COVID-19 JobKeeper and JobSeeker impacts on poverty and housing stress under current and alternative economic and policy scenarios

Abstract

Australia has been hit economically, as well as in health terms by the spread of COVID-19. There have been large declines in employment and hours worked, and dramatic restrictions on domestic and international trade. One of the main policy responses has been to increase payments to individuals and households. The major components of this are the temporary COVID Supplementary payment, which substantially increases working age income support payments of many of those who are not working, and the JobKeeper payment, which is a wage subsidy paid to eligible employers of eligible employees. The JobKeeper payment is designed to maintain the link employees have with their employer and to provide income support. In this paper, we estimate a range of measures of poverty and housing stress under different simulated scenarios related to the level of JobSeeker/JobKeeper payments and Australia’s economic circumstances. We find that in aggregate terms these changes have reduced measures of poverty and housing stress, with both now below what they were prior to COVID-19. We find that the protective impact has been reduced somewhat by the July policy announcement to make these supplementary payments less generous and also that with the same level of expenditure a greater reduction in poverty and housing stress could have been achieved by a different payment allocation, and in particular by a slightly lower JobKeeper payment and higher other payments.