contraction and the last time Australia suffered one, mobile phones were the size of bricks and the internet was an American university research project.
The downturn experienced in 2020 is at a level unseen since the early days of radio and before television, with the quarterly economic plunge worse than some months of the early 1930s.
The seven per cent downturn in just three months was the equivalent of two-and-a-half years of economic growth, between March 2017 and December 2019, before the coronavirus pandemic.
The ABS’s head of national accounts Michael Smedes said the pandemic had caused the worst economic slump since quarterly economic records began in 1959.
CommSec chief economist Craig James said: ‘This is not your typical recession.’
New South Wales suffered the biggest quarterly slump of 8.6 per cent followed by Victoria on 8.5 per cent.
The data was taken before Victoria’s Labor Premier Daniel Andrews in August put his state into an economically-crippling, Stage 4 lockdown.
Westpac senior economist Andrew Hanlan said the earlier coronavirus lockdowns, introduced in March, were to blame for this recession.
‘The Q2 national accounts confirmed that Australia economy experienced a severe economic recession over the first half of 2020 – triggered by the partial lockdown/shut-down of the economy in response to COVID,’ he said.
During the last recession in 1991, Australia’s economy shrank by 1.4 per cent in the March and June quarters, after 18 per cent interest rates had caused a spike in bankruptcies.
During this recession, consumers stopped spending, with household saving levels surging from six per cent to 19.8 per cent in just three months.
The number of hours worked plunged by 9.8 per cent during the June quarter as household consumption dived by a record 12.1 per cent.
The annual fall in consumer spending was the first ever decline in the 61-year-old ABS national accounts series.
On an annual basis, the economy shrunk by 6.3 per cent. The quarterly slump was an worse than the 1930s Great Depression while the annual decline at a level unseen since the aftermath of World War II in 1945