Hundreds of thousands of people were forced out of work in recent months as a result of COVID-19 lock downs. Those pushed onto income support payments for the first time have become viscerally aware that previous payment levels were absolutely insufficient to survive on.
NewStart, the previous unemployment payment, was around $565 a fortnight at its base rate. Political pressure on the government made them announce a fortnightly $550 Coronavirus Supplement to the renamed JobSeeker Payment, effectively doubling it. This payment is due to expire in September.
Prior to the outbreak of COVID-19, income support payments for the unemployed had been at historic lows. People on welfare have reported that they were regularly going without meals and medication, were couch surfing or stuck in abusive relationships. Students were giving up on their studies.
With the additional Coronavirus payment these things have improved. However keeping welfare payments at poverty levels has been a conscious policy of successive Liberal and Labor governments for years.
When NewStart replaced the Unemployment Benefit early 1990s its rise was linked to the rises in the federal minimum wage. As such it rose each year in line with worker’s wages. For a brief period it was almost a liveable amount.
John Howard’s coalition government cut across this and instead linked Newstart increases to the inflation rate, which is lower. The real purchasing power of Newstart has decreased every year since 1997, while the cost of living has significantly increased. Since then both major parties have resisted calls to raise payments rates.
Keeping welfare payments miserably low means that unemployed workers will be more likely to accept jobs with lousy pay and conditions. Big business benefit from a “reserve army” of the unemployed.
It means workers have to compete for lower and lower wages. The less bosses pay in wages the more they keep in profit. On the other hand higher welfare helps push up wages at the expense of profits and raises living standards all around.
Low welfare payments also means less public spending, freeing up funds to be reallocated to tax cuts for the rich and other priorities for big business like military hardware.
In effect since April the Coronavirus Supplement payment has been a lifeline for people who’d previously been trying to survive on $40 a day. But for many others it is still barely enough to cover the rent, let alone much else.
There is widespread support for keeping the supplemented JobSeeker rate as it is. A Vox Pop Lab survey found 58% of people say the current level is about right. And 60% said that the government should provide a guaranteed minimum income for all regardless of their employment status.
For workers, welfare payments are a necessary protection against the fact that capitalism simply won’t provide enough jobs, virus crisis or not. Working people should not have to suffer because of the fact that this system won’t provide for everyone.
After years of flatly refusing to raise the rate even the right wing Liberal government has been temporarily forced to raise it. But their motivations are not the same as those of the working class or socialists.
As unemployment spikes it significantly reduced workers collective ability to spend. This along with potentially explosive pressure from workers and the unemployed is what has prompted Scott Morrison to consider raising the rate.
Big business and their political representatives are concerned that alongside the real reduction in ordinary people’s spending power so-called “consumer confidence” is slumping too. All of this means less profits for businesses that are still operating, and in turn huge problems for the capitalist economy.
Instead of worrying about the profit margins of the wealthy elite or the contradictions of their system, Socialists want measures that meet the needs and raise the living standards of all ordinary people.
That’s why we call for an immediate, permanent increase to welfare payments to liveable levels for all those unable to work. That means at least $1000 per week with rises linked to the minimum wage. The wealth exists to fund such measures, the problem is the super-rich have hoarded it all away.
Real permanent increases that alleviate the worst poverty can be won from Morrison’s capitalist government. We can do that by harnessing the current anger and energy of millions of ordinary people in campaigns and organisations. The limited concession of the Coronavirus Supplement already shows that.
But to permanently lock in living incomes and high living standards for everyone we need to go beyond the capitalist system and its mean logic. We need a democratic socialist system that puts people before profit.
By Meredith Jacka